2005 (10) TMI 198 - AT - Central Excise

Clandestine removal - Proof - Valuation (Central Excise) - Penalty, confiscation and fine - Imposition of

Summary

Issues:
1. Allegation of clandestine removal of pipes not accounted for in RG-1 Register.
2. Confirmation of differential duty on escalation charges.
3. Challenge to penalties and confiscation of property.
4. Discrepancy in Balance Sheet figures and actual clearances.

Analysis:
1. The appeals arose from a common order confirming duty amounts for clandestine removal of pipes and differential duty on escalation charges. The appellants argued that the Balance Sheet figures did not reflect actual clearances and that the pipes were manufactured for specific projects, tested, and inspected before being entered into statutory records. The Department issued notices based solely on the discrepancy in quantities between the Balance Sheet and RG-1 without any other evidence of clandestine removal.

2. Regarding the escalation charges, the appellants contended that they had already factored in the escalation in their cost of production, and any additional amounts received were accounted for. They requested a recalculation of duty based on the actual amount received. The Tribunal found merit in this argument and directed a re-calculation of duty on escalation charges.

3. The appellants challenged the penalties imposed, arguing that they had informed the Department about the escalation charges and had no intention to evade duty. The Tribunal agreed, setting aside the penalties and confiscation of property, as there was no evidence of evasion or suppression.

4. The Tribunal analyzed the Balance Sheet discrepancies and found that the Department failed to provide evidence of excess production or clearances without duty payment. Citing precedents, the Tribunal held that demands cannot be confirmed solely based on Balance Sheet figures. As there was a lack of evidence, the demands on clandestine removal were set aside, along with associated penalties and confiscation. The case was remanded for re-calculation of duty on escalation charges based on actual amounts received.