1998 (8) TMI 408 - AT - Central Excise

Issues Involved:
1. Confirmation of duty demand on excess clearances.
2. Validity of evidence obtained without a Panchnama.
3. Liability for duty on clearances of Vat Indigo.
4. Imposition and quantum of penalty.

Detailed Analysis:

1. Confirmation of Duty Demand on Excess Clearances:
The case originated from an order by the Additional Collector of Central Excise, Vadodara, confirming a duty demand of Rs. 26,543.62 on S.O. Dyes cleared in excess of Rs. 2.5 lakhs and imposing a penalty of Rs. 1 lakh. The appellants had cleared 100 kgs of S.O. Dyes valued at Rs. 35,000/- without payment of Central Excise duty under Notification No. 175/86, which was not admissible due to exceeding the value limit of Rs. 2.5 lakhs during 1985-86. The department found that S.O. Dyes worth Rs. 1,40,150/- had been cleared without bills, gate passes, and payment of duty. The adjudicating authority confirmed the duty demand and penalty based on documentary and oral evidence.

2. Validity of Evidence Obtained Without a Panchnama:
The appellants argued that the Central Excise officers failed to draw up a Panchnama for the recovery of private documents from Smt. Pratimaben A. Patel's purse, which they claimed weakened the department's case. However, the tribunal held that the absence of a Panchnama did not affect the case as the documents were resumed in accordance with the Central Excise Rules. The tribunal distinguished the cited case laws and emphasized that strict rules of evidence do not apply to quasi-judicial proceedings. The case was based on both the private documents and the statement of Shri Trilok Chand Jain, who admitted to the clearances without payment of duty.

3. Liability for Duty on Clearances of Vat Indigo:
The appellants contended that the demand for duty on 100 kgs of Vat Indigo cleared from 25-3-1986 to 31-3-1986 was barred by limitation, as the relevant RT 12 returns were filed and approved, indicating regular clearance. The tribunal found merit in this argument and set aside the duty demand for this period, remanding the matter to the proper Central Excise officer to verify if the clearances were regular and covered by GP1s. If the appellants could establish this, the demand would be beyond the normal period of limitation.

4. Imposition and Quantum of Penalty:
Given the quantum of the duty demand and the remand of the demand for clearances between 25-3-1986 and 31-3-1986, the tribunal found the penalty of Rs. 1 lakh disproportionate and reduced it to Rs. 25,000/-. However, there was a difference of opinion between the members on whether the entire case should be remanded for de novo consideration or only specific parts. The Vice President argued for a complete remand to reassess the duty liability and penalty, while the Judicial Member proposed a partial remand and immediate reduction of the penalty.

Majority Order:
The majority decision was to remand the entire case back to the Collector for de novo consideration, including determining the value of goods clandestinely removed, the duty payable, and the appropriate penalty. The Collector was directed to pass a speaking order after giving the appellants an opportunity to be heard.

Conclusion:
The appeal was disposed of with the following orders:
1. Duty demand on clearances between April 1985 and 24th March 1986 in excess of Rs. 2.5 lakhs was sustained, with re-quantification by lower authorities.
2. Duty demand on 100 kgs of Vat Indigo cleared between 25-3-1986 and 31-3-1986 was set aside and remanded for verification.
3. Penalty was reduced to Rs. 25,000/-.
4. The entire case was remanded for de novo consideration by the Collector.

The judgment reflects a thorough examination of the issues and adherence to procedural and substantive legal principles.

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