1999 (5) TMI 175 - AT - Central Excise

Summary

Issues Involved:
1. Confiscation of goods and duty demand.
2. Allegations of clandestine removal and evasion of duty.
3. Validity of penalties imposed on the appellants.
4. Common premises and operational interdependence of the units.
5. Admissibility of evidence and defense arguments.

Issue-wise Detailed Analysis:

1. Confiscation of Goods and Duty Demand:
The Commissioner of Central Excise, Meerut, ordered the confiscation of goods valued at Rs. 99,39,334/- seized from the appellants and confirmed a duty demand of Rs. 53,55,862/- on goods valued at Rs. 2,73,54,179/- allegedly clandestinely removed by the appellants during 1993-94 and 1994-95. Penalties were also imposed on the appellant firm and associated individuals under Section 209A and Rule 209A.

2. Allegations of Clandestine Removal and Evasion of Duty:
The Revenue alleged that during a visit by Central Excise Officers to the factory of the appellant firm on 12-7-1995, it was found that the factory had multiple distillation columns, but no raw material register was maintained. The factory was found to have unaccounted stock and operational distillation plants, indicating evasion of duty. The officers found no record of stock of raw materials duly accounted, suggesting suppression of production of excisable goods.

3. Validity of Penalties Imposed on the Appellants:
The penalties imposed on the appellant firm and individuals were contested. The appellants argued that the Commissioner failed to appreciate the correct factual position and that the premises of the three units were not common. They also contended that the distillation plant had been sent for repairs, and the Department did not conduct an inquiry to verify this. However, the Commissioner found that the appellants failed to provide adequate evidence to substantiate their claims, leading to the imposition of penalties.

4. Common Premises and Operational Interdependence of the Units:
The appellants contended that the three units were independent with separate financial arrangements, stock, and employees. However, the Commissioner observed that the units operated from the same premises with common entry/exit points and were owned by members of the same family. The ground plan submitted by the appellants did not reflect the existence of the trading units, and additional construction was found, indicating operational interdependence.

5. Admissibility of Evidence and Defense Arguments:
The appellants argued that the Department's case was built on surmises without adequate evidence. They contended that the goods found were duty-paid and that the penalties were disproportionate. However, the Commissioner found that the appellants failed to produce duty-paying documents and did not account for the excisable goods. The defense that the distillation plant was sent for repairs was not substantiated with proper details, and the appellants did not inform the authorities about the transfer of machinery.

Conclusion:
The Tribunal found that the appeals lacked merit. The manufacturing unit, QEC, was found to be engaged in clandestine production and clearance of goods without payment of duty. The duty demand of Rs. 53,55,862/- was confirmed, and penalties on M/s. QEC and Shri Mukul Kumar were upheld. However, penalties on Smt. Vandana and Smt. Veena were set aside due to lack of evidence of their active involvement. The penalty on Shri Alok Tiwari was reduced from Rs. 10 lakh to Rs. 1 lakh. The impugned order was confirmed with modifications, and the appeals were disposed of accordingly.