2014 (7) TMI 187 - AT - Central Excise

Duty demand - Clandestine removal of goods - denial of the benefit of Notification No.75/87-CE - Held that - Commissioner has considered the appellant s plea of duplication and has come to a finding that Annexure D to show cause notice arrived at 630 out of 1060 entries. However, we find that the said annexure D refers to 1312 ACs. As such, we really fail to understand the above observation of the adjudicating authority. Accordingly, we deem it fit to set aside the impugned order and remand the matter to the adjudicating authority for arriving at a finding of quantum of air conditioners alleged to have been removed by the assessee, without payment of duty and to assess their duty liability accordingly. - Decided in favour of assessee.

Issues:
1. Duty demand on the manufacture of air conditioners.
2. Allegations of clandestine removal of air conditioners during specific periods.
3. Denial of benefit of duty free clearances under Notification No. 75/87-CE.
4. Imposition of penalty on the appellant.
5. Verification of records and statements regarding clearance of air conditioners.
6. Arguments regarding the quantity of air conditioners removed without duty payment.
7. Plea of duplication and overlapping in the calculation of the number of air conditioners.
8. Remand of the matter for a correct assessment of duty liability.

Analysis:
The judgment by the Appellate Tribunal CESTAT New Delhi involved a case where duty demand amounting to Rs. 74,14,748 was confirmed against the appellant for alleged clandestine removal of air conditioners during the 1995-96 period. Additionally, a penalty of Rs. 2,58,000 was imposed on the appellant for the subsequent period of 1996-97 due to the denial of the benefit of Notification No. 75/87-CE, which grants duty free clearances subject to specific conditions. The appellant, engaged in manufacturing air conditioners, contested the findings of the adjudicating authority regarding the quantity of air conditioners removed without duty payment.

During the investigation, it was found that the appellant's factory was visited by Central excise authorities, leading to the recording of statements and checks on the records maintained by the appellant. The Revenue alleged that the appellant had been clearing air conditioners without duty payment or under different pretexts like compressor clearance or repair and maintenance services. The appellant's advocate admitted certain clearances without duty payment but argued that the duty was confirmed based on the number of compressors procured, which were duly recorded in their registers.

The appellant contended that there was overlapping and duplication in the calculation of the number of air conditioners removed clandestinely. The Commissioner's order was challenged on the grounds that the quantity of air conditioners removed would be lower if all records were verified, especially considering compressors not initially entered in the records. The Tribunal found discrepancies in the Commissioner's observation regarding the number of air conditioners considered for removal without duty payment, leading to the decision to set aside the order and remand the matter for a correct assessment of duty liability.

The Tribunal clarified that it was not expressing any opinion on the merits of the case, allowing the appellant to present arguments on the quantity of air conditioners removed without duty payment while granting the Commissioner the freedom to make an independent decision. The judgment emphasized the need for a thorough review of records and calculations to determine the accurate duty liability in the case of alleged clandestine removal of air conditioners.

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