C.C.E., Chandigarh vs Virgo Plywood Ltd.

Brief facts of the case are that the respondent is engaged in the manufacture of plywood, block board and flush Doors, falling under Chapter 44 of

the Central Excise Tariff Act, 1985. The factory of the respondent was visited by the Preventive staff of the Central Excise Division on 02.09.2003.

During the course of verification, the Department recovered some invoices containing different Sl. Nos. for the financial year 2002-03 and 2003-04,

against which the respondent had cleared the finished goods i.e. plywood. It was further observed that the goods cleared by the respondent were not

accounted for in the records and no Central Excise duty had been paid on such removal of goods. Further, it has been observed that there is shortage

of finished excisable goods, which had not been accounted for in the books of accounts. On the basis of investigation, the Department issued the show

cause notice dated 21.06.2004, proposing recovery of duty amount of Rs.6,63,949/- and Rs.10,757/- from the respondent on the ground of clandestine

removal of goods. Besides, proposals were also made for recovery of interest and for imposition of penalty. The said Show cause notice was

adjudicated vide order dated 13.01.2005, wherein proposals made therein were confirmed. The appeal filed by the respondent herein against the said

adjudication order was disposed of by the Commissioner (Appeals), Customs and Central Excise, Chandigarh vide the impugned order dated 20th

April, 2005, holding that demand of Rs.2,64,405/- is not sustainable, since such demand was not proposed for recovery in the show cause notice. With

regard to the demand of Rs.4,70,595/-, the Commissioner (Appeals) has held that the respondent herein had deposited the duty amount and 25% of

penalty before passing the adjudication order, and therefore, no further penalty is imposable under Section 11AC of Central Excise Act, 1944. As

regards the duty demand in the adjudication order for Rs.65,805/- on goods removed as per 5 Nos. of Biltis and demand of Rs.1,13,792/- on the goods

allegedly removed under katcha slips, the observations of the Commissioner (Appeals) are that the Department has not produced any evidence to

show clearance of the goods without payment of duty. Accordingly, the charges of clandestine removal and imposition of penalties on the appellant

were also dropped in the impugned order.

Feeling aggrieved with the impugned order, Revenue has filed this appeal before this Tribunal on the ground that the duty demand of Rs.2,64,405/-

confirmed in the adjudication order, was proposed in the show cause notice for recovery from the respondent. Further, the impugned order has been

assailed on the ground that the fact of clandestine removal of goods against 5 Biltis and Katcha slips were corroborated from the confessional

statement of the Director of the firm Shri Surinder Arora; thus, dropping of the said demand in the impugned order is not proper and justified. The

Revenue has also contested dropping of penalty amount in the impugned order.

In response to the appeal filed by Revenue, the respondent has filed the cross-objection before this Tribunal.

Heard both sides and perused the records.

The appeal has been filed by Revenue in respect of demand of Rs.2,64,405/- dropped by Commissioner of Central Excise on the ground that the

said demand was not subject matter of the show cause notice. On perusal of the case records, I find that the show cause notice has proposed for

recovery of the demand amounting to Rs.6,63,949/-; whereas, the adjudication order has confirmed the demand of Rs.8,38,059/-. Thus, it is evident

that the demand of Rs.2,64,405/- was not a part of the show cause notice, and accordingly, the same cannot be confirmed by the adjudicating

authority. Therefore, there is no infirmity in the impugned order, in so far as dropping such duty demand confirmed in the adjudication order.

Further, on going through the appeal records, I find that the Commissioner (Appeals) has dropped the duty demand of Rs.65,805/- and Rs.1,13,792/-

on the ground that the Department was not able to collect any evidence of having the goods been cleared without payment of duty and that the same

is not corroborated by any statement of the buyer of the appellant or any transporter etc. In this context, I find that the adjudicating authority vide

order dated 13.01.2005 has specifically recorded the statement dated 12.09.2003 of Shri Surinder Arora, accepting the fact of issuance of parallel

invoices under the signature of Devendra Singh Chauhan. Since the statement dated 02.09.2003 and 12.09.2003 were never retracted by the appellant,

the charges of clandestine removal, in my considered opinion, cannot be dropped. Accordingly, the impugned order dropping the duty demand of

Rs.65,805/- and Rs.1,13,792/- are not sustainable. The said amount alongwith interest and penalties are recoverable from the Respondent.

The respondent has filed Cross-Objection on the ground that in absence of any specific finding by the Commissioner (Appeals) with regard to

evidence of clandestine removal, duty demand of Rs.4,70,595/- is not proper and justified. I find that though the Commissioner (Appeals) has not

specifically dealt with the issue in hand, but the said aspect has been dealt with by the original authority at great length. Since the adjudication order

has merged with the appellate order passed by the Commissioner (Appeals) and in the former order, the issue has been adequately discussed, I am of

the view that the stand taken by the respondent in the Cross-Objection will not merit consideration.

In view of the foregoing, Revenue’s appeal is partly allowed and the impugned order is set aside to the extent of duty demand of Rs.65,805/-

and Rs.1,13,792/- dropped therein. Cross-Objection filed by the respondent is dismissed.

[Pronounced in the Open Court on 18/09/2015]