2000 (5) TMI 640 - AT - Central Excise

Issues Involved:

1. Whether the respondent wilfully suppressed production of excisable goods with an intent to evade payment of duty.
2. Whether the respondent actually cleared excisable goods clandestinely without payment of duty and without issuing gate passes.
3. Validity of the penalty imposed on the respondent.

Issue-wise Detailed Analysis:

1. Suppression of Production:

The Ld. Collector examined whether the respondent wilfully suppressed production with the intent to evade payment of duty. The Collector noted that essential oils were kept in separate containers without filtration, and finished marketable products only came into existence after filtration and blending. During the years 1988-89 to 1990-91, the respondent had not exhausted the full exemption limit and had unutilized exemption limits. The Collector observed that the Investigating Officers did not carry out investigations regarding whether the seized goods were semi-finished and did not obtain technical or trade opinions to confirm the status of the goods. The Panchnama did not detail the nature of the packing or indicate whether the containers had labels or were of standard size. The Collector concluded that the non-standard quantities of goods stored in various containers and the seizure memo's silence on labeling or sealing led to the benefit of the doubt going to the respondent. The Collector held that the respondent did not account for goods in the RG-1 register because they believed the stock was semi-finished oils.

2. Clandestine Removal:

On the issue of clandestine removal, the Ld. Collector considered the statement of Miss Julie Mendis, who explained that job numbers were given by her and that dates were put in the dispatch copy after seeing the date from the gate pass. If there was no date or gate pass number, it meant that the goods might not have been dispatched. The Collector noted that no inquiries were made regarding the unaccounted dispatches revealed from the dispatch books. During the years 1988-89 to 1990-91, the respondent had not completed the full exemption limit and had sufficient unutilized exemption limits. The Collector observed that the balance sheet showed a closing balance of stock worth Rs. 9,66,780/- while the RG-1 showed a closing balance of only Rs. 2,250/-. The respondent explained that the balance sheet included the value of semi-finished goods, supported by a Chartered Accountant's certificate. The Collector accepted this explanation, concluding that the non-accountal of goods in the RG-1 was due to the inclusion of semi-finished oils in the balance sheet.

3. Penalty Imposition:

The Ld. Collector reviewed the original gate passes retrieved from the respondent's files and found that the presence of these gate passes did not indicate that goods had been cleared twice or more under the same passes. The Collector's order was reviewed, and an appeal was filed, arguing that the terms of Notification No. 175/86 were not applicable and that the adjudicating officer should have confirmed the duty amount of Rs. 1,65,609/- for the period in question. The Collector had accepted the figures furnished by the respondent without reconciling them with the R.T.12 returns and balance sheet. The Tribunal found that the Collector had examined all aspects, including the availability of exemption under Notification No. 175/86, and concluded that the respondent had an excess clearance exemption limit for clearing goods without payment of duty as an SSI unit.

Conclusion:

The Tribunal upheld the Ld. Collector's order, finding no infirmity in the conclusions regarding the semi-finished status of the goods and the lack of evidence for clandestine removal. The appeal was rejected, and the penalty of Rs. 5,000/- was deemed sustainable in law. The Cross Objections regarding the penalty were disposed of accordingly.

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