1. Show cause notice dated 29-7-98 was issued to the appellant-company as a S.S.I. manufacturer of biscuits since 1995, pursuant to the enquiries made by the Directorate General of Anti-Evasion, Kolkata, indicating that the appellants had removed certain goods without discharging duties due thereon. The show cause notice asked the appellants as to why - "(6.1) Central Excise duty amounting to Rs. 5,77,456.00 shall not be demanded from and paid by them under Section 11A of the Central Excise Act, 1944; (6.2) a penalty shall not be imposed upon them under Section 11AC of the Central Excise Act, 1944 for the aforesaid contravention; (6.3) interest at the appropriate rate shall not be charged on and paid by them under Section 11AB of the Central Excise Act, 1944; (6.4) the amount of Rs. 11,54,912.00 already deposited by them, as mentioned hereinbefore, shall not be appropriated against the aforesaid demand/penalty under Section 11 of the Central Excise Act, 1944; (6.5) finished goods found in excess and seized on 18-5-98 viz.
47,574.400 Kgs. of biscuits, contained in 11,167 carton boxes valued at Rs. 10,83,179.00 shall not be confiscated vide Rule 173Q of the Central Excise Rules, 1944, or the security deposit referred to in Para 2 above, shall not be appropriated instead." 2. Learned Additional Commissioner confirmed the demand of duty amounting to Rs. 5,77,456.00 (Rupees five lakhs seventy-seven thousand four hundred and fifty-six) and imposed personal penalty of an equivalent amount and appropriated the entire amount of security deposit of Rs. 77,000.00 (Rupees seventy-seven thousand) in lieu of confiscation and provisional release of the seized goods involving duty of Rs. 22,818.00 (Rupees twenty-two thousand eight hundred and eighteen). The present appeal has been filed against the impugned Order passed by the Commissioner (Appeals), Central Excise, Calcutta, on the grounds that - (a) while not disputing the alleged contention as regards the removal of biscuits unaccounted and their quantum, method of computation of assessable value on the said quantum of biscuits was questioned; (b) that the Department has failed to quantify the actual production and its value with documentary evidence, and they have taken the average value of Rs. 100.00 per 'C/B', and since they were not in a position to quantify the actual sale-value, they accepted the Department's contention of the average-value of Rs. 100.00. However, they submit that the total value calculated as Rs. 72,18,200.00 (Rupees seventy-two lakh one hundred and eighty-two) (sic) by the Department and accepted by them, is cum-duty price, and computation of assessable value has not been correctly made and they relied upon a formula in the case of Madras Rubber Factory [1989 (27) E.L.T. 553 (S.C.) - 1987 (10) ECR 625 (S.C.) and 1995 (77) E.L.T. 433 (S.C.)] to determine the assessable value which would, as per the Supreme Court's formula, work out to Rs. 66,83,518.00 (Rupees sixty-six lakhs eighty-three thousand five hundred and eighteen) and therefore, involvement of duty would thus be reduced to Rs. 5,34,648.44 (Rupees five lakhs thirty-four thousand six hundred and forty-eight and paise forty-four); (c) that the invocation of mandatory penalty under Section 11AC was not correct and thereby 100% penalty imposed should be set aside. In support of their submission in this regard, they have relied upon various decisions; (d) that duty on the seized goods which were provisionally released on a cash security of Rs. 77,000.00 (Rupees seventy-seven thousand) works out to Rs. 22,818.00 (Rupees twenty-two thousand eight hundred and eighteen) and the balance amount from the said Rs. 77,000.00 towards security deposit was refundable to them by the Department, since the goods which were admittedly found lying in the factory, have been shown excess of the recorded RG-I balance. Therefore, they have requested for refund of the amount in excess of whatever payable as duty, and for reduction of penalty.
(a) the offence of clandestine removal and non-accountal in the RG-I register, is admitted; (b) the seized goods are liable for confiscation and duty on the clandestinely removed goods is required to be determined. We see force in the plea of following the settled law, to grant the benefit of calculation of duty, by considering the value of the clandestinely removed goods, to be the cum-duty price, and the applicability of MRF decision of the Apex Court to determine the duty from such cum-duty price; (c) the penalty imposed under Section 11AC is liable to be reduced @ 25% of duty, if duty and penalty are paid within 10 days from the date of computation of duty. In this case, we find that the same have been paid within the stipulated period and therefore, the penalty under Section 11AC cannot be in excess of 25% of duty. The same is required to be confirmed only @ 25% of the duty to be worked out as per MRF formula.
4. We also do not find any substance in the plea of the appellants that the deposit of Rs. 77,000.00 (Rupees seventy-seven thousand) at the time of release of the seized goods found in excess over the RG-I balance, was only for the duty-liability on the appellants. The goods are definitely not accounted for and there is corroborative evidence arrived at and confirmed that clandestine removals were being effected.
Therefore, the confiscation and the security deposit as ordered, is upheld. However, no duty can be demanded once again on the seized goods which were provisionally released on payment of duty.
5. Therefore, as regards the goods found to be removed clandestinely, redetermination of duty may be done as per the MRF decision. The penalty under Section 11AC is, thereafter to be reduced to 25% of the duty to be determined as per the MRF formula. Consequential excess payment, if any made by the appellants over and above the determination as arrived at in this case, should be refunded to the appellants.
Appeal is disposed of in above terms.