2002 (9) TMI 175 - AT - Central Excise

Clandestine removal - Proof - Penalty - Imposition of - Demand - Limitation - Refund - Deposit pending investigation

Summary

Issues Involved:
1. Duty demand and penalty imposition under Section 11A and 11AC of the Central Excise Act, 1944.
2. Alleged clandestine removal of goods without payment of duty.
3. Calculation and accounting of production and waste.
4. Refund claim and unjust enrichment.

Issue-wise Detailed Analysis:

1. Duty Demand and Penalty Imposition:
The Commissioner confirmed a duty demand of Rs. 1,63,341/- under the proviso to sub-section (1) of Section 11A of the Central Excise Act, 1944, and imposed an equal amount of penalty under Section 11AC of the Act, 1944. The Commissioner's order was based on the finding that M/s. Ravishankar Industries Pvt. Ltd. was evading payment of Central Excise duty by not accounting part of their production and clearing goods clandestinely without payment of excise duty.

2. Alleged Clandestine Removal of Goods:
The Revenue argued that M/s. R.S. Industries Ltd. had reported the manufacture of 1380 jumbo rolls but accounted for only 99,659 rolls, raising a prima facie doubt of non-accountal of 5,221 rolls. The importer claimed these were waste, but the Revenue contended that the waste percentage claimed was excessive and not justified. Evidence from the show cause notice indicated that 1,200 rolls were purchased without a bill by M/s. Asia Photo Films Pvt. Ltd., and 2,100 rolls were cleared without payment of duty as A1 rolls, which the appellants explained as Quality Control rejections.

3. Calculation and Accounting of Production and Waste:
The appellants argued that the actual length of the chamber roll was about 4,061 ft., yielding approximately 1,220 metres of finished product, with waste accounted for in the RG1 register and cleared on payment of duty. They contended that waste occurred due to various factors like power failure and machine breakdown, and allowances should be given for non-accountal waste and scrap. The Commissioner found that the appellants had not followed proper procedures for some clearances and confirmed a duty demand for 152 rolls measuring 2,78,902 linear metres.

4. Refund Claim and Unjust Enrichment:
The appellants claimed a refund of Rs. 36,65,318/- after the Commissioner confirmed the duty demand of Rs. 1,67,341/-. They argued that the amount was deposited under coercion and should be treated as a deposit, not duty, thus not attracting provisions of unjust enrichment. The Department rejected the refund claim on the grounds of time-bar and unjust enrichment. The Tribunal found that the amount was deposited under threat and force, not pursuant to any show cause notice or adjudication order, and thus could not be treated as duty. Consequently, the provisions of unjust enrichment and time-bar did not apply.

Conclusion:
The Tribunal concluded that the Department had not provided concrete and direct documentary evidence to prove the clandestine removal of goods. It upheld the Commissioner's order confirming a duty demand of Rs. 1,67,341/- and imposing an equal amount of penalty, finding no legal infirmity or factual inaccuracy. However, the Tribunal set aside the impugned order regarding the refund claim, allowing the appeal with consequential benefits, as the amount deposited by the appellants could not be treated as duty, and the provisions of unjust enrichment and time-bar did not apply.