2013 (9) TMI 134 - AT - Central Excise

Company directed to pay Rs.60,00,000 for duty evasion, with recovery stayed pending appeal disposal.

M/s ALLURE INTERNATIONAL Versus COMMISSIONER OF CENTRAL EXCISE & SERVICE TAX, JAIPUR

The court found in favor of the department regarding the diversion of duty-free inputs to a DTA unit, upholding duty evasion allegations. The company was ... Waiver of pre-deposit – Stay application - Duty free material transferred from one unit to 100% EOU unit – Held that:- The duty demands of Rs.37,17,905/- and Rs.24,68,098/- are in respect of transfer of duty free materials from AOPL, Bhiwadi to AOPL, Noida, which is a 100% EOU. Even if the inputs involving duty of Rs.37,17,905/- have been unauthorisedly transferred from AOPL, Bhiwadi to AOPL, Noida, a 100% EOU the fact remains that AOPL, Noida being a 100% EOU was entitled to procure duty free inputs against CT-3 certificate. Duty evasion by AOPL, Bhiwadi by illicitly diverting the duty free inputs to DTA – Held that:- Allegation is based on concrete evidence on record – Evidence being the documents i.e. entries in the raw material issue register of AOPL, Statements of Partner of DTA unit, statements of managers of AOPL (appellant) etc. Held that:- AOPL, Bhiwadi had not been able to establish prima facie case in respect of duty demand of Rs.1,67,82,443/- and as such, this is not the case for waiver from the requirement of pre-deposit - AOPL, Bhiwadi, are directed to deposit Rs.60,00,000/- (Rupees Sixty Lakh only) within a period of 12 weeks. Issues involved:1. Alleged unauthorized transfer of duty-free inputs from one unit to another.2. Alleged diversion of duty-free inputs to a DTA unit.3. Removal of duty-free unit carton and glass bottles without payment of duty.Detailed analysis:1. The case involves allegations against a company engaged in the manufacture of perfumes for export under bond. The first issue pertains to the unauthorized transfer of duty-free inputs from the Bhiwadi unit to a new unit in Noida. The department alleged that the goods were transferred without proper authorization, leading to a duty demand of Rs.37,17,905. The second issue involves the diversion of duty-free inputs to a DTA unit, resulting in an alleged duty evasion of Rs.1,67,82,443. The third issue concerns the removal of duty-free unit carton and glass bottles without payment of duty, leading to a duty demand of Rs.24,64,098.2. The Commissioner, Central Excise, Jaipur-I, confirmed the duty demands against the company and imposed penalties under various sections of the Central Excise Act, 1944. The penalties imposed ranged from Rs.3 lakh to Rs.50 lakh on different parties involved. The company filed stay applications and appeals against this order.3. During the hearing, the company's advocates argued that the duty demands lacked a basis, especially concerning the transfer of goods between units and the alleged diversion of inputs to the DTA unit. They requested a waiver of the pre-deposit requirement for hearing their appeals. The department opposed the stay applications, citing concrete evidence supporting the duty evasion allegations and penalties imposed.4. After considering both sides' submissions and reviewing the records, the judges found that while the duty demands related to the transfer of goods between units might not be justified due to the nature of the units involved, the allegation of duty evasion by diverting inputs to the DTA unit was supported by concrete evidence. The judges noted admissions and corroborating statements that indicated the diversion of duty-free inputs for domestic market use.5. Consequently, the judges directed the company to deposit Rs.60,00,000 within 12 weeks. Upon compliance, the pre-deposit requirements for the remaining duty demand, interest, and penalties were waived, and recovery stayed until the appeals' disposal. The stay applications were disposed of accordingly.