1994 (7) TMI 168 - AT - Central Excise

Summary

Issues: Duty demand on aerated waters removed clandestinely without payment of duty, imposition of penalty.

Analysis:
1. The case involved an appeal against the Additional Collector of Central Excise's order confirming a duty demand of Rs. 3,94,200 on 9250 gross bottles of aerated waters alleged to have been removed clandestinely without payment of duty. A penalty of Rs. 40,000 was also imposed. The Department's case was based on discrepancies in the clearance of crown corks from the store section to the plant section, not being accounted for in the central excise records maintained by the appellants.

2. The appellants, manufacturers of aerated waters, explained discrepancies in the receipt and issue of crown corks. An audit revealed discrepancies, and the appellants provided explanations and evidence. However, a show cause notice was later issued alleging removal of crown corks without proper accountal and clearance without duty payment. The adjudicating authority rejected the appellants' contentions, leading to the appeal.

3. During the hearing, submissions from both parties were considered. The cardex report indicated the issuance of various crown corks to the plant section. The appellants provided explanations regarding specific crown corks received and utilized for production, including defective ones. However, the explanation lacked complete records and supporting documentation, such as the Form IV register for raw material receipt.

4. The Tribunal found that the Department had discharged its initial burden based on entries in the cardex report, shifting the burden to the appellants to account for the 9250 gross crown corks, a principal raw material for aerated waters. The appellants failed to prove the quantity of crown corks in question or adequately explain discrepancies. The failure to inform the Department about defective crown corks further weakened the appellants' case.

5. Ultimately, the Tribunal upheld the duty demand and penalty, agreeing with the Additional Collector's findings that the crown corks were used in manufacturing aerated waters and cleared without duty payment. The appellants' inability to substantiate their claims and lack of proper documentation led to the rejection of the appeal, affirming the impugned order.