1999 (5) TMI 258 - AT - Central Excise

Issues Involved:

1. Waiver of pre-deposit of duty amount and penalties.
2. Shortage of physical stock of cigarettes.
3. Seizure of cigarettes without duty-paying documents.
4. Alleged excess use of cut tobacco in cigarette manufacturing.
5. Alleged clandestine removal based on balance sheet figures.
6. Alleged clandestine removal based on invoices from GTC, Bombay.
7. Penalties imposed on various appellants.

Detailed Analysis:

1. Waiver of Pre-deposit of Duty Amount and Penalties:

The appellants sought a waiver of the pre-deposit of Rs. 3,60,15,443/- in duty and penalties totaling Rs. 1,24,00,000/-. The tribunal acknowledged the appellants' financial constraints, including the closure of the company and lack of liquid funds since 1994, and granted the waiver and stay of recovery.

2. Shortage of Physical Stock of Cigarettes:

The appellants contested the demand related to the shortage of 22 CFCs of cigarettes, arguing that the shortage was explained by a certificate from the Range Superintendent, which the Commissioner did not consider. The tribunal noted that the Commissioner failed to analyze the evidence and explanations provided by the appellants, leading to a non-speaking order.

3. Seizure of Cigarettes Without Duty-Paying Documents:

Regarding the seizure of 197 CFCs of cigarettes, the appellants argued that the seized goods could have come from various manufacturers, not just the appellants. The tribunal found that the Commissioner did not provide clear evidence linking the seized goods directly to the appellants, resulting in a non-speaking order.

4. Alleged Excess Use of Cut Tobacco in Cigarette Manufacturing:

The major demand of Rs. 2,07,96,797/- was based on the alleged excess use of 4 kgs of cut tobacco per bag. The tribunal found that the Commissioner's findings were based on assumptions and lacked detailed analysis of the registers and evidence provided by the appellants. The tribunal emphasized the need for a thorough examination of the manufacturing process and wastage to justify the demand.

5. Alleged Clandestine Removal Based on Balance Sheet Figures:

The demand of Rs. 18,82,896/- was based on figures from the balance sheet, which the appellants argued were for raw tobacco, not cut tobacco. The tribunal noted that mere figures from the balance sheet could not substantiate allegations of clandestine removal without detailed analysis and evidence.

6. Alleged Clandestine Removal Based on Invoices from GTC, Bombay:

The demand of Rs. 1,24,93,470/- was based on invoices from GTC. The appellants argued that GTC maintained credit notes for returned or unsold cigarettes, which the Commissioner failed to verify. The tribunal found that the Commissioner did not analyze the evidence or explanations provided, resulting in a non-speaking order.

7. Penalties Imposed on Various Appellants:

The tribunal found that the penalties imposed on the General Manager, Chartered Accountant, and traders were not justified due to the lack of detailed findings and evidence linking them to the alleged clandestine activities. The tribunal emphasized the need for a thorough examination and justification for imposing penalties.

Conclusion:

The tribunal concluded that the impugned order suffered from various infirmities, including the lack of detailed analysis and non-speaking findings. The tribunal set aside the order and remanded the matter to the Commissioner for de novo consideration, with instructions to grant a hearing to the appellants, consider cross-examination requests, and pass a detailed, considered order.

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