2016 (12) TMI 527 - AT - Central Excise

Clandestine removal - Whether delay in making dispatch entry in RG-1 (stock register) under the facts that entry of duty for payment was debited in the other statutory records namely RG-23 part-II or PLA, a case of clandestine removal is made out? - Held that - the appellant preferred appeal before learned Commissioner (Appeals), who vide the Order-in-Appeal dated 25/01/2010 was pleased to observe that inspite of several letters written by him (9 in number) to the Additional Commissioner Central Excise, Meerut-II requesting therein to send the concern/relevant documents being RG-23 part-I register and RG-1 register, but till the date aforesaid record have not been received by him. It is further observed that from perusal of correspondence between Adjudication Branch of Central Excise, Meerut-II and Adjudication Branch of Central Excise, Noida, copies of which were endorsed to the ld. Commissioner (Appeals), it was evident that the documents are still not traceable and/or readily available despite a lapse of more than five years. In order to confer substantial Justice the ld. Commissioner set aside the Order-in-Original and remanded the matter back to the adjudicating authority with the direction to decide the case within three months, after providing the appellants the relevant RG 23 part-I register and RG-1 register and thereafter affording an opportunity to the appellants to present their case. Pursuant to remand the second Order-in-Original dated 14/03/2013 was passed by the Additional Commissioner, Meerut-II. As pointed out by the learned Advocate for the appellant, it is evident on perusal of the records that the relied upon documents, as directed by the ld. Commissioner (Appeals) were not provided to the appellant assessee and again the duty of ₹ 4, 21,831/- was confirmed along with confiscation of the seized goods and the seized stock with option to redeem on payment of redemption fine. However, penalty on Manoj Kumar, driver was not imposed as the amount of ₹ 3,14,060/- and ₹ 14,38,961/- were found to be admissible credit. Being aggrieved, the appellant preferred appeal before ld. Commissioner (Appeals), who vide the impugned order have been pleased to uphold the recovery of duty of ₹ 4,21,831/-, uphold the confiscation of the goods seized and also the truck seized but have been pleased to reduce the redemption fine to ₹ 50,000/- and further, he was pleased to set aside the confiscation of the seized molasses. And further been pleased to reduce the redemption fine to ₹ 1,50,000/- on the excess found goods. I find that the Order-in-Original, passed in the second round dated 14/03/2013, have been passed in violation of the principles of natural Justice, as well as in gross violation of the orders and directions of the ld. Commissioner (Appeals). Accordingly, the said order is not sustainable. Accordingly, I set aside the Order-in-Appeal and the Order-in-Original and allow the appeal. The appellant assessee will be entitled to consequential benefits, in accordance with law. So far the pre-deposits or the payment of duty pending adjudication or appeal is concerned, the same are refundable to the appellant along with interest, as per Rules - appeal allowed - decided in favor of appellant-assessee.

Summary

Issues:
Delay in making dispatch entry in RG-1, Alleged clandestine removal of goods, Discrepancy in physical stock vs. book stock, Seizure of goods, Confiscation of goods and truck, Imposition of penalties, Violation of principles of natural justice.

Analysis:

1. Delay in making dispatch entry in RG-1:
The main issue in this appeal was whether the delay in making dispatch entry in RG-1, while debiting duty in other statutory records like RG-23 part-II or PLA, constituted a case of clandestine removal. The appellant, a chemical manufacturing company, explained the process of recording goods and the variation in stock entries due to the timing of dispatches. The central excise officers conducted physical verification and seized goods based on discrepancies in physical vs. book stock.

2. Alleged clandestine removal of goods:
The central excise department issued a show cause notice alleging short goods in the bonded store room compared to RG-1 register, demanding Central Excise Duty and proposing confiscation and penalties. The appellant contested the notice, leading to an adjudication confirming the demand, penalties, and confiscation. Subsequent appeals and remands were made, highlighting the lack of provided documents and violation of natural justice principles.

3. Discrepancy in physical stock vs. book stock:
The comparison of physical stock with RG-1 records revealed discrepancies in various products, leading to the seizure of goods and subsequent legal proceedings. The appellant's explanations regarding the timing of entries and dispatches were considered during the adjudication process.

4. Seizure of goods and confiscation:
The central excise officers seized goods based on discrepancies and conducted physical verification, leading to the confiscation of goods and the truck. The appellant made submissions to explain the differences in stock entries, which were considered during the legal proceedings.

5. Imposition of penalties:
Penalties were imposed on the company and the truck driver in the initial adjudication, which were contested through appeals and remands. The reduction of penalties and confiscation fines were part of the subsequent orders, with considerations given to admissible credits and explanations provided by the appellant.

6. Violation of principles of natural justice:
The final judgment highlighted the violation of natural justice principles and orders by the adjudicating authority, leading to the setting aside of previous orders and allowing the appeal. The appellant was entitled to consequential benefits and refunds of pre-deposits or pending duty payments along with interest.

In conclusion, the appellate tribunal set aside the orders related to duty recovery, confiscation, and penalties, citing violations of natural justice. The appellant was granted relief, and refunds were directed to be made in accordance with the law.