Custom, Excise & Service Tax Tribunal
Cce, Allahabad vs M/S Maa Vindhyawasini Enterprises on 28 October, 2010
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL, West Block No.2, R. K. Puram, New Delhi COURT-IV Date of hearing/decision: 28.10.2010 Excise Appeal No. 993 of 2009-SM & E/CO/195/09-SM [Arising out of order-in-Appeal No. 5, 6-CE/ALLD/2009 dated 22.1.2009 passed by the Commissioner (Appeals), Central Excise, Allahabad] For approval and signature: Honble Mrs. Archana Wadhwa, Member (Judicial) 1. Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982. 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order? 4 Whether Order is to be circulated to the Departmental authorities? CCE, Allahabad Appellant Vs. M/s Maa Vindhyawasini Enterprises Respondent
Appearance:
Appeared for the Appellant Shri Anil Khanna, SDR
Appeared for the Respondent - None
Coram: Honble Mrs. Archana Wadhwa, Member (Judicial)
Order No.___________________________
Per Archana Wadhwa :
On being aggrieved with a part of order of the Commissioner (Appeals), Revenue has filed the present appeal.
2. I have heard Shri Anil Khanna, ld. SDR appearing for the Revenue. Nobody appeared for the respondent.
3. As per the facts on record, the respondents are engaged in the manufacture of gutkha falling under Chapter 24 of the Central Excise Tariff Act, 1985. During the visit of the Central Excise officers on 17.10.2007, who conducted various checks and verifications, as a result certain shortages and excesses were conducted.
4. Proceedings were initiated for confirmation of demand, confiscation of excess found goods and imposition of penalty etc. Such proceedings resulted in passing of an order by the original adjudicating authority. As we are concerned, in the present appeal, only with the confiscation of 67.500 kgs. of loose unpacked gutkha (mixture) and the confirmation of demand of duty of Rs.1,26,840/-, reference is not being made to the other excesses and shortages.
5. 67.500 kgs. of gutkha of loose unpacked was confiscated by the original adjudicating authority on the ground that it is not entered in the statutory records, with an option to the assessee to redeem the same on payment of redemption fine of Rs.5000/-. On an appeal against the said order, Commissioner (Appeals) extended the relief to the respondent by observing as under :-
As regards loose unpacked gutkha mixture 67.500 kgs found in excess of recorded balance, it has been alleged in the show cause notice that the stock was not properly accounted for and it was kept with intent to remove the same without payment of Central Excise duty after packing. In the grounds of appeal the appellant No. 1 has submitted that the loose stock was still under process of manufacture and was within the factory premises and therefore not liable for seizure. In the SCN it has been alleged that the loose mixture was intended to be filled in 54000/- pouches containing 1.25 gms in each pouch and was to be clandestinely removed without payment of duty which works out to Rs.9177.00. The allegation does not seem to be fully justified. Admittedly the gutkha is cleared in packed condition. The loose stock was still within the factory premises, therefore the calculation of Central Excise duty on the basis of possible manufacture/packing is hypothetical. The appellant may be guilty of not accounting the stock in loose condition but the confiscation of goods and demand of duty is not justified when the stock is still within the factory and has not yet attained marketability. The appellant are liable for penalty for not maintaining the record properly in this regard. Therefore they are directed to enter the stock in the stock register and remove that on payment of appropriate amount of Central Excise duty. The order for confiscation and imposition of redemption fine is set aside. However, since no penalty has been proposed under Rule 27 of the Central Excise Rules 2002. I refrain from imposing any penalty on the appellant. Since the demand of duty on loose unpacked gutkha mixture 67.500 kgs. found in excess of recorded balance, is not sustainable. I find no merit in the departmental appeal and the appeal is rejected.
6. Revenue in their memo of appeal have not contested the finding that the said goods were in loose condition and not fully manufactured they have simply reiterated that such product was not accounted for in statutory daily stock register. There is no rebuttal of the finding of fact by the Commissioner (Appeals) that the goods were in loose condition and were still under process of manufacture. As such, I find no infirmity in the views adopted by Commissioner (Appeals).
7. Further the original adjudicating authority has confirmed demand of duty of Rs.1,26,840/- on the findings of clandestine removal, which in turn were based upon shortage of betel nuts. Commissioner (Appeals) has observed that the allegation of clandestine removal cannot be upheld on the basis of shortage of one of the raw materials. For better appreciation the relevant paragraphs from the impugned order is re-produced :-
From the above it may be seen that there was shortage of 600.250 kgs. of Betel nuts. Taking into account 0.750 gm. Betel nut pouch, it was alleged in the SCN that 800333 pouches were manufactured and since 54000 pouches are to be manufactured out of stock of loose gutkha of 67.500 kg. still lying in the factory the balance of 746333 were manufactured on which the total Central Excise duty works out to Rs.1,26,840.00 which were alleged to have been removed clandestinely. Here also the calculation of duty is only on hypothetical basis on the basis of shortage of raw material. Demand of duty is not sustainable in view of the following case law:
in the case of Patheja Forgings Vs. CCE 2001 (127) ELT 513 (CEGAT) it was held that shortage of raw material by itself not enough to lead to conclusion of clandestine manufacture and removal of finished goods. In Parle Beverages Ltd. Vs CCE 1998 (99) ELT 468 (CEGAT) it was observed that it is well settled that clandestine removal must be established by the department it was not be presumed. In Kanoria Chemicals Vs. CCE 1999 (08) ELT 733 (CEGAT) it was held that demand for clandestine removal solely based on shortage of packing bangs was not sustainable. Same view of expressed in the case of George Verghese Vs. CCE 1992 (60) ELT 361 (Ker. HC DB) followed in the case of V.K. Thampy Vs. CCE 1994 (69) ELT 300 (CEGAT) wherein it has been held that clandestine removal cannot be taken to be established solely on evidence of shortage of raw material clandestine removal is a positive act and burden to prove the same is on the department. Demand based on presumption and conjectured has to be set aside. ICY Cold Commercial Enterprises Vs. CCE 1994 (69) ELT 337 (CEGAT) and in DP Steel Industries Vs. CCE 1995 (78) ELT 492 (CEGAT).
8. The Revenue has not adduced any evidence to show that such shortages of goods were used in the manufacture of the final product, which stands cleared by the appellant without payment of duty. The appellate authority has rightly observed that in the absence of any corroborative evidence, shortage of one of the raw materials by itself cannot be made the basis for concluding against the assessee. It is also seen that the authorised representative of the appellant, during the course of investigations, had clarified that sub-standard betel nuts were returned by them to its suppliers Shri Pramod Kumar Jain of Varanasi. As such the demand has been rightly held to be on the basis of assumptions and presumptions.
9. In view of the foregoing, no merits are found in the Revenues appeal the same is rejected.
(Pronounced in Court) (ARCHANA WADHWA) MEMBER (JUDICIAL) RM