1994 (8) TMI 156 - AT - Central Excise

Issues Involved:
1. Allegation of clandestine removal of 1308 vehicles without payment of duty.
2. Discrepancy in accounting and inventory records.
3. Compliance with procedural requirements for vehicle clearance.
4. Financial condition of the appellant and its impact on pre-deposit requirements.

Detailed Analysis:

1. Allegation of Clandestine Removal of 1308 Vehicles:
The primary issue revolves around the allegation that the appellants cleared 1308 vehicles without payment of duty, resulting in a demand of Rs. 3,46,95,525.32. The appellants contended that the figures in the balance sheet included duty-paid vehicles in transit, stock-yards, or on display, and that recalculating based on their records would show no excess clearances. They submitted a Chartered Accountant's certificate and detailed statements to support their claims. The Department, however, argued that the appellants admitted non-accounting of some vehicles and that the discrepancy in balance sheet figures indicated clandestine removal.

2. Discrepancy in Accounting and Inventory Records:
The Department's case was based on discrepancies between the number of vehicles shown in the balance sheet and those accounted for in the RG 1 Register and RT 12 returns. The appellants argued that the closing balance in the balance sheet included vehicles both within and outside the factory, and that the Department should only consider vehicles within the factory for determining clearances. They provided detailed charts and a Chartered Accountant's certificate to substantiate their position. The Department maintained that the appellants failed to maintain proper records and admitted lapses in accounting for some vehicles.

3. Compliance with Procedural Requirements for Vehicle Clearance:
The Department highlighted procedural lapses, including the use of the same gate passes for clearing vehicles twice, and failure to follow prescribed procedures for damaged vehicles. Statements from company officials admitted these procedural violations. The appellants countered that these issues pertained to specific vehicles (251 and 70 vehicles) and not the 1308 vehicles in question. The Department argued that these procedural lapses indicated a broader pattern of non-compliance and clandestine removal.

4. Financial Condition of the Appellant and Its Impact on Pre-Deposit Requirements:
The Department argued that the appellants had a sound financial position with continuous profits and liquidity, justifying the demand for pre-deposit. The appellants sought waiver of pre-deposit, contending that the demand was based on erroneous calculations and that they had already paid a significant portion of the duty demanded. The Tribunal considered the financial condition of the appellants and the prima facie strength of the Department's case in deciding on the pre-deposit requirement.

Separate Judgments:
The Vice President and Member (Judicial) delivered separate judgments. The Vice President rejected the stay application, emphasizing the Department's strong case and the appellants' financial capability. The Member (Judicial) disagreed, finding prima facie merit in the appellants' arguments and proposing waiver of pre-deposit. The matter was referred to a third Member (Technical), who concurred with the Member (Judicial), leading to the final order granting waiver of pre-deposit and staying recovery during the appeal.

Final Order:
In view of the majority opinion, the pre-deposit of the duty in question is waived, and its recovery is stayed during the pendency of the appeal.

Dated: 16-8-1994

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