1997 (6) TMI 117 - AT - Central Excise

Summary

Issues:

1. Confirmation of duty amount and confiscation of seized goods.
2. Allegations of suppression of production and evasion of duty.
3. Exemption claims under various notifications.
4. Confiscation of goods and liability under Rule 173Q.
5. Quantum of penalty and reduction based on findings.
6. Calculation of value of goods and allegations of artificial inflation.
7. Examples of goods not included in clearance value calculations.

Analysis:

1. The appeal challenged the confirmation of duty, confiscation of seized goods, and imposition of penalties by the Principal Collector. Duty amounting to Rs. 6,06,438.87 was confirmed, seized goods valued at Rs. 1,55,227 were confiscated, and a penalty of Rs. 50,000 was imposed on the appellants.

2. Allegations of suppression of production and evasion of duty were made against the appellants. The excise officers suspected that the production of foam articles was being suppressed by showing them as latex adhesives/compounds. However, documents provided by the appellants indicated that the department was aware of the manufacturing of adhesives since 1984, undermining the suppression allegations.

3. The appellants claimed exemption under various notifications for clearances of specified goods. The authenticity of sales and buyers of latex solutions was questioned, but affidavits and documents supported the manufacturing of latex compounds/adhesives during the period in question, refuting the department's claims.

4. The issue of confiscation of goods and liability under Rule 173Q was raised. The appellants argued that Rule 9(2) could not be invoked as no goods were removed from the factory. However, the Tribunal differentiated the case from previous judgments and upheld the orders of confiscation under Rule 173Q(b) for unaccounted excisable goods.

5. The quantum of penalty was addressed, and based on the findings that the duty demand was not sustainable, the penalty was reduced to a token amount of Rs. 5,000. The Principal Collector's determination of penalty based on evasion of duty and unaccounted goods was adjusted accordingly.

6. Calculation of the value of goods was disputed, with the department accused of artificially inflating values. The appellants argued that the total value of clearances was evident from invoices and did not require additional valuation methods. The Tribunal acknowledged the merit in the appellants' claims regarding the valuation of goods.

7. The show cause notice highlighted examples of goods not included in clearance value calculations, suggesting possible discrepancies. The appellants contested these examples, stating that even if all values were considered, the total would still fall within permissible limits. The Tribunal found these examples insufficient to support the department's claims of duty evasion through underreported values.