Clandestine Removal

PJ/Case Laws/2011-12/1516

Clandestine Removal - proof of

Case: MEWAR BOTTLING CO. (P) LTD. Versus COMMISSIONER OF CENTRAL EXCISE, JAIPUR

Citation: 2002 (140) E.L.T. 237 (Tri. - Del.)

Issue:- Shortage of crown corks in manufacture of aerated water is sufficient evidence for proving clandestine removal?

Whether it is presumed that caustic soda is used in or in relation to manufacturing of aerated water when there is shortage of quantity of caustic soda and no accounting entry made for issuance of caustic soda?

Brief Facts:- The appellant are engaged in the manufacture of aerated water. The excise officers visited the factory of the appellants and 2,92,270 crown corks of various brand names were found short. It was also found that the appellants availed the benefit of Modvat credit in respect of caustic soda found short. A show cause notice was issued to the appellants and the adjudicating authority confirmed the demand on the ground that the crown corks, found short, were used in the manufacture of aerated water, which was cleared without payment of duty. The adjudicating authority also ordered recovery of Modvat credit on caustic soda, which was found short. Personal penalties were also imposed on the appellants as well as on the employees of the companies.

Appellant’s Contention:- The demand on the basis of shortage of crown corks, is not sustainable in absence of any evidence to show that they have manufactured such quantity of aerated water. He submits that they are getting concentrate to manufacture aerated water and there is no evidence to show that they had received concentrate to manufacture such quantity of bottles of aerated water. He also relies upon the decision of the Tribunal in the case of C.C.E v. Ludhiana Bottling Co. reported in [1997 (93) E.L.T. 177 (Tribunal)] and submits that in this case the Tribunal held that duty cannot be confirmed only on the shortage of crown corks as the goods are damaged during the manufacture of final product. In respect of demand of duty on caustic soda, he submits that 3650 kgs. of caustic soda was used in the manufacture of final product, but the quantity of caustic soda was not shown as issued from the stock register maintained by the factory due to oversight. He submits that the caustic soda is used for clearing the bottles before filling and it was also used for the general cleanliness of the factory.

Reasoning of Judgment:- Officers of the Revenue department found short a certain quantity of crown corks and the duty is demanded on the ground that the crown corks are used in the manufacture of aerated water, which was cleared without payment of duty. There is no other evidence in respect of other raw-materials used in the manufacture of such quantity of aerated water.

In the case of C.C.E v. Ludhiana Bottling Co. held that the demand of duty based merely on waste of crown corks or their non-accountal, is not sustainable. In the present case also, the demand is being made only on the count of shortage of crown corks. Therefore, demand on this count is not sustainable.

In respect of shortage of caustic soda, the appellants only submit that this was used in or in relation to the manufacture of final product and due to mistake, this was not shown issued from the stock register. The appellants availed the benefit of Modvat credit on the quantity of caustic soda and there is no explanation or proof showing that this quantity was used in the manufacture of final product.

Demand set-aside in respect of shortage of crown corks and demand under Rules 57-I as well under 57-I(4) of the rules in respect of caustic soda is upheld.

Decision:- Appeals disposed of accordingly.

Comments

PJ/Case Laws/2011-12/1516

Post a Comment

Query