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2016 (4) TMI 143

Head Note:
Clandestine clearance of finished MMF(P) measuring 66,91,771.78 L.Mtrs. - confiscation of the goods of MMF(P) 66,91,771.81 L.Mtrs though not physically available proposed - demand of duty - Held that:- Clandestine removal cannot be sustained in the absence of evidence of clandestine manufacturing. The statements were uncorroborative nature and could not be made sole basis for holding against the assessee. Their veracity has to be gauged from accompanying circumstances and corroborated by independent evidences. Thus the demand of duty of ₹ 1,99,11,979.00 on 62,22,212.00 L.Mtrs cannot be sustained.

But, we find force in the submission of Revenue in respect of demand of duty of ₹ 14,65,949.00 on 4,82,220.00 L. Mtrs of grey fabrics. It is seen that there was shortage of 4,82,220,00 L. Mtrs of grey fabrics during the physical stock verification. The appellants failed to give a proper reason. Thus, the demand of duty on the shortage of the raw material is justified. The Learned Authorised Representative cited various decisions on this issue. We agree with the submission of the Learned Authorised Representative. The demand of duty of ₹ 27,560.00, the Learned Advocate had not contested, and therefore, it is required to be upheld.

Regarding imposition of penalty on Shri Sandeep Arunkumar Khaitan Director of the assessee company, we find that he has accepted the removal of finished goods to the quantity of 4,82,220.00 L. Mtrs, and therefore, the imposition of penalty is warranted. However, the quantum of the penalty is required to be reduced. We do not find any material against imposition of penalty on Shri Mohan Lal Khaitan and M/s Koral Prints. There is no material available of involvement of Shri Mohan Lal Khaitan, and M/s Koral Prints and therefore, imposition of penalty on them are not justified. It is well settled by serious of decisions that if the goods are not available, confiscation of goods and imposition of redemption fine cannot be warranted.

In view of the above discussion, the impugned order is modified to the extent the demand of duty of ₹ 14,65,949.00 and ₹ 27,560.00 alongwith interest and the imposition of penalty of equal amount of duty are upheld. The demand of duty of the balance amount alongwith interest and penalty is set-aside. The penalty on Shri Sandeep Arunkumar Khaitan is reduced to ₹ 2,00,000.00 (Rupeees Two Lakhs only). Confiscation and Redemption Fine are set-aside. The penalty on Shri Mohan Lal Khaitan and M/s Koral Prints are set-aside. The assessee is entitled to option to pay penalty 25% of duty alongwith entire amount of duty and interest within 30 days from the date of communication of this order as provided under Section 11AC of the Act, 1944. The appeals filed by the M/s. Santosh Textile Mills and Shri Sandeep Arunkumar Khaitan are disposed of in the above terms. The appeals filed by Shri Mohan Lal Khaitan and M/s Koral Prints are allowed.


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