CCE Vs. NIVARAN HERBAL PVT. LTD.

JUDGEMENT

(1.) Heard both sides. The respondents had taken a registration for manufacture of 8 ml. 'Velvette' brand shampoo. The present proceedings started with detection of clearance of 8 ml. shampoo and 100 ml. shampoo without payment of duty. The adjudicating authority has confirmed a demand of Rs. 2,11,874/ - and has imposed a penalty of equal amount under Section 11AC of the Central Excise Act, 1944 in addition to imposing a further penalty of Rs. 25,000/ - under Rule 173Q of the Central Excise Rules, 1944 and demanding interest under Section 11AB of the Act. The lower appellate authority has set aside the demand, except for an amount of Rs. 387/ -, and the penalty leading to this appeal by the Department.

(2.) Shri V.V. Hariharan, learned Jt. CDR appearing for the Department argues that the impugned Order -in -Appeal requires to be set aside for the reason that the same has been passed without taking into account the voluntary statements made by the Director and Despatch Clerk of the respondent -company to the effect that the clearances were made without payment of duty. He also states that the respondents had taken registration only for manufacture of 8 ml. shampoo and they had taken no registration for 100 ml. shampoo. The submission made by the respondents that they have received 8 ml. shampoo for re -processing and that the same was sent back as such cannot be accepted as the respondents had filed No. D3 intimation, nor in the central excise accounts maintained by them and returns filed by them they have recorded return of defective/leaking of shampoo sachets. Moreover, the respondents had not taken any registration for manufacture of 100 ml. shampoo, but 100 ml. packets were found in the premises and the production register had a page for 100 ml. shampoo. As regards the claim that the respondents had traded 100 ml. shampoo, he states that the respondents had taken no permission for receiving and storing such shampoo in their factory premises as required under the rules. Besides, the purchase vouchers submitted by the respondents show that most of these vouchers were of a date subsequent to the date of sale of 100 ml. shampoo by them. This also goes to show that the explanation regarding trading in 100 ml. shampoo given at a belated stage cannot be accepted. He argues that the statement voluntarily given along with other attendant facts and circumstances clearly point out that there was clandestine manufacture and removal.

(3.) After hearing both sides and perusal of case records, we find that the respondents have admitted in the course of investigation that the impugned goods were produced and sold clandestinely without payment of duty and they had also made good Rs. 1,90,000/ - towards duty which was later on appropriated by the original authority adjudicating the case. The subsequent explanation given on behalf of the respondents that the 8 ml. sachets were defective shampoos and the same were received for reprocessing and that these were further sent back cannot be believed in the absence of any documentary evidence such as D3 intimation, omission of recording in the statutory registers and non -reflection in the statutory returns. Similarly, the subsequent version that 100 ml. shampoos were being re -traded cannot also be accepted in the absence of required permission for receiving and storing duty paid goods and the respondents having possession of 100 ml. bottles for shampoos. The lower appellate authority has also not carefully scrutinized the documents placed before him inasmuch as he has allowed relief to the respondents without noticing that the documents produced for purchase of 100 ml. shampoos happen to be of dates subsequent to the date of removal of the shampoos and therefore no conclusion can be drawn that the 100 ml. shampoos were traded as no shampoo bought on a future date could have been sold on an earlier date.