2003 (12) TMI 218 - AT - Central Excise

Issues Involved:
1. Clandestine removal of goods due to discrepancy in weight between export documents and actual physical stock.
2. Excess consumption of raw materials leading to unaccounted finished goods.
3. Undervaluation of anodized Aluminium profiles.
4. Non-inclusion of "Die Charges" in the assessable value.
5. Shortage of finished goods in stock.

Detailed Analysis:

1. Clandestine Removal of Goods Due to Discrepancy in Weight:
The appellants were found to have discrepancies between the physical weight of exported goods and the weight recorded in export documents. The differential quantity was alleged to have been retained in the factory and cleared clandestinely. The demand of Rs. 1,05,67,090/- was raised based on a total quantity of 641.145 MTs of goods. The adjudicating authority revised this demand to Rs. 64,82,565/- after excluding exports to M/s. Man Intertrade Co. (UAE). The demand was based on documentary evidence and unretracted statements from company officials. The Tribunal upheld this demand, noting the unrebutted evidence and admissions by company officials.

2. Excess Consumption of Raw Materials:
The SCN alleged that excess raw materials were consumed than recorded, leading to unaccounted finished goods being cleared clandestinely. However, the adjudicating authority did not confirm any demand for this issue, resulting in a demand of Nil out of Rs. 2,99,83,430/-.

3. Undervaluation of Anodized Aluminium Profiles:
The appellants were found to have cleared anodized Aluminium profiles at prices applicable to mill-finished profiles, leading to undervaluation and a demand of Rs. 20,860/-. This demand was confirmed based on work order registers, relevant invoices, and admissions by company officials. The Tribunal upheld this demand as it was based on clear and unrebutted evidence.

4. Non-inclusion of "Die Charges":
The appellants collected "Die Charges" from customers but did not include these in the assessable value, leading to a demand of Rs. 16,050/-. The adjudicating authority appropriated payments made towards this duty, leaving an outstanding demand of Rs. 3,750/-. The Tribunal noted a discrepancy in the total quantum of duty and directed the adjudicating authority to re-examine the issue, particularly regarding an amount of Rs. 25,000/- credited back to customers' accounts.

5. Shortage of Finished Goods in Stock:
A shortage of 680.90 Kgs. of Aluminium sections/profiles was found during a stock check, leading to a demand of Rs. 9,703/-. The appellants contested this, claiming a mistake in physical verification. The adjudicating authority rejected this plea, and the Tribunal upheld the demand as the appellants failed to show any mistake in the verification process.

Penalties and Interest:
- The penalty under Section 11AC was reduced to Rs. 10 lakhs, considering the gravity of the offence.
- The penalty of Rs. 40 lakhs under Rule 173Q was set aside as the grounds stated were irrelevant to the rule.
- The penalty of Rs. 10 lakhs on the Managing Director under Rule 209A was set aside due to lack of positive evidence of mens rea.
- Interest under Section 11AB was limited to the period from 28-9-96 onwards.

Conclusion:
The Tribunal sustained the duty demands of Rs. 64,82,565/-, Rs. 20,860/-, and Rs. 9,703/-, while setting aside the demand of Rs. 16,050/- for requantification. Interest was payable under Section 11AB from 28-9-96 onwards. The penalty under Section 11AC was reduced to Rs. 10 lakhs, and the penalties under Rule 173Q and on the Managing Director under Rule 209A were set aside. The appellants were directed to be given a reasonable opportunity for duty requantification proceedings.

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