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of <h1>Adjudication Process Challenged: Lack of Disclosure, Upheld Duty Demand, Penalties Imposed</h1> The case involved allegations of clandestine removal, defrauding Revenue, and misuse of Cenvat credit. The adjudication process was challenged for ... Clandestine Removal of Goods - Shortage of Goods – Waiver of Pre-deposit - Held that:- Shortage occurred for making no entry in the record and clandestine removal of the goods were done - It is not only on one consideration adjudication was made but several considerations as above compelled adjudicating authority to raise the demand - For the reasons aforesaid it is not possible to grant waiver of pre-deposit on baseless defence led - Prima facie, it appears that premeditated design was made to defraud Revenue in the manner - the appellant directed to make deposit of Rs. 4 crores shall serve the interest of Revenue at interim stage till appeal is heard - Partial stay granted. Issues:1. Violation of principle of natural justice in adjudication proceeding initiation.2. Allegations of clandestine removal, defrauding Revenue, and availing Cenvat credit without receiving goods.3. Examination of various propositions and demands raised by the adjudicating authority.4. Analysis of evidence related to clandestine removal, nexus between appellant and Dharamkanta, and questionable modus operandi.5. Procurement of scrap without proper records and enjoying Cenvat credit.6. Use of parallel invoices and evasion of Revenue.7. Pre-deposit requirement and penalties imposed on involved parties.Issue 1: Violation of principle of natural justice in adjudication proceeding initiation:The adjudication was initiated based on incriminating documents found during a search, leading to an excise duty demand of Rs. 6,26,62,091. The appellant argued that the documents were not supplied to them, violating the principle of natural justice. They also highlighted the lack of cross-examination of key individuals. The Revenue contended that the material recovered indicated the appellant's involvement in clandestine activities, defrauding Revenue and availing Cenvat credit without receiving goods.Issue 2: Examination of various propositions and demands raised by the adjudicating authority:The adjudicating authority framed five propositions to raise demands, including excise duty on quantities of M.S. Ingot, shortage of finished goods, and clearance of goods not recorded by the appellant. The authority analyzed each issue step by step, considering the appellant's defense and concluding that shortages occurred due to non-entry in records and clandestine removal of goods.Issue 3: Analysis of evidence related to clandestine removal and questionable modus operandi:The evidence from Dharamkanta, statements of involved individuals, and recovered materials pointed towards a nexus between the appellant and clandestine clearance of goods. Further investigation revealed questionable practices, such as unrecorded raw material supplies, supporting the allegations of defrauding Revenue.Issue 4: Procurement of scrap without proper records and enjoying Cenvat credit:The adjudicating authority examined the procurement of scrap, finding that the appellant enjoyed Cenvat credit without actually receiving the inputs. The lack of proper records and discrepancies in goods carried on trucks indicated a deliberate attempt to cause loss to Revenue.Issue 5: Use of parallel invoices and evasion of Revenue:The authority investigated the use of parallel invoices, revealing pre-printed invoice books with the same serial number. The appellant failed to provide a substantial defense, leading to the conclusion that there was an evasion of Revenue through such practices.Issue 6: Pre-deposit requirement and penalties imposed on involved parties:Considering the evidence and lack of satisfactory defense, the adjudicating authority directed the appellant to make a deposit of Rs. 4 crores to protect Revenue's interest. Penalties were also imposed on individuals involved, with specific amounts and timelines set for compliance.This judgment thoroughly analyzes the issues of natural justice violation, clandestine activities, procurement discrepancies, and Revenue evasion, culminating in specific directives regarding pre-deposit requirements and penalties on involved parties.
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