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2013 (10) TMI 1303 - AT - Central ExciseClandestine removal of goods - Shortage of goods - Bogus invoices - Demand of differential duty - Confiscation of goods - Redemption fine - Held that:- As regards the quantity of goods cleared, the Revenue has arrived at a figure of 69,269.21 kgs., and this is based on the entries made in the register maintained at the security gate which indicated the number of cartons cleared, the quantity of goods cleared and the numbers of the vehicles in which the goods had been cleared. The appellant itself has admitted to a clandestine clearance of about 35 to 40 MTs in the statements of its various officials and it has been admitted that such production and clearance were not accounted for in the statutory records. A shortage of 35 MTs of terry towels were recorded during the stock taking done on 28/29-9-1996 and the appellant has not been able to satisfactorily explain the shortage and the reasons therefor. Since the 35 MTs of clandestine clearance has not been accounted for in the statutory records, they could not have formed part of the inventory of stock which was examined on 28/29-9-1996. Thus we have two sets of clearances, one pertaining to clandestine clearance of about 35 MTs without accountal anywhere as admitted by the appellant’s officials and the other relating to the shortage of 35 MTs vis-a-vis the stock mentioned in the books of accounts. These two together account for about 70 MTs of goods cleared without payment of excise duty. - Therefore, the quantity of clandestine clearance taken at 69.26 MTs has a strong and reasonable basis. Accordingly, we hold that the duty demand on this quantity is clearly sustainable in law. If we apply the rate applicable to clandestine clearance of terry towels from 100% EOUs on par with the rate applicable to domestic units, the rate of duty applicable would be 10% adv. During the impugned period, for licit clearances from 100% EOUs made with the approval of the Development Commissioner, the rate applicable was 50% of each of the aggregate duties of customs leviable on like imported goods into India. During the impugned period, the normal customs duty rates were 25% BCD, 2% SCD and 10% CVD. Aggregate of 50% of each of these duties would work out to 19.175%. Thus it would result in an absurd and illogical situation where the clandestine clearances would attract a lower duty rate (10%) when compared to the duty rate applicable on licit clearances (19.175%). Such an interpretation and application of law would promote tax evasion and not tax compliance and would be completely contrary to the object of the legislation. Excise duty rate that would apply to clearances into DTA from a 100% EOU even for the period prior to the amendment would be equal to the customs duty rate leviable on like goods when imported into India. Therefore, if we undertake a purposive construction with a view to suppress the mischief and advance the remedy, the confirmation of duty demand by the adjudicating authority at a rate equal to the aggregate of each of the customs duties is correct and sustainable in law. Based on this production, the appellant has been permitted to clear terry towels of quantity not exceeding 43,402 kgs. of value not exceeding ₹ 81.77 lakhs during the period 7-4-1997 to 30-9-1997. The permission granted will operate from the date of issue of the permission and not for the earlier period and this is what is envisaged under the Export and Import Policy 1992 to 1997. In other words, the permission granted is not for the clearances already effected but for the clearances to be effected subsequently. Thus there is no merit in this contention and accordingly, we uphold the duty demand of ₹ 67,87,507/- confirmed against the appellant in respect of the clandestine removal of 69,267.21 kgs. of terry towels during April to September, 1996. Appellant did not apply for any permission for clearance into DTA after the earlier permission granted expired in March, 1995. Therefore, it cannot be said that clearances were effected pending grant of any permission. Inasmuch as there is no permission granted by the Development Commissioner for the clearances made during 1995-96, the appellant would not be eligible for the benefit of Notification No. 2/95-C.E. as the concessional rate provided therein is in respect of clearances made in accordance with the permission granted by the Development Commissioner. Thus the demand of differential excise duty of ₹ 9,21,795/- is clearly sustainable in law Goods were not put to use for the intended purpose. In any case the value of the raw materials is already included in the value of the finished goods which have been cleared illicitly. If duty is demanded separately, once on the inputs and again on the finished goods, it would lead to double demand of duty which is not sustainable in law. As regards the confiscation of goods valued at ₹ 7.23 lakhs seized on 1-10-1996, the confiscation is sustainable inasmuch as the goods were cleared without payment of duty and under the cover of bogus documents. An option to redeem the same on payment of a fine of ₹ 2 lakhs has been given by the adjudicating authority and we find that the fine is not excessive and therefore, we uphold the same. However, in respect of the seized vehicle valued at ₹ 3 lakhs, which is confiscated and allowed to be redeemed on payment of fine of ₹ 75,000/-, the amount of fine seems to be much on the higher side. The driver/owner of the tempo cannot be held responsible for the evasion of excise duty by the appellant firm though the vehicle has been used for transportation of duty evaded goods. Therefore, only a nominal fine is warranted and accordingly, we reduce the redemption fine from ₹ 75,000/- to ₹ 10,000 - Decided partly in favour of assessee.
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