1998 (6) TMI 422 - AT - Central Excise

Summary

Issues:
The judgment involves the discrepancy in stock of intermediate goods, confessional statement, evidence of clandestine production, and application of relevant case laws.

Discrepancy in Stock of Intermediate Goods:
The officers found a shortage of 54.6 MT of H.R. Coils in slit condition compared to the recorded stock during a factory visit. The authorised signatory admitted the shortage, leading to a show cause notice alleging that these goods were used in production of final goods cleared without duty payment. The demand of Rs. 1,70,352/- and equivalent penalty were confirmed by the Assistant Collector and upheld by the Collector (Appeals).

Confessional Statement and Evidence of Clandestine Production:
The statement of the authorised signatory did not amount to a confession as it only admitted the shortage of process materials, not the knowledge of finished goods being sent out without duty payment. The lower authorities erred in converting a possibility into a confessional statement without corroborative material to establish clandestine production and clearance. The judgment highlighted the lack of evidence and the normalcy of production loss, citing relevant case laws like Union of India v. Indian Aluminium Co. Ltd.

Application of Relevant Case Laws:
The judgment referenced various case laws such as H & R Johnson (I) Ltd. v. Collector of Central Excise, Leather Chemicals & Industries Ltd., and Global Enterprises v. Collector of Central Excise to emphasize the importance of direct admission in establishing clandestine removal. It concluded that in the absence of such admission by the authorised signatory, the lower authorities erred in upholding the allegation of clandestine production and removal. The appeal was allowed, and the impugned order was set aside with appropriate relief ordered.