1998 (2) TMI 210 - AT - Central Excise

Summary

Issues:
- Duty demand on processed man-made fabrics
- Imposition of personal penalty

Analysis:
The judgment pertains to an appeal against the confirmation of duty demand and imposition of a personal penalty by the Commissioner of Central Excise (Appeals) on the appellant, a processing unit dealing with man-made fabrics. The Central Excise Officers found a discrepancy in the quantity of processed fabrics on the premises, leading to a duty demand of Rs. 98,358.30 and a penalty of Rs. 25,000. The appellant explained the discrepancy as a result of intermixing of fabrics due to similar appearance and defaced lot numbers during processing. The appellant also highlighted the common industry practice of processing various fabric lots together to save resources. The Assistant Commissioner upheld the duty demand and penalty, which was further affirmed by the lower appellate authority, leading to the present appeal.

The appellate tribunal considered the submissions of both parties and reviewed the evidence, including the statement of the appellant's representative. The appellant's explanation for the discrepancy was based on the blending of man-made fabrics with similar qualities, leading to intermixing of different lots during processing. The appellant raised concerns about the accuracy of the verification process that determined the quantity of excess and shortage. The appellant's counsel argued that processing units commonly batch different fabric lots together for efficiency, dyeing, and printing, and only segregate them after final processing for clearance lot-wise.

After careful consideration, the tribunal found the evidence insufficient to establish the charge of clandestine removal of processed fabrics. The tribunal held that the burden of proof to establish such a charge was not met by the Department. Therefore, the tribunal set aside the impugned order, allowing the appeal and granting consequential relief to the appellants as per the law. The judgment emphasized the importance of meeting the burden of proof in establishing charges and highlighted the industry practices relevant to fabric processing to justify the appellant's explanation for the discrepancy.