2014 (4) TMI 47 - AT - Central Excise

Tribunal confirms duty demand, imposes penalty for discrepancies in production

The Tribunal upheld the duty demand confirmation of Rs.1,19,92,751/- and imposed a penalty on the appellant following the discovery of incriminating ... Waiver of pre deposit - Statement of various persons was recorded indicating that they are not making entry in their statutory record showing the exact consumption of raw material resulting in excess production of final product & on the above basis proceeding was initiated - Held that:- recovery of documents from the appellant premises has not been disputed by them. When the same read alongwith statement of various persons including the Production Manager of the appellant, it becomes clear that the basis of which input output ratio adopted by the Commissioner is not in vacuum, but is made on the basis of the admission on part of various persons connected with the production of the sponge iron. As such at this prima-facie stage, we do not find a good case in favour of the appellant so as to dispense with the pre-deposit of entire amount of duty demand - Conditional stay granted. Issues: Duty demand confirmation, Penalty imposition, Clandestine activity, Pre-deposit requirement- Duty Demand Confirmation: The Commissioner confirmed a duty of Rs.1,19,92,751/- along with an identical penalty after discovering incriminating documents during a visit to the appellant's factory. Various checks and verifications conducted by DGCEI revealed discrepancies in the consumption of raw materials, leading to excess production of the final product. Statements from individuals connected to production supported the findings, justifying the basis for the input-output ratio adopted by the Commissioner.- Penalty Imposition: The appellant did not dispute the recovery of documents from their premises. The statements obtained, including from the Production Manager, indicated involvement in clandestine activities. The Tribunal found no strong case in favor of the appellant to waive the pre-deposit of the entire duty demand. The appellant had already deposited Rs. 20 lakhs during the investigation. Therefore, the Tribunal directed the appellant to deposit an additional Rs. 30 lakhs within eight weeks and report compliance. Subsequently, the pre-deposit of the remaining duty and penalty amount was waived, and recovery stayed during the appeal's pendency.- Clandestine Activity: The appellant was found to be engaged in clandestine activities based on the recovery of incriminating documents and statements from individuals involved in production. The discrepancies in recording raw material consumption led to excess production, highlighting the illicit nature of the operations.- Pre-Deposit Requirement: The Tribunal ordered the appellant to make a further deposit of Rs. 30 lakhs within a specified timeframe, in addition to the amount already paid, to comply with the pre-deposit requirement. Upon fulfilling this directive, the pre-deposit of the remaining duty and penalty was waived, and the recovery process stayed pending the appeal's resolution.