2018 (5) TMI 209 - AT - Central Excise

Redemption fine - excess quantity found during the search - Held that - the Tribunal in the case of Ambey Laboratories vs CCE 2017 (6) TMI 374 - CESTAT NEW DELHI has held that since the goods remained within the factory there is no justification for seizure and confiscation of such goods - redemption fine set aside. Demand of duty - job-work - yarn was received and was returned in the Hank form - Held that - the appellant is a job worker. Primary duty payment liability lies with the job worker unless the principal manufacturer was taken over the liability - In the present case, the principal had not taken over the liability, so the appellant is liable to pay the duty liability of ₹ 40,32,222/-. This ground is rejected. Demand - goods sent for job worker - Held that - In the instant case, the principal has not taken the liability to pay the duty demand so the duty demand lies with the job worker - if the duty demand in the instant case to be paid by job worker and not by the Principal appellant. Hence, the duty demand of ₹ 2,83,421/- is deleted. Clandestine removal - it was alleged that only Challans and internal gate passes were prepared before actually clearing the goods under the Central Excise invoices - Held that - demand was raised solely on the basis of the statement of Sh. R. B. Shah, Authorized Signatory who, in his statement dated 30.01.1997 admitted that file No. 22 contained various challans showing dispatch of the finished goods and that no Central Excise invoices were for such dispatches made by them and that the said goods were removed by them without payment of Central Excise duty - demand sustained. Demand - shortage of yarn - Held that - the demand is based merely on assumption basis. When it is so, then the demand is not sustainable. The penalties will be decided accordingly by the Adjudicating Authority in light of above confirmation of the duty. Appeal allowed in part.

Summary

Issues:
1. Excess quantity found during the search
2. Levy of redemption fine
3. Duty demand of ?40,32,222/-
4. Duty demand of ?2,83,421/- on goods sent for job work
5. Demand of ?5,47,536/- for goods removed without payment of duty
6. Demand of ?2,14,853/- for goods removed without payment of duty
7. Demand of ?3,18,290/- for shortage of yarn

Excess Quantity Found During the Search:
The appellant contested the levy of redemption fine on the excess quantity of yarn found during the search, arguing that the goods were unfinished and unpacked. Referring to a similar case, the Tribunal set aside the redemption fine, stating that since the goods were found within the factory and were yet to be packed, there was no justification for seizure and confiscation. The redemption fine was canceled in favor of the appellant.

Levy of Redemption Fine:
The appellant challenged the duty demand of ?40,32,222/-, claiming to be a job worker without primary duty payment liability. The Department argued that the yarn was returned in a different form. The Tribunal held that the appellant, being a job worker, was liable to pay the duty as the principal manufacturer had not taken over the liability. The ground regarding duty demand of ?40,32,222/- was rejected.

Duty Demand of ?2,83,421/- on Goods Sent for Job Work:
The appellant disputed the duty demand on goods sent for job work, asserting that the duty liability should lie with the job worker. The Tribunal agreed with the appellant's submission, stating that in the absence of the principal taking the liability, the duty demand of ?2,83,421/- was deleted in favor of the appellant.

Demand of ?5,47,536/- for Goods Removed Without Payment of Duty:
The appellant contested a demand of ?5,47,536/-, arguing that there was no evidence of actual removal of goods under Central Excise invoices. The Tribunal noted that the demand was based on the statement of the authorized signatory admitting removal of goods without payment of duty. As no contradictory evidence was presented, the demand was sustained, and this ground was dismissed.

Demand of ?2,14,853/- for Goods Removed Without Payment of Duty:
A similar grievance was raised regarding a demand of ?2,14,853/- for goods removed without payment of duty using internal gate passes. The Tribunal found that goods were indeed removed without duty payment, and thus confirmed the demand. This ground was also dismissed.

Demand of ?3,18,290/- for Shortage of Yarn:
The appellant challenged a demand of ?3,18,290/- for a shortage of yarn, arguing that no worksheet or calculation was provided by the investigating officers. The Tribunal observed that the demand was based on assumption without proper evidence, leading to the cancellation of the demand in favor of the appellant.

Conclusion:
The Tribunal partly allowed the appeals filed by the appellants, setting aside certain demands while confirming others. The penalties were left to be decided by the Adjudicating Authority in light of the duty confirmation, ensuring a reasonable opportunity for the assessee in the penalty proceedings.