2006 (5) TMI 13 - AT - Central Excise

Central Excise - Clandestine removal - No statutory records have to be maintained when raw material purchased from unregistered dealer and credit is not availed - In the absence of any contrary evidence clandestine removal not established - Case remanded

Summary

Issues:
Violation of Central Excise Rules by appellants, Confiscation of seized goods, Imposition of penalties, Non-accountal of finished goods and excess raw materials, Allegations of clandestine removal, Duty paying documents, Findings by appellate authority, Set aside confiscation and penalties for appellant No.1, Remand for appellant Nos. 2 & 3.

Analysis:
The judgment deals with three appeals against an order upholding violations of Central Excise Rules. Appellant No.1, a manufacturer, was found with excess finished goods and raw materials during a visit, leading to confiscation and penalties. The appellate authority rejected their contentions of purchasing excess raw materials from unregistered suppliers. The judgment notes that if raw materials were procured from unregistered dealers without availing Modvat credit, recording in statutory records is not mandatory. The explanation for excess finished goods was accepted, and lack of corroborative evidence for clandestine removal led to setting aside confiscation and penalties for appellant No.1.

For appellant Nos. 2 & 3, the appellate authority failed to provide findings. Duty paying documents were produced, indicating discharge of duty liability, but were not considered. The judgment remands the case for a fresh consideration with a personal hearing. Consequently, the appeals of appellant Nos. 2 & 3 are allowed by way of remand to the appellate authority. The judgment concludes by allowing the appeal of appellant No.1 and remanding the appeals of appellant Nos. 2 & 3 for further proceedings.