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2024 (12) TMI 737 - AT - Central ExciseDuty demand on excess storage of Fatty Acid - confirmation of demand is on the basis of the report received from the Delhi Commissionerate indicating that the Appellants have sold substantial quantity of goods at much lower price in the guise of stock transfer to M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise, which were found to be nonexistent - HELD THAT - The officers of the Delhi Commissionerate conducted verification and found that the two dealers namely, M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise were nonexistent. Thus, it is observed that there is no truth in the submission of the appellant that no verification was conducted by the department to ascertain the existence of the two dealers. As the verification conducted by the officers of Delhi Commissionerate revealed the nonexistence of the two dealers, the demand confirmed on account of undervaluation of the goods cleared to these two dealers in the impugned order, is sustainable. Accordingly, the demand of Rs.5,68,101/- confirmed in the impugned order along with interest upheld. As the suppression of value has been established, the penalty equal to the duty imposed upheld on this count. Benefit of the N/N. 10/96-CE dated 23.07.1996 - HELD THAT - The appellant would not be eligible for the benefit of notification 10/96-CE, to the extent of clearance of traded goods cleared during the period mentioned supra, proportionately. Accordingly, the denial of the benefit of notification 10/96-CE for all the goods manufactured and cleared is legally not sustainable. The benefit of notification 10/96-CE is not available to the appellant proportionately to the extent of value of the traded goods cleared by the appellant in the containers and jars. From the impugned order, we observe that demands of Rs.27,92,810/- and 50,95,061/- has been confirmed by denying the exemption 10/96-CE for all the goods. In view of the observations, the benefit is to be denied only proportional to the value of the traded goods. As the segregation of value of traded goods has not been done in the impugned order, these demands set aside and this issue remanded back to the adjudicating authority to deny the benefit of notification 10/96-CE proportional to the value of traded goods cleared by the appellant during the period in which traded goods were cleared in tin containers from 29.05.2008 and in poly jars from 01.04.2008. Demand of duty of Rs.53,38,184/- on account of Clandestine Removal of 1157.346 MT of Fatty Acid in the guise of Refined Palm Oil - HELD THAT - The conclusion in the Order-in-Original that laboratory register shows content of FFA (Free Fatty Acid) range 4.8 to 5.6% in crude palm oil in majority cases does not in any way proof that RPO (D)/RPO(F) which are admittedly inferior quality RPO is Fatty Acid not RPO. It is observed that the Annexure C-6 does not reflect any comparison of the document mentioned in the Para iv of the impugned order. The said annexure refers to four seized documents namely 3/BBRL/FY08 and 19/BBRL/FTY/08 to 22/BBRL/FTY/08.In fact there is no record of a comparison of the said documents as referred to the order-in-original - the conclusion arrived at by the adjudicating authority that Fatty Acid has been removed in excess is totally baseless - there is no such comparative chart and department has failed to provide even an iota of proof as to excess removal of Fatty Acid or removal of Fatty Acid in the garb of RPO. The allegation of clandestine clearance is of serious nature and hence there should be tangible evidence of clandestine manufacture and clearance and not merely inferences or unwarranted assumptions. In the present case, it is observed that the demand has been confirmed purely on assumption basis. There is no evidence of actual removal of unaccounted finished goods from the factory without payment of duty. No finished goods cleared clandestinely has been recovered outside the factory. The department has not identified any purchasers of the clandestinely cleared finished goods. There is no corroborative evidence in the form of receipt of sale proceeds, whether by cheque or by cash, of such goods by the manufacturer or persons authorized by him - In the absence of any such evidence to support the clandestine clearance, we hold that the demand of Rs.53,38,184/- confirmed in the impugned order on account of clandestine clearance is not sustainable. Penalties imposed on the Directors of the appellant-company - HELD THAT - The penalty has been imposed for their role in the commission of the alleged offence. From the findings, it is observed that the allegation of under valuation of goods cleared to non-existent dealers has been sustained. The allegation of irregular availment of the benefit of exemption notification 10/96-CE is partly sustained and the allegation of clandestine removal of goods is not sustained. Considering the roles played by the appellants, it is observed that the penalties imposed on the Directors of the appellant company is on the higher side, which need to be reduced in proportion to the offence committed - the penalties imposed Shri. Deepak Keshan and Shri. Rahul Nangalia Directors of the Appellant-company, reduced from Rs.1,00,000/- to Rs.50,000/- each. Application disposed off.
Issues Involved:
1. Duty demand on excess storage of Fatty Acid. 2. Duty liability on stock transfer price. 3. Alleged undervaluation and sale to non-existent entities. 4. Denial of exemption under Notification No. 10/96-CE for packaging materials. 5. Alleged clandestine removal of Fatty Acid. 6. Penalties imposed on the directors of the appellant company. Issue-wise Detailed Analysis: 1. Duty Demand on Excess Storage of Fatty Acid: The adjudicating authority dropped the demand concerning the alleged clearance of 289.741 MT of Fatty Acid without accounting in the books. The allegation was not sustained, and therefore, this issue was not contested further. 2. Duty Liability on Stock Transfer Price: The appellant did not contest the duty demand of Rs. 73,241/- confirmed in the impugned order. The tribunal upheld this demand along with interest and penalty, as the appellant had already paid the duty and did not dispute it in the appeal. 3. Alleged Undervaluation and Sale to Non-existent Entities: The demand of Rs. 5,68,101/- was confirmed based on a report indicating sales at undervalued prices to non-existent entities, M/s. Mayur Sales Corporation and M/s. Sunrise Enterprise. The appellant argued that these entities existed and provided consignment notes. However, verification by the Delhi Commissionerate revealed their non-existence. The tribunal upheld the demand and penalty, as the suppression of value was established. 4. Denial of Exemption Under Notification No. 10/96-CE for Packaging Materials: The adjudicating authority denied the exemption under Notification No. 10/96-CE for Tin Containers and Poly Jars, alleging they were used for goods cleared with other brand names and traded goods. The tribunal found that the appellant did not maintain separate accounts for traded and manufactured goods, which were stored together, making it impossible to segregate them for exemption purposes. However, the tribunal noted that the denial of exemption for all goods was incorrect and remanded the issue to reassess the demand proportionate to the value of traded goods. 5. Alleged Clandestine Removal of Fatty Acid: The demand of Rs. 53,38,184/- for alleged clandestine removal of Fatty Acid was based on discrepancies in the Lab Register. The tribunal found the demand to be presumptive and unsupported by evidence, such as actual removal or identification of buyers. The tribunal set aside this demand, stating that allegations of clandestine clearance require tangible evidence. 6. Penalties Imposed on the Directors of the Appellant Company: Penalties on the directors were imposed for their involvement in the alleged offenses. The tribunal, considering the partial sustenance of allegations, reduced the penalties from Rs. 1,00,000/- to Rs. 50,000/- each for the directors, Shri. Deepak Keshan and Shri. Rahul Nangalia. Conclusion: The tribunal upheld certain demands and penalties while setting aside and remanding others for reassessment. The appeals were disposed of based on these terms, with specific directions for recalculating duties and penalties where applicable.
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