1998 (1) TMI 218 - AT - Central Excise

Summary

Issues:
1. Clandestine removal of goods without payment of duty.
2. Consideration of barrier paper in the manufacturing process.
3. Calculation of duty demand based on unaccounted raw materials.
4. Applicability of precedent decisions in determining duty demand.
5. Imposition of penalty for non-accountal of materials in the raw material register.

Analysis:
1. The case involved allegations of clandestine removal of laminated sheets without payment of duty. The Central Excise Officers discovered discrepancies in the receipt and utilization of imported base paper by the appellants, leading to a duty demand of Rs. 6,83,294.44. Statements from key personnel, including the Excise Clerk and Director, were recorded to ascertain the facts.

2. The appellants argued that the duty demand was based on presumption and did not consider the use of barrier paper in the manufacturing process. They contended that accounting for barrier paper in the Modvat account would eliminate the alleged discrepancy. The appellants relied on previous Tribunal and High Court decisions emphasizing the need for concrete evidence in cases of clandestine removal.

3. The Department justified the duty demand by referring to the formula provided by the appellants' Director, which allegedly revealed clandestine clearance of finished products. The Department maintained that the application of this formula was essential to establish the quantity produced and cleared clandestinely.

4. The Tribunal carefully evaluated the submissions and evidence presented. It noted discrepancies in the receipt of base paper, with certain consignments not accounted for in the statutory records. The Director's explanation regarding the use of barrier paper and its impact on production quantity was considered. The Tribunal emphasized the importance of tangible evidence in proving clandestine removal, as highlighted in previous decisions.

5. Ultimately, the Tribunal found that the Department failed to conclusively establish the clandestine removal of goods due to insufficient evidence. While the duty demand was set aside, a reduced penalty of Rs. 25,000 was imposed on the appellants for non-accountal of materials in the raw material register. The Tribunal extended the benefit of doubt to the appellants based on the circumstances of the case, leading to the disposal of the appeal with the mentioned penalty modification.