Demand of duty on clandestine removals - Since appellant had prepared invoices during period, clearly indicating therein that they are operating under compounded levy scheme, it cannot be held that they had removed goods clandestinely: CESTAT
By TIOL News Service
AHMEDABAD, AUG 20, 2014: THE premises of the appellant were searched by the officers of the department and on physical stock verification in the presence of some of the Directors of the main appellant, it was noticed that there was shortage of 1,05,993 L.Mtrs of finished man-made fabrics. After investigations, show cause notices were issued to the main appellant as well as the individuals, directing them to show cause as to why the Central Excise duty should not be demanded from them for clandestine removal of the goods, why interest be not demanded and penalties be not imposed. The adjudicating authority, after considering the submissions made on behalf of all the three appellants, confirmed the demands with interest and also imposed penalties. The first appellate authority also confirmed the demands. The appellants are before the Tribunal challenging the order of Commissioner (Appeals).
After hearing both sides, the Tribunal held:
As regards the demand of duty on illicit removal of 26,534 L.Mtrs , wherein an amount of Rs.80,663/- has been confirmed, the purchasers of the materials have clearly recorded a statement which clearly indicate that they have received this quantity of fabrics from the appellant without any duty paying documents or under cover of any invoice. It is seen that the said statement of the buyer is not retracted by him, hence, appellant has not made out any case for setting aside the demand of Rs.80,663/-.
As regards the demand of illicit removal of 5,19,371 and 1,05,993 L.Mtrs found as shortage during stock taking on 07.06.2001, appellant has case in his favour for more than one reason.
This demand is raised on the basis of folding record in formchits No.14/16/17 pages of the folding book seized under Panchnama and shortages, at the factory premises of the appellant. Though, various statements are recorded indicating therein that the goods were cleared illicitly, on deeper perusal of the records, the said lot numbers which were recorded in the worksheet prepared were properly answered by the appellant when they filed reply to the show cause notice.
There is no denial of the fact that the main appellant had filed an application on 18.05.2001 to operate under compounded levy scheme with CCE Ahmedabad. The said application on the date of visit was not rejected by the authorities and after visit of the authorities in the factory premises of the appellant, appellant having not received any rejection letter, continued to clear the goods manufactured by them under the compounded levy scheme. It is noticed from the records that the appellant had prepared invoices during the period, clearly indicating therein that they are operating under compounded levy scheme as per the provisions. It cannot be held against the appellant that he having filed an application for paying duty on the ascertained annual production capacity, as per the notification issued under Section 3A of Central Excise Act, 1944 and rules made thereunder , that he had removed the goods clandestinely during the period. The entire worksheet of the Revenue indicate that the productions were done in the month of May, barring few entries, they were done from 11.05.2001 which would fall under the application filed by the appellant on 18.05.2001 indicating to operate under compounded levy scheme. There is no dispute that the main appellant had discharged the Central Excise duty liability after 18.05.2001 under compounded levy scheme and paid the duty liability through PLA. The charge of illicit removal cannot be confirmed against the appellant on this factual matrix, which indicate that the appellant to his subsequent application made on 18.05.2001 has paid the duty under the compounded levy scheme.
(See 2014-TIOL-1536-CESTAT-AHM)
