2009 (8) TMI 896 - AT - Central Excise

Tribunal rules against steel company in export fraud case, orders duty payment and penalties

The Tribunal found in favor of the Department in a case involving alleged fraudulent export claims by a steel manufacturer. The company faced duty demand, ... - Issues involved: Alleged fraudulent export claims, duty demand, rebate recovery, penalty imposition, discrepancies in production data, limitation on demand.Summary:The case involved an applicant company claiming to be a manufacturer of steel items and exporting them, facing allegations of fraudulent practices by the Department. The Department contended that the company had not used appropriate machinery, electricity, or fuel to manufacture the claimed products, and invoices did not align with the products manufactured. Consequently, a substantial duty demand, rebate recovery, and penalties were imposed, including a penalty on the Director.The company's advocate argued based on annexures to Panchnamas and reports from technical and financial experts to support the existence of manufacturing facilities. He also raised concerns about the legality of the duty recovery, rebate reversal, and penalties, citing previous show cause notices and the circumstances of the case.The Department highlighted discrepancies in raw materials, production quantities, and wastage levels, indicating inconsistencies in the company's production data. After considering both sides' submissions and reviewing the records, the Tribunal found the Department's case to be strong due to discrepancies in the company's claims and the substantial rebate already paid.In its decision, the Tribunal directed the company to deposit specific amounts towards duty demand, rebate recovery, and penalties within a specified timeframe. A similar directive was given to the Director, with a waiver of the remaining amounts subject to compliance. These directions were made for the purpose of disposing of the stay petitions, indicating prima facie views on the matter.