2018 (7) TMI 314 - AT - Central Excise

Valuation - quantification of duty based on consumption of Potassium Chlorate - case of appellant is that value arrived for the clearance on the basis of consumption of Potassium Chlorate is not correct and that the ratio of 5 kgs of Potassium Chlorate per 100 match units has to be adopted, instead of 4 kgs of Potassium Chlorate - Held that - It was seen that during the period from February 2009 to October 2009, the appellant company had utilized 4606 kgs. of Potassium Chlorate and manufactured 123754 units of matches. From this it was arrived that the appellants have manufactured 100 units of matches with 4 kgs of Potassium Chlorate. The average value of matches per bundle was arrived on such calculations - there is no error in such quantification of demand, though the appellant seeks the same to be modified and to be calculated adopting 5 kgs. of Potassium Chlorate per 100 units. Demand of duty on same goods for second time - Redemption fine - goods provisionally released to the appellants and later cleared on payment of duty - Held that - Instead of confirming the duty demand on the seized goods and appropriating the duty already paid by the appellant has again passed order confirming the duty in this regard, which in our view cannot sustain - redemption fine is also unwarranted and requires to be set aside - confirmation of duty demand of ₹ 32,202/- requires to be set aside, and has to be reconsidered - matter on remand. Appeal allowed in part and part matter on remand.

Issues involved:
1. Calculation of Central Excise duty on safety matches manufactured by the appellant company.
2. Demand of duty on seized goods and imposition of penalty under Section 11 AC of the Act.
3. Dispute regarding the quantity of Potassium Chlorate used in manufacturing the safety matches.
4. Applicability of redemption fine on the seized goods.
5. Imposition of penalty equal to the duty amount under Section 11 AC of the Act.

Analysis:

1. Calculation of Central Excise duty: The appellant company, engaged in manufacturing safety matches, disputed the quantification of duty based on the utilization of Potassium Chlorate. The appellant argued that the duty amount should be reduced to ?3,74,740 based on the consumption of 5 kgs of Potassium Chlorate per unit, as stated by the Proprietor in his statement. However, the authorities relied on evidence of finished products cleared during the relevant period and calculated the duty based on the consumption of 4 kgs of Potassium Chlorate per 100 match units. The Tribunal upheld the duty demand of ?4,64,606 for the period under consideration.

2. Demand of duty on seized goods and penalty imposition: The Tribunal set aside the demand of ?32,202 as duty payable on 1767 bundles of matches seized during a visit by officers. These goods were provisionally released and later cleared on payment of duty. The Tribunal found that demanding duty on the same goods again was unwarranted. The redemption fine imposed on the seized goods was also set aside.

3. Dispute over Potassium Chlorate quantity: The appellant contended that the quantity of Potassium Chlorate used per unit was 5 kgs, contrary to the department's claim of 4 kgs. The Tribunal noted that the appellant failed to provide reliable evidence contradicting the quantity of products cleared, leading to the rejection of the appellant's argument for adopting 5 kgs per 100 units.

4. Imposition of penalty: The appellant argued against the imposition of penalty under Section 11 AC of the Act, claiming no suppression of facts. The Tribunal did not find merit in the contention that there was no suppression of facts and upheld the penalty equal to the duty amount in respect of the seized goods.

5. Operative part of the Order: The Tribunal partly allowed the appeal and remanded the issue of duty demand on the seized goods back to the adjudicating authority for reconsideration based on the discussions made in the judgment.

This detailed analysis highlights the key issues addressed in the judgment, including the calculation of duty, dispute over the quantity of Potassium Chlorate, demand of duty on seized goods, and the imposition of penalties.

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