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2004 (8) TMI 280 - AT - Central ExciseDemand - Clandestine removal of laminated sheets - Demand based on entries in spiral pad maintained - HELD THAT - No evidence has been produced by Revenue to show purchase of any of these inputs. It has been held by the Tribunal in the case of Ammtex Synthetics Ltd. v. C.C.E. 2002 (9) TMI 182 - CEGAT NEW DELHI relied upon by the learned Advocate that surmise and conjectures cannot take place of legal proof and the Department is required to prove the charge of clandestine removal by cogent convincing and tangible evidence. The Supreme Court in the case of Oudh Sugar Mills Ltd. v. U.O.I. 1962 (3) TMI 75 - SUPREME COURT has observed that no show cause notice or an order can be based on assumptions and presumptions. The findings based on such assumptions and presumptions without any tangible evidence will be vitiated by an error of law. In the present matter also the duty has been demanded on the basis of terms of rate contract without corroborating and substantiating with tangible evidence that the decorative laminated sheets against rate contracts were supplied by the Appellants from their own manufacture from factory. Such a demand cannot be sustained for want of tangible evidence. We therefore set side the same Merely because the figures were in odd number it could not be presumed that they represent the figures of actual production and not figures for production planning. Shri Gairola in his statement dated 12-6-96 recorded on the date of search itself has stated that the figures were production planning. The learned Advocate has also relied upon the decision in the case of T.G.L. Poshak Corporation v C.C.E. 2001 (9) TMI 683 - CEGAT CHENNAI wherein it has been held by the Tribunal that unless Department produces evidence which should be clinching in nature of purchase of inputs and sale of the final product demand cannot be confirmed based on some notebooks. Similar views have been expressed by the Tribunal in the case of Bearing Manufacturing Co. v. C.C.E. 2000 (2) TMI 148 - CEGAT MUMBAI . Accordingly we set aside the said demand of duty. As the laminated sheets procured and sold from Delhi has been held not to have been manufactured by the Appellants the aggregate value of clearances for the financial year 1992-93 will remain within the eligible limit of value of clearance for the purpose of availing the benefit of SSI exemption Notification during the following financial year i.e. 1993-94. In view of this duty demanded by denying exemption under Notification No. 1/93-C.E. is set aside. Demand of duty on account of shortage of finished goods the Appellants have not succeeded in controverting the findings recorded by the Commissioner in the Adjudication Order. The duty is thus payable by the Appellants. However the matter is to be remanded for computation of duty on account of challenge of classification of the laminated sheets by the Appellants in terms of judgment of Supreme Court in the case of Bakelite Hylam Ltd. supra. The jurisdictional Adjudicating Authority will first decide the classification of the impugned product after affording a reasonable opportunity of hearing to the Appellants and then compute the amount of duty payable by them on the quantity of finished goods found short. Similarly the Appellants are liable to reverse the MODVAT Credit equivalent to the amount of credit taken by them in respect of base paper found short as they have not satisfactorily accounted for the same. As far as confiscation of the finished goods found unaccounted we observe that Shri M.L. Sharma had admitted the same in his statement recorded on 12-6-96. The submission that the excess was on account of mix-up among the categories of the sheets is nothing but an after thought. We therefore uphold the confiscation. However we reduce the redemption fine to Rs. 50, 000/- as the redemption fine imposed is on the higher side. Similarly we uphold the confiscation of goods found in excess as Abdul Rashid Khan Production Manager was satisfied with the manner of stock taking of raw-material. The redemption fine imposed is only Rs. 10, 000/- which is reasonable. As the main allegation of removal of goods clandestinely has not been upheld penalty imposed on the Appellant No. 2 is set aside and penalty on Appellant No. 1 is reduced to Rs. 15, 000/-. Both the appeals are disposed off in the above manner.
Issues Involved:
1. Demand of Central Excise duty and penalties imposed. 2. Allegations of clandestine removal of laminated sheets. 3. Denial of Small Scale Industry (SSI) exemption. 4. Shortage of finished goods and raw materials. 5. Classification of laminated sheets. Summary: 1. Demand of Central Excise duty and penalties imposed: The Commissioner of Central Excise confirmed the demand of Central Excise duty against the Appellant-Company and imposed penalties on both the Appellants. The Appellants argued that the impugned Order was based on erroneous inferences and untested statements of dealers. They cited various legal precedents to support their claim that allegations of clandestine removals must be substantiated by concrete evidence. 2. Allegations of clandestine removal of laminated sheets: The Revenue alleged that laminated sheets supplied from the Delhi godown under the DGS&D rate contract were clandestinely manufactured and removed from the Bhiwadi factory. The Appellants contended that the laminated sheets were procured from the market, branded as "Paras" through screen printing, and dispatched directly from the Delhi godown. The Tribunal found that the Revenue did not provide tangible evidence to support the allegations of clandestine removal, such as purchase of inputs, production records, or transport documents showing goods being moved from Bhiwadi to Delhi. 3. Denial of Small Scale Industry (SSI) exemption: The Revenue denied the benefit of SSI exemption u/s Notification No. 1/93-C.E., arguing that the Appellants exceeded the clearance limit. The Tribunal found that the clearances from Delhi godown, which were traded goods, should not be included in the aggregate value of clearances for determining SSI exemption eligibility. Consequently, the demand based on denial of SSI exemption was set aside. 4. Shortage of finished goods and raw materials: The Tribunal upheld the demand of duty for the shortage of finished goods found during physical verification, noting that the Appellants could not satisfactorily explain the discrepancies. The issue of classification of laminated sheets was remanded to the jurisdictional Adjudicating Authority for re-evaluation. The Tribunal also upheld the requirement for the Appellants to reverse the MODVAT Credit for the base paper found short. 5. Classification of laminated sheets: The Tribunal directed the jurisdictional Adjudicating Authority to first decide the classification of the laminated sheets, referencing the Supreme Court judgment in the case of Bakelite Hylam Ltd., before computing the duty payable on the quantity of finished goods found short. Final Decision: The Tribunal set aside the major demand of duty and penalties related to the alleged clandestine removal and SSI exemption denial. However, it upheld the demand for duty on the shortage of finished goods and required the reversal of MODVAT Credit for the base paper found short. The confiscation of unaccounted finished goods was upheld with a reduced redemption fine. Penalty on the Appellant No. 2 was set aside, and the penalty on Appellant No. 1 was reduced to Rs. 15,000/-. Both appeals were disposed of in the above manner.
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