2004 (2) TMI 206 - AT - Central Excise

Clandestine removal of goods in the disguise of waste - Evidence - Demand and penalty - whether M/s. Nutech Polymers Ltd., Appellants No. 1, were clearing their final products in the disguise of waste - HELD THAT - Regarding duty amounting to Rs. 1,44,572/- in respect of 11,854 number of HDPE/PP bags, we observe that Shri K.K. Mahajan, Works Manager, who looks after works relating to Excise and despatch, has deposed in his statements dated 20-3-2001 and 30-3-2001 that no invoice under Rule 52A (i.e. duty paying invoices) was issued in respect of the said bags. The Appellant No. 1 has not succeeded in controverting the findings contained in the impugned order, in this regard. We, therefore, uphold the demand of duty of Rs. 1,44,572/- and hold that the Appellants are liable to penalty also u/s 11AC of the Central Excise Act as the excisable goods had been cleared without payment of duty and intent to evade payment of duty is apparent as no prescribed invoices were issued at the time of removal of goods. Charge of clearance of fabrics in the disguise of waste - It is for the Department to bring evidence to prove that the wastage reflected in statutory records is not the actual wastage and the burden is not cast upon the assessee to produce the documents relating to actual generation of wastage. The learned Advocate has also contended that the input-output norm as per EXIM Policy is 8% in respect of HDPE Woven Fabrics and 10% in respect of HDPE Woven sacks. This contention has also not been controverted by the Revenue. We, therefore, hold that the Revenue has not succeeded in establishing in the present matter that the Appellant No. 1 had removed good quality excisable goods in the disguise of wastage. We, therefore, set aside the demand of duty and penalty on this count. As observed by us earlier, penalty is imposable on M/s. Nutech Polymers Ltd. in respect of the duty demand upheld in this order. In the facts and circumstances of the case we are of the view that interest of justice will meet if they are ordered to pay a penalty of Rs. 25,000/-. We find no justification for imposing penalty on M/s. Mateshwari Enterprises as well as on Nirmal Karanpuria and K.K. Mahajan. Accordingly we set aside the penalty imposed on Appellant Nos. 2 to 4. All the appeals stand disposed of in the above manner.

Summary

Issues Involved:
1. Recovery of Cenvat credit.
2. Confirmation of Central Excise duty on alleged clandestine removal of goods.
3. Confirmation of duty on sacks removed without payment of duty.
4. Confirmation of duty on PP/HDPE Fabrics cleared in the guise of waste.
5. Imposition of penalties.

Summary:

1. Recovery of Cenvat credit:
The Commissioner ordered the recovery of Cenvat credit amounting to Rs. 2,320/-. The appellants did not contest this demand, and it was upheld.

2. Confirmation of Central Excise duty on alleged clandestine removal of goods:
The Commissioner confirmed the Central Excise duty amounting to Rs. 4,758/-. This demand was also not contested by the appellants and was upheld.

3. Confirmation of duty on sacks removed without payment of duty:
The Commissioner confirmed the duty amounting to Rs. 1,44,572/- on 1,18,546 sacks removed without payment of duty. The Tribunal upheld this demand, noting that the Works Manager had admitted in his statements that no invoice u/r 52A was issued for these bags, and the duty had been subsequently deposited by the appellants. The Tribunal also upheld the penalty u/s 11AC of the Central Excise Act for this evasion.

4. Confirmation of duty on PP/HDPE Fabrics cleared in the guise of waste:
The Commissioner confirmed the duty amounting to Rs. 28,00,917/- on 2,16,307 Kg of PP/HDPE Fabrics allegedly cleared in the guise of waste. The Tribunal set aside this demand, stating that no direct material or evidence was brought on record by the Revenue to support the charge. The Tribunal emphasized that duty cannot be demanded merely on the basis of assumptions and presumptions, citing the Supreme Court's decision in Oudh Sugar Mills Ltd. v. Union of India. The Tribunal found that the Revenue failed to rebut the appellants' contention that the daily production reports did not reflect waste arising after the tape/fabric production stage. The Tribunal also noted that the input-output norms as per EXIM Policy were not contested by the Revenue.

5. Imposition of penalties:
The Tribunal imposed a penalty of Rs. 25,000/- on M/s. Nutech Polymers Ltd. in respect of the duty demand upheld. However, the Tribunal found no justification for imposing penalties on M/s. Mateshwari Enterprises, Nirmal Karanpuria, and K.K. Mahajan, and accordingly set aside the penalties imposed on them.

Conclusion:
All the appeals were disposed of in the above manner, with the Tribunal upholding certain demands and penalties while setting aside others based on the evidence and legal principles involved.