2002 (7) TMI 485 - Commission - Central Excise

Commission settles case, directs payment with interest. Immunity granted, subject to conditions. Notices issued, retracted statements corroborated.

The Commission settled the case for Rs. 9,50,074/-, directing the applicant to pay interest on the delayed amount. Immunity from fine, penalty, and ... Value of clearances - Clubbing of - Settlement of case - Interest Issues Involved:1. Alleged clandestine removal of excisable goods without payment of Central Excise duty.2. Legitimacy and existence of alleged dummy units.3. Admissibility and credibility of retracted statements.4. Assessment of manufacturing capacity and duty liability.5. Compliance with procedural requirements for show cause notices.6. Determination of interest on delayed payment of duty.7. Immunity from fine, penalty, and prosecution.Detailed Analysis:1. Alleged Clandestine Removal of Excisable Goods:The applicant was accused of clandestinely removing parts of air-conditioners without paying Central Excise duty by using invoices from fictitious firms, namely M/s. Neha Refrigeration, M/s. Subhash Chandra & Brothers, and M/s. Subhash Air-Conditioning Pvt. Ltd. The show cause notice alleged a total value of Rs. 3,01,72,610/- for the goods removed without payment of duty and demanded Rs. 1,01,39,303/- under Section 11A of the Central Excise Act, 1944.2. Legitimacy and Existence of Alleged Dummy Units:The applicant contended that the units were registered with various government authorities and were engaged in legitimate activities, including repairing and reconditioning old compressors. The Revenue argued that these units were dummy units used to facilitate the clandestine removal of goods. However, the Commission noted that there was no evidence of financial flow back or sharing of profits among the units, and the units had their own purchase and sales records.3. Admissibility and Credibility of Retracted Statements:The applicant argued that the statements recorded by the officers were obtained under duress and subsequently retracted. The Commission observed that retracted confessions require corroboration by independent evidence, which was lacking in this case. The documentary evidence did not support the Revenue's claims, and the statements alone were insufficient to prove the allegations.4. Assessment of Manufacturing Capacity and Duty Liability:The applicant submitted a Chartered Engineer's report to assess the manufacturing capacity, which was not challenged by the Revenue. The Commission accepted the report and concluded that the applicant did not have the capacity to manufacture the alleged quantity of goods. The duty liability was settled at Rs. 9,50,074/-, which included duty on clandestinely cleared goods, waste, and inadmissible Modvat credit.5. Compliance with Procedural Requirements for Show Cause Notices:The Commission noted that no show cause notices were issued to the alleged dummy units, which were essential for a fair adjudication. The Tribunal's precedent emphasized the necessity of issuing show cause notices to all concerned units to establish their involvement and liability.6. Determination of Interest on Delayed Payment of Duty:The applicant admitted the duty liability but delayed the payment. The Commission directed the applicant to pay interest at the rate of 18% per annum on the delayed amount of Rs. 9,50,074/- from the due date until the actual payment date. The applicant was instructed to calculate and pay the interest within 30 days of receiving the order.7. Immunity from Fine, Penalty, and Prosecution:The Commission granted immunity from fine and penalty, acknowledging the applicant's cooperation and full disclosure. Additionally, immunity from prosecution under the Central Excise Act, 1944, and the Indian Penal Code was granted, subject to the condition that the settlement was not obtained by fraud or misrepresentation of facts.Conclusion:The Commission settled the case for Rs. 9,50,074/- and directed the applicant to pay the interest on the delayed amount. Immunity from fine, penalty, and prosecution was granted, provided the settlement was not obtained through fraud or misrepresentation. The Commission emphasized the importance of issuing show cause notices to all involved units and corroborating retracted statements with independent evidence.