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TMI Blog2003 (12) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... it appeared to the department that the appellant-company had evaded payment of Central Excise duty through clandestine removal of certain finished goods and deliberate undervaluation of certain other finished goods. Therefore, show-cause notice [SCN] dated 3-3-1999 was issued to M/s. Man Industries (India) Limited (appellants in E/2673/2002), the company's Managing Director Shri J.C. Mansukhani (appellant in E/2674/2002) and two other functionaries of the company. The SCN, which invoked the larger period of limitation under the proviso to Section 11A(1) of the Central Excise Act, raised the following demands of duty on the company : 1. Physical weight of the goods exported was less than the weight (catalogue weight) shown in the export documents. The differential quantity was retained in the factory and cleared clandestinely. Rs. 1,05,67,090/- 2. Consumption of raw material in excess of the quantity shown as consumed in the statutory account i.e. Form-IV Register. The unaccounted finished goods manufactured out of such excess unaccounted raw material were cleared clandestinely. Rs. 2,99,83,430/- 3. Removed anodized Aluminium prof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allegedly cleared in the above manner during the above period, corresponding to which the total quantity of exports as noted by the Commissioner was 6507.073 MTs. The adjudicating authority has found that, out of this quantity of total exports, the exports made to M/s. Man Intertrade Co. (UAE) are not to be taken into account for demanding duty and accordingly it has requantified the demand as Rs. 64,82,565/-. That authority has worked out this demand on the basis of the appellants' own records and statements. For instance, a letter issued by Shri U.D. Selvan, Senior Engineer of the company, to their Indore office showed the catalogue weight of certain Aluminium Sections as 21986 Kgs. and its physical weight as 21404.2 Kgs. Shri Selvan, in his statement, confirmed this fact. Some official correspondence between functionaries of the company also indicated that the catalogue weight of export goods was 5-10% more than the actual weight. Shri Deepak Das, Senior Manager (Tool Room), who was confronted with the letters, admitted that the catalogue weight (despatch weight) was always more than the physical weight. Shri Prahalad Das Sarda, Excise Officer Authorised Signatory, stated tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ved to have been removed from the factory without invoices and without payment of duty. The differential quantity was admitted but its accountal and clearance in terms of the legal provisions were not shown. (In view of the admission of the differential quantity by the company authorities, it was not necessary for the adjudicating authority to allow them to cross-examine any officer of the department). The department's allegation of clandestine removal of the said quantity stood proved. The appellants have stated that the total exports quantity noted by the Commissioner (6507.073 MTs) is not correct and that the correct figure must be less by 95.614 MTs and, on this basis, the demand of duty should be reduced. We are unable to accept this claim as we find that the Commissioner has noted the above quantity from a report of the Deputy Commissioner of Central Excise, Division II, Indore, which has not been called in question in these appeals. Yet another ground of challenge to the demand of duty is that many of the exports taken into account by the Commissioner had taken place prior to the period of demand. This, again, cannot be accepted as J.C. Mansukhani admitted that the different ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellants to pay duty on the "die research development charges" collected from their customers is not in dispute. The dispute is only with regard to the quantum of "die charges" on which duty of excise can be demanded. It is claimed by the appellants that they had credited an amount of Rs. 25,000/- in the accounts of customers and it is contended to the effect that this amount should have been excluded from the quantum of "die charges" for the purpose of demanding duty. We are of the view that, if any part of the aforesaid "die charges" of Rs. 1,07,000/- was duly credited back to customer's accounts, the dutiable quantum of "die charges" should stand reduced to that extent. It is for the adjudicating authority to examine this aspect. 3.4 The demand of Rs. 9,703/- confirmed by the adjudicating authority against the company is on a quantity of 680.90 Kgs. of aluminium sections/profiles, which was found short in their factory on 16-8-96 by Central Excise officers. The SCN alleged that this quantity of goods had been clandestinely removed without payment of duty amounting to Rs. 9,703/-. The party contested this allegation by submitting that there could be no shortage as some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... antum of penalty under Section 11AC to Rs. ten lakhs. 4.2 A separate penalty of Rs. 40 lakhs has also been imposed on the company. We find that this penalty has been imposed for the reasons stated in para 35 of the impugned order, which reads thus "The Noticee No. 1 have evaded Central Excise duty by suppressing and mis-declaring the facts with intent to evade payment of duty and since demand confirmed for recovery also includes the period when Section 11AC came into force, the Noticee No. 1 is, therefore, liable for penal action under Rule 173Q of the Central Excise Rules, 1944". We find that the reasons so stated for holding the company liable for penalty under Rule 173Q are not relevant to the rule. The penalty of Rs. 40 lakhs imposed on the company under Rule 173Q on irrelevant grounds requires to be set aside. 5. The adjudicating authority has also imposed a penalty of Rs. 10 lakhs on J.C. Mansukhani, Managing Director of the company, under Rule 209A of the Central Excise Rules 1944. The reasons for this penalty are seen to have been stated in para 36 of the impugned order. It has been stated that Mansukhani was aware of, and had acted in furtherance of, all activities of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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