2005 (2) TMI 342 - AT - Central Excise

Issues Involved:
1. Confiscation of excisable goods.
2. Demand of Central Excise duty.
3. Imposition of penalties.
4. Manufacturing activities and job work.
5. Allegations of clandestine removal.
6. Admissibility of statements and documents.
7. Small scale industry exemption.
8. Notification No. 83/94-C.E. exemption.
9. Cum-duty price determination.
10. Evidence of manufacturing and removal activities.

Issue-wise Detailed Analysis:

1. Confiscation of excisable goods:
The Department alleged that M/s. Bihariji Manufacturing Pvt. Ltd. and M/s. Hindustan Silicate received raw materials from M/s. Cosmos Industries and M/s. Supreme Plast India, manufactured goods, and removed them without issuing challans, leading to the confiscation of goods. The Commissioner confiscated the excisable goods under seizure with an option to redeem them on payment of a fine.

2. Demand of Central Excise duty:
A show cause notice dated 28-7-2003 was issued demanding duty from M/s. Bihariji and M/s. Hindustan Silicate. The Commissioner confirmed the demands of duty against these entities. However, the learned Advocate argued that they were job workers receiving raw materials free of cost, and the parts manufactured could not be marketed as such, requiring further processing by M/s. Cosmos Industries.

3. Imposition of penalties:
Penalties were imposed on all appellants, including individuals associated with the firms. The learned Advocate contended that no penalties should be imposed as the appellants did not contravene any Central Excise Rules and there was no evasion of duty.

4. Manufacturing activities and job work:
The learned Advocate argued that M/s. Bihariji and M/s. Hindustan Silicate were engaged in job work, manufacturing parts of flushing cisterns, mirror cabinets, and semi-finished stainless steel kitchen sinks. The parts required further processing by M/s. Cosmos Industries, which undertook additional manufacturing processes and assembly work.

5. Allegations of clandestine removal:
The Department's case was based on kaccha records recovered from Cosmos Industries' premises, which allegedly showed clandestine removal of goods. The learned Advocate argued that these records were not maintained by M/s. Bihariji or M/s. Hindustan Silicate and were created by a commission agent, Vinod Jain, to impress Cosmos Industries' directors.

6. Admissibility of statements and documents:
The learned Advocate contended that statements recorded under pressure, threat, and coercion should not be relied upon. The Department's case relied on statements from various individuals, including supervisors and directors, which were argued to be inconsistent with the documents.

7. Small scale industry exemption:
The learned Advocate emphasized that the benefit of small scale industry exemption was extended to both M/s. Bihariji and M/s. Hindustan Silicate, indicating they were independent units. The Department countered that the exemption was not available as the goods bore brand names belonging to Cosmos Industries.

8. Notification No. 83/94-C.E. exemption:
The Department argued that the exemption under Notification No. 83/94-C.E. was not available as the conditions regarding the supplier's undertaking were not fulfilled. The learned Advocate maintained that the job work was legitimate, and the raw materials were sent with proper documentation.

9. Cum-duty price determination:
The learned Advocate argued that if duty liability was imposed, the price should be treated as cum-duty price, and the assessable value should be determined after allowing statutory deductions. Reliance was placed on the Supreme Court decision in CCE v. Maruti Udyog Ltd.

10. Evidence of manufacturing and removal activities:
The learned Advocate presented various Panchnamas and statements indicating that M/s. Cosmos Industries undertook significant manufacturing activities, including assembling and processing parts received from job workers. The presence of machinery and semi-finished goods in Cosmos Industries' premises supported this contention. The Tribunal concluded that the Revenue failed to prove the charge of clandestine manufacture and removal without payment of duty, as the evidence presented only created suspicion.

Conclusion:
The Tribunal found that the Revenue did not provide sufficient evidence to prove clandestine removal and manufacturing by M/s. Bihariji and M/s. Hindustan Silicate. Consequently, no duty was demandable, and the confiscated goods were not liable for confiscation. Penalties imposed on the appellants were also set aside. All appeals were allowed with consequential relief.

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