2006 (2) TMI 27 - AT - Central Excise

Central Excise Clandestine/Secret removal Adequate proof to provide evidence that the appellant received Partially Oriented Yarn (POY) in the name of fictitious firms and used them for clearance of goods without payment of duty Demand sustainable

Summary

Issues:
- Allegations of clandestine manufacture and clearance of excisable goods without payment of duty
- Entitlement to modvat benefit
- Proper accounting for seized goods
- Penalty imposition

Analysis:

Allegations of Clandestine Manufacture and Clearance:
The case involved allegations against two companies, DTPL and STPL, for receiving POY from SPL under fictitious names and using them to manufacture and clear goods without paying duty. The Adjudicating Authority confirmed the allegations based on statements from involved parties, corroborating evidence, and truck movement registers. The appellants challenged the findings, citing lack of specific evidence like seizure of raw materials and finished products. However, the tribunal upheld the authority's decision, noting sufficient corroboration to establish the clandestine activities.

Entitlement to Modvat Benefit:
Regarding the modvat benefit, the Adjudicating Authority initially denied it due to the absence of original invoices. However, the tribunal ordered that the benefit should be granted based on triplicate copies available, as the Revenue had established that the goods were received by the appellants. The tribunal also considered the appellants' deposit and reduced penalties accordingly, emphasizing the need for a fair assessment of duty liability.

Proper Accounting for Seized Goods:
In the case of STPL, there were seizures of goods that were not properly accounted for. The Adjudicating Authority demanded duty and adjusted amounts already paid, while also allowing redemption of seized goods upon payment of fines. The tribunal found the authority's order legally sound and made slight modifications to reduce penalties for STPL and its director, ensuring justice was served.

Penalty Imposition:
In both cases, the tribunal reviewed the penalties imposed by the Adjudicating Authority and deemed them excessive. The tribunal reduced the penalties on both companies and their directors, considering the overall circumstances and ensuring a fair outcome. The appeals were disposed of with modifications to the penalties, emphasizing the importance of just and proportionate penalties in such cases.