1992 (9) TMI 212 - AT - Central Excise

Summary

Issues Involved:
1. Justification of the seizure of 4082.500 grams of goods by the Central Excise Officers and determination of whether they are Polythene Films or Lay-Flat Tubes.
2. Allegation of removal of polythene films involving a Central Excise duty of Rs. 8,17,320.73 and whether it is proved by the Department.
3. Imposition of a penalty of Rs. 20,000.00 on the appellants.

Detailed Analysis:

1. Justification of the Seizure and Nature of Goods:
The Department's case is based on the statement of Shri P.P. Agarwal, a partner of the appellant Firm, given on 21-12-1989, claiming the seized goods were Polythene Films. However, Shri Agarwal affirmed an affidavit on 22-12-1989 stating the materials under seizure were Lay-Flat Tubes, not Polythene Films. This affidavit was supported by Dr. K.K. Jain, who stated he recorded the initial statement under the dictation of the officers. The Department failed to draw samples of the goods to verify their nature, despite several correspondences from the appellants. Affidavits from witnesses Dr. K.K. Jain and Shri Bhola Dey confirmed the seized goods were Lay-Flat Tubes. The Department's failure to draw samples or verify with customers undermines their claim. The burden of proof lies with the Department, which failed to establish that the seized goods were Polythene Films. Consequently, the confiscation of the goods is not in accordance with law and is set aside.

2. Allegation of Removal of Polythene Films and Duty Demand:
The Department alleged the removal of goods during 1987-90 based on private records, but these records did not specify the removal of HDPE Film. Terms like 'materials despatched' or 'rolls despatched' were interpreted by the Adjudicating Authority as Polythene Films without concrete evidence. The appellants explained that these terms referred to Lay-Flat Tubings, which could be packed in rolls or folded. The Department did not verify with the customers despite having their details. Certificates from industry associations and purchase orders indicated the goods were Lay-Flat Tubings, not Polythene Films. The Department's reliance on separate columns in private records without corroborative evidence is insufficient. The demand of duty must be based on solid evidence, not mere suspicion. The Department's failure to provide conclusive evidence means the duty demand of Rs. 8,39,047.48 is set aside.

3. Imposition of Penalty:
Given the findings that the Department failed to prove the nature of the seized goods and the removal of Polythene Films, the imposition of a penalty of Rs. 20,000.00 on the appellants is also not in accordance with law. The penalty is hereby set aside.

Conclusion:
The appeal is allowed, setting aside the confiscation of goods, the duty demand of Rs. 8,39,047.48, and the penalty of Rs. 20,000.00. The Department failed to provide sufficient evidence to substantiate their claims, relying instead on assumptions and suspicions.