2000 (12) TMI 122 - AT - Central Excise

Summary

Issues Involved: Duty demand on clandestine removal of goods, under-valuation of goods, non-utilization of non-duty paid raw material, penalties imposed on company officers.

Duty Demand on Clandestine Removal of Goods: The Commissioner confirmed a duty demand of about Rs. 1.62 crores on M/s. Euro Cotspin Ltd. for clandestinely removing and selling Polyester/Synthetic yarn without payment of duty. The demand included amounts for clandestine removal, under-valuation, and non-utilization of raw material.

Appeals Filed: Appeals were filed by M/s. Euro Cotspin Ltd. and Mr. J.C. Khandelwal against the Commissioner's order, disputing duty amounts and penalties imposed. Both appeals were taken up together due to the same offense being involved.

Dispute on Duty Demand: The appellant disputed the duty demand, arguing that duty should be levied as per the Proviso to Section 3 of the Central Excise Act, and that Notification No. 2/95 exempted goods from excess duty. The appellant contended that the duty demand was inflated and should be much lower.

Valuation of Goods: The appellant argued that the price realized on sale of goods should be treated as cum-duty for duty calculation, citing precedent. The valuation of raw materials used in production was also contested, stating that the exemption only required supply to 100% EOU, not export of final product.

Penalties Imposed: The penalties were challenged based on the reduced duty demand. The appellant's actions of clandestine removal were deemed grave, leading to penalties being upheld but reduced for the company and confirmed for the Managing Director.

Legal Position and Decision: The duty payable was revised to Rs. 33,43,583.56, considering the appellant's arguments and Notification No. 2/95. Penalties were reduced for the company but confirmed for the Managing Director due to serious breach of trust and evasion of duties.

Conclusion: The appeal of M/s. Euro Cotspin Ltd. was allowed with duty and penalty reductions, while the appeal of Mr. J.C. Khandelwal was rejected, affirming the penalty imposed on him.