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2015 (4) TMI 737 - CESTAT NEW DELHI

2015 (4) TMI 737 - CESTAT NEW DELHI - TMI - Manufacturer - Excisability - Demand - Clandestine removal - Shortages - Job work charges - Seizure of goods - Held that:- Revenue is correct to say that shortage of 4116 locks established in the reported decision aforesaid. Appellant did not place any material to suggest that the determination of cum-duty value of such locks was erroneous. When no cost sheet was placed by appellant to show the material component in each lock, labour and overhead charg .....

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ent and credible evidence to find fault in recording thereof. Plea of eye estimation fails to stand. Appellant did not provide any material to establish impossibility of manufacture of 1,49,524 locks. In absence of any technical or scientific data, it is not possible to discard the conclusion of arise of 1,49,524 locks out of shortage of goods found by investigation. - following the decision of the High Court of Madras in the case of Alagappa Cements Pvt. Ltd. Vs. CEGAT, Chennai reported in [201 .....

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/s. R.P. Locks was berthing place for clandestinely removed goods of the appellant. Accordingly, the demand of ₹ 1,87,015 also sustains.

Revenue brought out its case clearly with evidence recorded. No doubt, there may be certain amount of arbitrariness in best judgment assessment. But the estimation itself when sustained in the first round of litigation and shortage of stock was found by Tribunal, appellant s questionable conduct came to record. The appellant therefore miserably .....

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ied on him is waived. His appeal is accordingly allowed. - Decided partly in favour of assessee. - Appeal Nos. E/1652 & 1653/2006 EX [SM] - Final Order No. 50781-50782/2015 - Dated:- 20-3-2015 - Hon ble Shri D. N. Panda, Judicial Member,J. For the Appellant : Shri Hemant Bajaj, Advocate For the Mrs. Rajana Jha, Commissioner (AR) ORDER Per D.N. Panda Both the appellants are in second round of litigation before the Tribunal. Tribunal in the earlier occasion by final order dated 17.01.2002 reported .....

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erial and fourthly the duty demand of ₹ 2,16,938/- on account of locks seized from the premises of M/s. R.P. Locks is to be re-examined for passing fresh order. Matter was remanded accordingly for denovo adjudication granting cum-duty benefit. 1.2 Learned Adjudicating authority in the re-adjudication proceeding found that the shortage of 4,116 locks detected on 29.9.2000 by investigation during physical inventory was established and only re-determination of value thereof allowing cum-duty .....

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iced that 250 gms of CR Strips were used for manufacture of 1,49,524 of number of locks valued at ₹ 76,75,725/- out of shortage of 37,381 kgs of C.R. strips and 4526 kgs of MS wires detected during investigation. Those were unaccounted and removed clandestinely. Appellant s plea that the raw materials found short during inventory was due to eye estimation and did not give rise to manufacture of 1,49,524 locks was found to be baseless. The authority granting cum-duty price benefit, duty dem .....

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ignatory who in his statement under Section 14 of the Central Excise Act, 1944 categorically stated that the appellant had two machines and those were power press and hard press. Various other activities were carried out by job workers. Value of the job worked goods was estimated fairly for loss of duty. 1.5 Fourthly, the locks seized from M/s. R.P Locks were held to be clandestinely removed without payment of duty. Value thereof was determined by the authority granting cum-duty benefit and dema .....

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was imposed under Section 173 Q of the Central Excise Rules, 1944 on the appellant manufacturer M/s. Keylocks (India) and penalty of ₹ 2,50,000/- was imposed on the appellant Shri Ravi Jain holding him guilty for not maintaining proper account of raw materials as well as finished goods and abeted in clandestine removal. 2. Against the aforesaid demand of duty and penalty, the manufacturer-appellant M/s. Key Lock (India) and its Authorized Representative Shri Ravi Jain came in appeal befor .....

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of Harrison brand was established. Therefore, appellant has no scope to re-agitating on this issue except re-determination of the value of the locks granting cum-duty price and work out duty liability thereon with consequence of evasion. 3.3 Revenue is correct to say that shortage of 4116 locks established in the reported decision aforesaid. Appellant did not place any material to suggest that the determination of cum-duty value of such locks was erroneous. When no cost sheet was placed by appe .....

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.11.3 is baseless since the shortage was reported on eye estimation. The CR Strips and MS Wire were in cut pieces for use in the manufacture of locks. The authority did not make weighment thereof. He whimsically suggested shortage. Adjudicating authority s notion that shortage of 37,381 kgs. of CR Strips and 4,256 kgs. of MS Wire shall give rise to manufacture 1,49,524 locks is baseless. Similarly, valuation of the locks at the rate of ₹ 51/- per lock is also without any merit. Accordingly .....

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authority rightly determined duty liability of ₹ 10,51,824/- on such count. 4.3 Even in second round, appellant failed to provide reconciliation statement of the goods of the above description found short during investigation. Once Panchnama was drawn in the presence of the witnesses, inventory found during investigation and recorded therein remain unquestionable in absence of any cogent and credible evidence to find fault in recording thereof. Plea of eye estimation fails to stand. Appel .....

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s required in that regard. In absence of any such data, determination of value of the locks of 1,49,524 numbers cannot be found to be faulty. Shortage of raw material gives rise to the conclusion of clandestine clearance with the intention to cause evasion of duty. This can be said following the decision of the Hon ble High Court of Madras in the case of Alagappa Cements Pvt. Ltd. Vs. CEGAT, Chennai reported in 2010 (260) E.L.T.511 (Mad.). Therefore, appellant fails on this count of demand also. .....

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r job working but they employed contract workers within factory and making payment for manufacture of locks inside factory. Such payments were called job work charges. Revenue s presumption that the goods were job worked is therefore incorrect. Similarly, valuation of the alleged job worked goods is also erroneous. 5.2 Learned Authorized Representative for Revenue argued that Adjudicating authority found that five firms M/s. Good Luck Painting works, M/s. Raju Polish Wala, M/s. Pramod Job Worker .....

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llant in different stages of manufacturing locks. Such outsourcing of work was nothing but job work and the appellant not maintaining appropriate records for such purpose was bound to suffer duty. 5.3 Appellant did not come forward to show which were the records maintained to identify the work done by above agencies if they were working in the factory of the appellant. The very work that is carried out by each of them was not explained. So also the work order if any placed with them was not prod .....

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incurred for manufacture became basis for estimation of the value of the goods and without evidence being shown as to clearances of the job worked goods on payment of duty, there was demand of ₹ 3,72,202/- rightly made on such count. For no good reason stated by the appellant assailing that demand, that remain untouched. 6.1 So far as the fourth count of demand of ₹ 1,87,015/- is concerned, when the department found goods of the appellant were lying with M/s. R.P. Locks and duty dema .....

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fend. So also the determination of the value of the goods was arbitrary for which demand of ₹ 1,87,015/- was not sustainable. But learned investigating authority found different sizes of locks in that premises and seized the same in absence of evidence of duty payment 6.2 Revenue on the other hand submits that the goods found with M/s. R.P. Locks were the goods of the appellant. That remained undisputed. Appellant failed to substantiate lawful clearance thereof. Therefore, in absence of ev .....

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ce that can be drawn is that premise of M/s. R.P. Locks was berthing place for clandestinely removed goods of the appellant. Accordingly, the demand of ₹ 1,87,015 also sustains. 7.1 Appellant manufacturer challenged the penalty on the count that the arbitrary adjudication gave rise to penalty of equal amount to duty. There is no doubt that clandestine removal of the goods was proved fact on record. Appellant s plea that mere not recording of the goods does not call for penalty as well as d .....

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