1998 (8) TMI 317 - Commissioner - Central Excise

Summary

Issues:
Allegation of suppression of facts, clandestine removal of goods, calculation of differential quantity of fabrics, accuracy of production calculation, evidence of clandestine removal, imposition of excise duty, deduction of excise duty from value, imposition of penalty under Section 11AC.

Allegation of Suppression of Facts:
The appellant argued that the show cause notice was barred by limitation due to no suppression of facts. They contended that the Department collected information from statutory records, and there was no evidence of clandestine removal of goods. The appellant emphasized that the calculation of differential fabric quantity based on chemical consumption might not be accurate due to potential waste in the production process. They relied on a Tribunal decision stating that excess consumption of raw materials does not indicate clandestine manufacture.

Accuracy of Production Calculation:
The Commissioner noted that the Department's calculation of clandestine removal lacked independent evidence and was based on a hypothetical ratio of chemical consumption to fabric production. The appellant disputed this calculation, arguing that the production process could involve waste, making fixed ratios unreliable. The Commissioner agreed that the calculation was speculative and inadmissible as evidence. Citing a Tribunal decision, the Commissioner emphasized the need for concrete evidence of unaccounted production and clearances.

Imposition of Excise Duty:
Regarding the demand for excise duty on processed fabrics, the appellant contended that duty should only apply to the balance quantity after accounting for cleared fabrics. They argued that the duty demand was inaccurate and should be based on the actual quantity manufactured and accounted for. The Commissioner clarified that excise duty should not be deducted from the fabric value as no excise duty was initially included in the value.

Imposition of Penalty under Section 11AC:
The appellant challenged the imposition of a penalty under Section 11AC, stating that the offense period predated the enforcement of the section. The Commissioner acknowledged this discrepancy and reduced the penalty considering the circumstances of the case. The Commissioner modified the original order, partially allowing the appeal and reducing the penalty imposed.

This detailed analysis of the judgment highlights the key legal issues addressed by the Commissioner in the case involving allegations of clandestine removal, excise duty calculation, and penalty imposition under Section 11AC.