2007 (3) TMI 110 - AT - Central Excise

Tribunal upholds duty demand and penalties on firm, sets aside penalty on partner. Challenge rejected. Evidence supports evasion.

The Tribunal upheld the duty demand and penalties imposed on the appellant firm but set aside the penalty on the partner. The appellant's challenge ... Demand and penalty - Two question raises (i) Appellant is clandestinely removed the good (ii) partner also liable for penalty - Held (i) Appellant is clandestinely removed the good and liable for penalty (ii) partner is not liable for personal penalty Issues:1. Confirmation of demand of duty on processed goods2. Imposition of penalties on the appellant firm and its partner3. Order for interest on the dutyAnalysis:1. The case involved the confirmation of demand of duty on processed MMF(P) cleared clandestinely by the appellant firm, which was engaged in manufacturing. The officers found a shortage of goods during a surprise visit, leading to a show cause notice for duty demand and penalties. The Order-in-Original confirmed the demand, imposed penalties, and the Commissioner (Appeals) upheld the decision.2. The appellant challenged the Commissioner (Appeals) decision on two grounds. Firstly, they argued that demand was based on private records, not statutory ones, and thus not correctly worked out. Secondly, they contended that penalties should be reduced as they had paid the duty, interest, and part of the penalty within 30 days. They also argued against the personal penalty on the partner, citing precedents.3. The appellant's advocate highlighted discrepancies in the imposition of penalties and the retraction of statements by the partner and authorized signatory. The Revenue, however, argued that the clandestine removal was admitted by the appellants and supported by evidence from recipients. The Commissioner found evidence of evasion and upheld the duty demand and penalties.4. The Tribunal noted that the appellants failed to provide evidence contradicting the recipients' statements about receiving the goods clandestinely. The first proviso to Section 11AC was cited to support the reduction of penalty upon payment of duty, interest, and part of the penalty within 30 days.5. Regarding the personal penalty on the partner, the Tribunal referred to previous decisions where penalties on partners of a firm were not levied separately. Following these precedents, the Tribunal set aside the penalty on the partner and allowed the appeals of the appellants accordingly.