Customs, Excise and Gold Tribunal - Delhi
Shamsons (I) Ltd. vs Collector Of Central Excise on 14 February, 1995
Equivalent citations: 1996(85)ELT120(TRI-DEL)
ORDER Gowri Shankar, Member (T)
1. This application is for waiver of pre-deposit of duty of Rs. 81,000/- and penalty of Rs. 25,000/- demanded from the applicant.
2. The applicant is a manufacturer of air-conditioners. In the course of a visit to the factory by the Central Excise Officers, it was found that there was a shortage of various raw materials which have been listed in the first page of the order of the Collector. On the basis of these shortages, investigation was conducted. The Collector's order has found that the explanation for the shortage was not satisfactory and he confirmed the demand holding that 13 air-conditioners have been manufactured and cleared without payment of duty. The penalty was also imposed on them.
3. I have heard Ms. Archana Wadhwa, Advocate for the applicant's company and Shri B.D. Bhagat, JDR for the department.
4. There is a considerable force in the advocate's contention that the shortage of raw materials by itself cannot leave me to conclude that the goods have been manufactured. I note that the shortage of different components varies widely. The department has primarily said that by the shortage of compressors in determining the number of air-conditioners stated to have been here without payment of duty -13. I also find the applicant's explanation that the 13 air-conditioners have been returned to the manufacturer as having been found defective has not been contravened by the Collector. On the basis of enquiries, he says that these were made at the factory of the manufacturer. The result of these enquiries was not made available to the assessee before the adjudication proceedings concluded. I am not able to agree with the views expressed by the DR. that it is not necessary to furnish such reports. There is a clear failure of natural justice here.
5. Shri Bhagat has cited three decisions which, according to him, show that mere shortage of raw material can legitimately lead to the conclusion that there has been clandestine removal of the goods. The decisions in 1993 (65) E.L.T. 94 and 1993 (68) E.L.T. 117, both related to cases where there was shortage of the finished product, and not the raw material. The decision in 1993 (63) E.L.T. (sic) related to duty demanded of raw material and on which modvat credit has been taken. It is a cliche to say that clandestine removel must be established beyond doubt. Prima facie, this does not appear to have been done in the present case.
6. I therefore, order the waiver of pre-deposit of duty demanded and penalty imposed and also grant stay recovery of these amounts.
The appeal may be listed in due course for hearing.