2005 (5) TMI 221 - AT - Central Excise

Summary

Issues Involved:
1. Clandestine removal of goods.
2. Evidence of actual clearance of goods.
3. Imposition of penalty.
4. Confiscation of seized goods.

Issue-wise Detailed Analysis:

1. Clandestine Removal of Goods:
The appellants were engaged in the manufacture of "Acid Slurry" and "Spent Acid." In May 2003, Central Excise officers intercepted a tanker lorry transporting Acid Slurry from the appellants' factory without any duty-paying document. Subsequent investigations revealed that the goods had been removed without payment of duty. Two sets of invoices were recovered: "QUADRUPLICATE" copies from the appellants' factory and "ORIGINAL" copies from their customers. The invoices had identical serial numbers and dates of removal but different quantities and duty amounts. The Department suspected clandestine removal of goods based on these documents.

2. Evidence of Actual Clearance of Goods:
The appellants contended that the invoices recovered from their customers were not for the removal of goods but for production before sales tax authorities at checkposts. They argued that there was no evidence of actual clearance of goods under these invoices, as the customers did not take Modvat credit of the duty mentioned. The Department failed to record statements from the customers to confirm receipt of goods. The burden of proof for clandestine removal was on the Department, which was not successfully discharged. The Tribunal noted that the charge of clandestine removal could not stand solely on the issuance of two sets of invoices without positive evidence.

3. Imposition of Penalty:
The adjudicating authority confirmed the duty demand and imposed a penalty of Rs. 64,930/- under Section 11AC. The first appellate authority upheld the duty demand but reduced the penalty to Rs. 25,000/-. The appellants challenged the penalty, arguing that the Department did not provide sufficient evidence of clandestine removal. The Tribunal found that there was no material evidence to support the charge of clandestine removal, thus the penalty was not sustainable and required to be set aside.

4. Confiscation of Seized Goods:
The appellants did not contest the confiscation of the seized Acid Slurry. They had paid duty on these goods and obtained provisional release during the investigation. The Tribunal sustained the order of confiscation and the demand of duty of Rs. 42,930/-.

Conclusion:
The Tribunal concluded that the demand of Rs. 22,000/- was not sustainable due to the lack of evidence of clandestine removal. Consequently, the penalty was also set aside. However, the order of confiscation and the demand of duty of Rs. 42,930/- were sustained. The appeal was disposed of in these terms.