2000 (5) TMI 849 - AT - Central Excise

Issues Involved:
1. Wrongful availing of concessional duty under Notification 138/86.
2. Manipulation of records and suppression of facts.
3. Confirmation of differential duty and penalties.
4. Confiscation of land, building, plant, and machinery.
5. Quantum of penalties imposed on individuals and the company.

Issue-wise Detailed Analysis:

1. Wrongful Availing of Concessional Duty:
The appellants were accused of wrongfully availing the benefit of concessional duty under Notification 138/86, which required the paper to be manufactured from pulp containing more than 50% by weight of unconventional materials. The department alleged that the appellants manipulated records to show compliance with this requirement, despite not actually receiving the necessary quantity of waste paper and white cutting No. 1.

2. Manipulation of Records and Suppression of Facts:
The department's investigation revealed that out of 15,22,301 kgs of waste paper and white cutting No. 1 purportedly received, only 63,555 kgs were actually received. The remaining quantity was falsely shown in records to fraudulently claim the concessional duty. The evidence included admissions from transport companies and suppliers who denied actual transactions. The adjudicating authority concluded that the appellants manipulated records to show higher usage of unconventional materials to meet the notification's conditions.

3. Confirmation of Differential Duty and Penalties:
The adjudicating authority confirmed a differential duty demand of Rs. 68,21,417.95P. and imposed penalties on the company and its officials. The penalties included Rs. 2 crores on the company, Rs. 3 lakhs on the former Managing Director, Rs. 5 lakhs on the Commercial Manager, Rs. 1 lakh on the current Managing Director, and Rs. 25,000 on the Deputy Manager (Excise and Despatch). The tribunal upheld the findings of manipulation and suppression, justifying the imposition of penalties.

4. Confiscation of Land, Building, Plant, and Machinery:
The adjudicating authority also ordered the confiscation of land, building, plant, and machinery used in the manufacture of paper, with an option to redeem them on payment of a fine of Rs. 1 crore. The tribunal, however, found this confiscation too harsh and set it aside, considering it disproportionate to the offense.

5. Quantum of Penalties Imposed on Individuals and the Company:
The tribunal reduced the penalties imposed on the individuals and the company. The penalty on the company was reduced to Rs. 1 crore, on the former Managing Director to Rs. 1 lakh, on the current Managing Director to Rs. 35,000, on the Commercial Manager to Rs. 1,75,000, and on the Deputy Manager to Rs. 7,500. The reduction was justified based on the roles and involvement of the individuals in the manipulation of records.

Separate Judgments Delivered:
- The Vice President agreed with the findings of manipulation and suppression but differed on the quantum of penalties and confiscation. He upheld the original penalty of Rs. 2 crores on the company but found the confiscation of land, building, plant, and machinery too harsh and set it aside.
- The third member, agreeing with the Vice President on the harshness of confiscation, set it aside but agreed with the Judicial Member on reducing the penalties on individuals and the company.

Majority Order:
- Confirmation of duty demand.
- Reduction of penalty on the company to Rs. 1 crore.
- Reduction of penalties on individuals as specified.
- Setting aside the confiscation of land, building, plant, and machinery.

The appeals were disposed of in the above terms, with the majority order reflecting the combined judgment of the tribunal members.

← Previous Next →