2006 (3) TMI 27 - AT - Central Excise

Central Excise - Clandestine removal - Evidence - Authenticity of register - Demand - Show cause notice - Confiscation of goods

Summary

Issues Involved:
1. Alleged evasion of central excise duty by M/s. Rishabh Velveleen Pvt. Ltd. (RVPL).
2. Authenticity and corroboration of private register No. 93.
3. Suppression of production and clandestine removal of goods.
4. Seizure and confiscation of unaccounted velveleen flock fabrics.
5. Penalties and fines imposed on RVPL and its directors.
6. Confiscation of land, building, plant, and machinery.

Issue-wise Detailed Analysis:

1. Alleged Evasion of Central Excise Duty:
The central excise officers conducted searches and found 9095.10 meters of unaccounted velveleen flock fabrics at RVPL's factory. Incriminating documents were recovered, indicating that RVPL was evading central excise duty. The duty of Rs. 1,08,00,122/- was demanded for goods removed clandestinely during 1993-94 and 1994-95. RVPL was charged with contraventions of various provisions of the Central Excise Rules, 1944, for manufacturing and clearing goods without accounting for them and without paying the required duty.

2. Authenticity and Corroboration of Private Register No. 93:
The Commissioner found no corroborative evidence to support the entries in private register No. 93, stating it was fabricated to present a favorable financial picture to banks. The register was not supported by corresponding bills, GRs/RRs, or unaccounted goods from buyers. Therefore, the Commissioner concluded that the register was not reliable.

3. Suppression of Production and Clandestine Removal of Goods:
The Commissioner observed no circumstantial or corroborative evidence showing suppression of production and clandestine removal of goods. Statements from RVPL's Accounts Officer and directors lacked corroborative evidence. The search of the transporter's premises did not reveal unaccounted consignment bookings. Hence, the Commissioner concluded that the department's case based on register No. 93 was not genuine.

4. Seizure and Confiscation of Unaccounted Velveleen Flock Fabrics:
The Commissioner noted that the seized 9095.10 meters of velveleen flock fabric were entered and cleared on payment of duty after provisional release. In the absence of specific allegations, the seizure was set aside. The Commissioner dropped the proceedings against RVPL and other noticees.

5. Penalties and Fines Imposed on RVPL and Its Directors:
The Central Board of Excise & Customs reviewed the Commissioner's order, finding it incorrect and illegal. The Board directed the Commissioner to seek correct determination from the Tribunal. The Tribunal found that the entries in register No. 93 were corroborated by various documents and statements, including railway receipts and goods receipts. The Tribunal concluded that RVPL clandestinely removed goods, confirming the demand for duty and imposing penalties.

6. Confiscation of Land, Building, Plant, and Machinery:
The Tribunal held that RVPL's land, building, plant, and machinery, valued at Rs. 83,20,695/-, were liable for confiscation under Rule 173Q(2) of the Central Excise Rules, 1944, due to the huge evasion of duty by clandestine removal of goods.

Tribunal's Order:
1. Confirmed the demand of duty on goods clandestinely removed, directing the Commissioner to rework the duty amount by considering the value as cum duty price.
2. Imposed a penalty of 25% of the quantified duty amount on RVPL.
3. Held the seized goods liable for confiscation, directing RVPL to pay a fine of 25% of the goods' value in lieu of confiscation.
4. Confiscated RVPL's land, building, plant, and machinery, allowing redemption on payment of a fine of 15% of their value.

The Tribunal's decision was dictated and pronounced in open court.