2014 (3) TMI 125 - AT - Central Excise

Tribunal upholds allegations of clandestine goods removal, imposes penalties. Appellant 1 granted reduced penalty.

The Tribunal upheld the allegations of clandestine manufacture and removal of goods by the appellants, confirming demands for unpaid excise duty and ... Unaccounted production and clearance of copper enamelled wires - clandestine removal - retracted statments - Held that:- Both the excise clerk, production supervisor have confirmed that private notes/chits which contains the details of clandestine removal of goods were written and maintained by the employees of the appellant No. 1; if the recovered documents are admitted to have been maintained by the production supervisor and were in the factory premises (at the security gate), the said evidence is sufficient to prosecute the appellant, supported by the statements of Chief Executive and directors. There is nothing on record to show statements made by the clerk, production supervisor, and the directors were retracted. In the absence contrary evidence of retraction by others, I am of the view that the lower authorities were correct in confirming the demand raised against the appellant alongwith interest and imposed penalties. - Decided against the assessee. Benefit of reduced penalty 25% of the amount duty liability - Held that:- The law has been settled by the Hon. High Court of Gujarat in the case of Akash Fashions Prints Pvt. Ltd - [2009 (1) TMI 113 - GUJARAT HIGH COURT] as to that Tribunal can also extend the benefit of reduced penalty of 25% of the amount of duty, if it was not extended by the lower authorities - penalty imposed on appellant No. 1 should be 25% of the amount of duty confirmed on them as per the provision of section 11AC of the Central Excise Act, 1944, subject to the condition that the entire duty liability and the interest and said penalty as indicated herein above is paid within 30 days of the receipt of this order. - Decided partly in favor of assessee. Issues Involved:1. Allegations of clandestine manufacture and removal of copper enamelled wires.2. Use of dummy trading firms for evading excise duty.3. Authenticity and evidentiary value of seized documents and statements.4. Imposition of penalties and interest on the appellants.5. Retraction of statements and allegations of coercion.Issue-wise Detailed Analysis:1. Allegations of Clandestine Manufacture and Removal:The appellants were accused of clandestinely manufacturing and removing copper enamelled wires without paying excise duty. The Directorate General of Central Excise Intelligence conducted searches and found incriminating documents at the factories of the appellants, which indicated unaccounted production and clearance of goods. The investigation revealed that the appellants used dummy trading firms to camouflage these activities.2. Use of Dummy Trading Firms:The investigation found that the appellants used non-existent trading firms, M/s Bharat Electrical and M/s Anurag Electricals, to cover the clandestine clearance of their finished products. These firms were found to be dummy entities with no real existence, used solely to facilitate the evasion of excise duty.3. Authenticity and Evidentiary Value of Seized Documents and Statements:The seized documents, including notebooks and records found at the security guard's cabin, were scrutinized. Statements from various employees, including the Chief Executive, Production Supervisor, and Excise Clerk, confirmed the authenticity of these documents. The documents detailed the actual production and clearance of goods, which were not accounted for in the statutory records. The appellate authority upheld the findings based on these documents and corroborative statements.4. Imposition of Penalties and Interest:The Adjudicating Authority confirmed the demands for unpaid excise duty and imposed penalties on the appellants. The First Appellate Authority upheld these orders but reduced the penalties for some appellants. The Tribunal confirmed the demand of Rs. 21,14,207/- against Appellant 1 and Rs. 7,754/- against Appellant 2, along with interest. The Tribunal also upheld the appropriation of Rs. 20 lacs paid by Appellant 1.5. Retraction of Statements and Allegations of Coercion:The appellants argued that the statements were obtained under coercion and should be discarded. However, the Tribunal found no evidence of retraction or physical abuse. The statements were consistent and corroborated by documentary evidence. The Tribunal dismissed the claims of coercion and upheld the findings of the lower authorities.Conclusion:The Tribunal concluded that there was sufficient evidence to prove the clandestine manufacture and removal of goods by the appellants. The penalties and interest imposed were upheld, with a modification allowing Appellant 1 to benefit from a reduced penalty of 25% of the duty amount, provided the payment was made within 30 days. The appeals were disposed of accordingly.Pronouncement:The judgment was pronounced in the Court on 28.02.2014.