2015 (10) TMI 1548 - AT - Central Excise

Duty demand upheld on company, penalty on Director set aside. Tribunal's decision under Section 11AC upheld.

The case involved a duty demand of Rs. 2,00,826 on the appellant company and its Director based on recovered documents. The Tribunal directed verification ... Duty demand - Imposition of penalty - Held that:- Tribunal remanded the matter to the Adjudicating Authority for verifications of the reconciliation of the clearance mentioned in the documents and the watchman’s private register with the duty paying documents. On a query from the Bench, the Learned Advocate of the appellant submits that they are not challenging the reconciliation of the statements in the present appeal. I find that the Adjudicating Authority passed the order following the directions of the Tribunal in so far as to verify the reconciliation of the documents recovered from the security guard alongwith duty paying documents. The Learned Advocate has not disputed the reconciliation. - it is directed that the appellant is entitled to pay penalty 25% of duty alongwith duty and interest within 30 days from the date of communication of this order under Section 11AC of the Act. - Decided partly in favour of assessee. Issues:- Duty demand based on recovered documents- Lack of further investigation by Revenue- Tribunal's remand order for reconciliation verification- Penalty imposition on the DirectorDuty Demand Based on Recovered Documents:The case involved a duty demand of Rs. 2,00,826 along with interest and penalties imposed on the appellant company and its Director based on documents recovered from the security guard during a visit to the factory. The Adjudicating Authority confirmed the demand, which was upheld by the Commissioner (Appeals). The Tribunal remanded the matter to the Adjudicating Authority for verification of reconciliation between the documents and duty paying documents. The Learned Advocate argued that the demand was solely based on the recovered documents without proper corroboration. However, the Tribunal's directions for verification were followed, and the reconciliation was not disputed by the Advocate during the proceedings.Lack of Further Investigation by Revenue:The Advocate for the appellant contended that the Revenue had not conducted a comprehensive investigation into various aspects such as procurement of raw materials, manufacturing processes, transportation, and financial transactions. The Advocate relied on precedents to support the argument that the demand solely based on recovered documents without further investigation was not justified. However, the Authorized Representative for the Revenue reiterated the findings of the Commissioner (Appeals) and argued that the proceedings were conducted as per the Tribunal's remand order, indicating that the Advocate's submissions lacked merit.Tribunal's Remand Order for Reconciliation Verification:The Tribunal's remand order directed the Adjudicating Authority to verify the reconciliation of the clearance mentioned in the recovered documents with the duty paying documents. The Tribunal accepted the Advocate's request for reconciliation and remanded the matter for fresh adjudication. During the proceedings, the Advocate confirmed that they were not challenging the reconciliation, indicating that the reconciliation process was not in dispute. The Adjudicating Authority followed the Tribunal's directions for verification, and the Advocate did not contest the reconciliation, leading to the Tribunal upholding the impugned order against the appellant.Penalty Imposition on the Director:The Advocate argued that the penalty imposed on the Director was unwarranted as he had no involvement in the alleged clandestine removal of goods. The Tribunal found no material evidence supporting the imposition of the penalty on the Director and subsequently set aside the penalty. The Tribunal upheld the impugned order against Appellant No. 1 but directed the appellant to pay a penalty of 25% of the duty along with duty and interest within a specified period under Section 11AC of the Central Excise Act 1944. The penalty imposed on the Director was set aside, and the appeal filed by Appellant No. 2 was allowed.This detailed analysis of the judgment highlights the key issues, arguments presented by the parties, Tribunal's directions, and the final decision rendered by the Tribunal.