2017 (3) TMI 454 - AT - Central Excise

Clandestine removal - job-work - appellant claim that the goods were sent by the appellant for job work on their behalf. Therefore there was no need to pay any duty - Held that - neither any proper challan was issued mentioning the provision of job work nor any entry was made in the records of the appellant - Movement of the finished goods can be made for job work by following the procedure and if the procedure is not followed, it will be treated as removal of finished goods and it attracts excise duty - the supply of the material for job work was nowhere recorded in any of the records of the appellant nor any document was issued. Therefore, the removal of the goods will be treated as clandestine removal without payment of excise duty - demand upheld. Imposition of penalty u/r 26 on employees of the appellant company - Held that - since the goods were cleared with their knowledge and they have malafide intention, not followed the procedure, no account for the removal in the books, penalty u/r 26 were correctly imposed. Appeal dismissed - decided against appellant.

Summary

Issues: Alleged clandestine removal of excisable goods for job work, confirmation of demand, confiscation of goods, imposition of penalties, appeal against Order-in-Original.

In this case, the appellants, manufacturers of excisable goods, were found to have sent goods for job work without payment of central excise duty or proper documentation. The goods were seized, and a show-cause notice was issued demanding excise duty, proposing confiscation of goods, penalties under Rule 25 and Section 11AC, and interest under Section 11AA and 11AB. The adjudicating authority confirmed the demand, ordered recovery under Section 11A, and imposed penalties and confiscation. The Commissioner (Appeals) upheld the order, leading to the present appeal.

The main contention raised by the appellant was that the goods sent to the job worker were for job work, and hence, no duty was payable until the processed goods were cleared. However, the tribunal noted that no proper documentation or record of sending goods for job work was maintained by the appellant. As a result, the movement of finished goods was treated as clandestine removal, attracting excise duty. The tribunal upheld the demand confirmed by the lower authorities, stating it was in accordance with statutory provisions.

Regarding the penalties imposed on employees of the appellant company, the tribunal found that since the employees were aware of the clearance of goods without proper procedures, had malicious intent, and did not maintain records, penalties under Rule 26 were deemed appropriate. Consequently, the appeals of the employees against the penalties were dismissed.

Ultimately, the tribunal upheld the impugned order, confirming the demand for excise duty, confiscation of goods, and imposition of penalties, while dismissing the appeal filed by the appellant against the Order-in-Original. The judgment was pronounced on 16/02/2017 by the tribunal.