Parallel invoices and supporting statements can prove clandestine removal, with penalties adjusted to the applicable period and provision.

Parallel invoices, transport documents and statements prepared by the assessee itself were treated as sufficient to infer clandestine manufacture and removal, because they showed identical clearance particulars, dual invoicing and undisclosed clearances. The absence of rebuttal, cross-examination or a satisfactory reconciliation of quantities weakened the defence, and the plea for further corroboration from raw material consumption or electricity use was rejected. Penalties were largely sustained because the officers' role in the parallel invoicing scheme was not disputed, but the manufacturer's penalty was reduced for the period before Section 11AC came into force, and the personal penalties on the officers were also reduced.

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Issues: (i) Whether the excisable goods were clandestinely manufactured and removed without payment of central excise duty on the basis of parallel invoices, bank documents, statements and surrounding circumstances. (ii) Whether the penalties imposed on the manufacturer and its officers under the Central Excise Act, 1944 and the Central Excise Rules, 1944 were sustainable, and whether the quantum of penalty required reduction for the period prior to the commencement of Section 11AC.

Issue (i): Whether the excisable goods were clandestinely manufactured and removed without payment of central excise duty on the basis of parallel invoices, bank documents, statements and surrounding circumstances.

Analysis: The documents prepared by the appellants themselves showed identical clearance particulars, transport documents and banking use of two sets of invoices. The statements of the finance manager, excise manager and bank official supported the conclusion that parallel invoices were used and only one set was disclosed to the department. The appellants did not rebut these statements, seek cross-examination, or reconcile the quantities cleared with duty-paid clearances. In these circumstances, the plea that there was no corroboration from raw material consumption or electricity use was rejected.

Conclusion: The clandestine removal of goods without payment of duty was established and the demand of central excise duty was upheld.

Issue (ii): Whether the penalties imposed on the manufacturer and its officers under the Central Excise Act, 1944 and the Central Excise Rules, 1944 were sustainable, and whether the quantum of penalty required reduction for the period prior to the commencement of Section 11AC.

Analysis: The appellants' conduct attracted penal liability because the role of the officers in the preparation and use of parallel invoices was not disputed. The objection to the applicability of Rule 209A was rejected. However, as part of the demand period preceded the coming into force of Section 11AC, the penalty on the manufacturer required reduction to that extent. The penalty on the manufacturer under Rule 173Q was maintained, while the personal penalties on the officers were reduced.

Conclusion: The penalties were substantially sustained, but the penalty under Section 11AC and the penalties on the officers were reduced.

Final Conclusion: The appeals failed in substance, with only limited relief granted on the quantum of penalties.

Ratio Decidendi: Where parallel invoices, transport documents and supporting statements prepared by the assessee itself establish fictitious clearances, clandestine removal and duty evasion can be inferred without further corroboration, and penal consequences may follow with quantum adjusted to the period and applicable penal provision.

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