2018 (3) TMI 4 - AT - Central Excise

Clandestine manufacture and removal - 425 Transformers - demand on the ground that the goods have not been mentioned in the RG-1 register - Held that - the Revenue in their memo of appeal have not been able to rebutt the findings given by the Lower Authorities - Admittedly, there is no evidence of clandestine removal of the goods; as also that the excess found transformers lying in the factory premises were meant for clandestine removal. In as much as, the transformers were sold to State Organizations and Power Corporation, the clearance of the same in a clandestine manner without payment of duty does not arise. Appeal dismissed - decided against Revenue.

Summary

Issues:
- Seizure of transformers without payment of duty
- Confiscation of seized goods
- Demand of duty on goods removed clandestinely
- Imposition of penalty under Section 11AC

Seizure of Transformers Without Payment of Duty:
The case involved the interception of transformers during transit checking, leading to the seizure of transformers believed to have been removed from the factory without duty payment. Subsequently, a large number of transformers were found in the factory premises without being entered in the RG-1 Register. The authorities alleged that these transformers were not accounted for in the register with the intent of clandestinely removing them without paying duty. A Show Cause Notice was issued, proposing confiscation of seized goods and demanding duty on the goods removed clandestinely. The Adjudicating Authority held that some seized transformers were not fully manufactured, while no evidence supported the clandestine removal of other transformers.

Confiscation of Seized Goods:
The Additional Commissioner's Order-in-Original stated that some seized transformers were not fully manufactured, and the respondents acted in a bona fide manner. The demand for duty on the allegedly clandestinely removed transformers was dropped based on the lack of evidence. The Revenue appealed, arguing that the transformers had reached the RG-1 stage and should have been entered in the register. However, the Commissioner (Appeals) rejected the appeal, noting that the transformers were not completed or finished as per the Chartered Engineer's opinion.

Demand of Duty on Goods Removed Clandestinely:
The Revenue contended that the transformers should have been entered in the RG-1 Register as per a trade notice, and the respondents failed to provide evidence regarding the purpose of four transformers. Additionally, the party could not prove proper accountal of 951 transformers or payment of duty on them. The Commissioner (Appeals) rejected the Revenue's appeal, emphasizing the lack of evidence for clandestine removal and noting that the transformers were sold to government departments, making clandestine clearance improbable.

Imposition of Penalty under Section 11AC:
The appellate tribunal upheld the Commissioner (Appeals) decision, stating that the Revenue failed to rebut the lower authorities' findings. The tribunal found no evidence of clandestine removal of goods or intent to clandestinely remove excess transformers found in the factory. Since the transformers were sold to state organizations and power corporations, the possibility of clandestine clearance without duty payment was deemed implausible. Consequently, the appeal filed by the Revenue was rejected, affirming the decision of the Commissioner (Appeals).