2004 (1) TMI 134 - AT - Central Excise

Summary

Issues: Alleged duty evasion on the removal of Mefanamic Acid I.P., shortage of 25 kgs, and removal of 345 kgs in a clandestine manner.

Issue 1: Alleged duty evasion on the removal of Mefanamic Acid I.P.
The main appellant, engaged in manufacturing Mefanamic Acid I.P., faced allegations of removing 85 kgs of the product clandestinely without paying duty. The defense claimed that the duty was paid at the rate applicable to small-scale units. The tribunal noted that the mere act of removal without duty payment attracts a penalty, and the duty paid based on the small-scale rate was found to be in order. The defense argument that the shortage of 25 kgs was part of the 85 kgs removed was rejected, and the duty demand for this quantity was confirmed.

Issue 2: Shortage of 25 kgs
The defense's claim that the shortage of 25 kgs was part of the 85 kgs removed was dismissed. The tribunal found that the physical and book balances showed a gap of 25 kgs, distinct from the 85 kgs already removed. Consequently, the demand for duty on this quantity was upheld.

Issue 3: Removal of 345 kgs in a clandestine manner
Regarding the alleged removal of 345 kgs in a clandestine manner, the tribunal scrutinized the evidence, including Lorry Receipts and statements from a transporter employee. It was noted that the Lorry Receipts indicated goods different from what the appellants manufactured. The tribunal emphasized that the duty demand based solely on the Lorry Receipts was not sustainable. The lower authorities failed to consider discrepancies and did not seek additional evidence to corroborate the allegations. As a result, the duty demand on the 345 kgs was set aside.

Conclusion:
The tribunal partially allowed the appeals, sustaining a penalty for duty evasion on 85 kgs and setting aside penalties imposed under other rules. The duty evasion on 345 kgs was deemed unsubstantiated, leading to the dismissal of duty demands related to this quantity. Penalties on partners were also set aside, and consequential relief was granted in accordance with the law.