1998 (10) TMI 298 - Commissioner - Central Excise

Summary

Issues:
1. Alleged clandestine removal of cotton fabrics without payment of duty.
2. Confiscation of seized dyed cotton fabrics.
3. Treatment of value of fabrics as cum-duty price.
4. Imposition of penalty under Section 11AC.

Issue 1: Alleged clandestine removal of cotton fabrics without payment of duty
The case involves an appeal filed by a textile manufacturer against an Order-in-Original alleging suppression of production and clearance of processed fabrics without duty payment. Central Excise Officers seized cotton fabrics due to discrepancies in records. The appellant was accused of clearing fabrics without duty payment based on seized notebooks and statements. The appellant disputed the allegations, claiming only partial clearance without duty. The Commissioner noted the lack of independent investigation by the Department to prove clandestine removal. Relying on legal precedents, the Commissioner emphasized the burden of proof on the Department. The absence of evidence at the buyers' end and reliance on records without verification led to the dismissal of the duty demand, except for the admitted amount.

Issue 2: Confiscation of seized dyed cotton fabrics
Regarding the confiscation of 400 L.Mtrs of dyed fabrics, the Commissioner found no intent to evade duty as the goods remained within the factory premises. Citing tribunal decisions, it was established that if goods were not removed clandestinely and were still on-site, confiscation was not justified. Therefore, the seizure lacked grounds for confiscation or imposition of fines, as no attempt to evade duty was evident.

Issue 3: Treatment of value of fabrics as cum-duty price
The appellant argued for treating fabric value as cum-duty price, deducting excise duty to arrive at the assessable value. The Commissioner rejected this argument, stating that no deduction was necessary since excise duty was not included in the stated value. The contention for deducting duty from the value was dismissed.

Issue 4: Imposition of penalty under Section 11AC
Regarding the penalty imposition, the Commissioner noted that Section 11AC came into force after the relevant period. Considering the circumstances, the penalty was deemed unjustified. The penalty was reduced to Rs. 5,000 each on the appellant and another entity. Ultimately, the appeal was allowed, and the lower authority's order was set aside based on the lack of conclusive evidence and procedural errors in the case.