2017 (10) TMI 1438 - AT - Central Excise

Court Upholds Clandestine Goods Removal Demand & Penalties

Maharaja Industries (Unit II) Versus C.C.E.,S.T. & Cus., Bangalore-IV

The court upheld the demand for clandestine removal of goods and penalties imposed on the main appellant. Evidence including torn out invoices and a ... Clandestine removal - certain manufactured goods have not been entered in statutory records - certain torn out invoices were also found in dustbin - case of appellant is that neither invoice no. is mentioned nor name of the consignee is mentioned therefore it cannot be alleged that goods has been cleared clandestinely - Held that:- In the case of clandestine removal neither invoice no. is required nor the name of the consignee is required. Only modus operandi is to be seen - The Revenue has been able to produce evidence in form of the torn off invoices and statement of Shri Nagappa certifying the allegations made by the Revenue. The contention of the appellant that the said statement has been retracted by way of an affidavit which has been placed on record at the time of reply to the show cause notice and same has not been considered. I find that the affidavit which has not been filed with the Department in time cannot be the basis for retraction that the statement has been retracted on next day by Shri Nagappa. Therefore, the retraction is not admissible. Revenue has been able to prove clandestine removal of goods on the basis of the torn of invoices recovered during the course of investigation - demand with interest and penalty upheld. Demand of ₹ 32,815/- (Rupees Thirty-Two Thousand Eight Hundred and Fifteen only) has been confirmed on the goods seized during the course of investigation as the said goods has been cleared on payment of duty during the said period is set aside. Penalty imposed on Shri Raviraj partner - Held that:- As M/s. Maharaja Industries is partnership firm, therefore separate penalty on the partner cannot be imposed. Therefore, penalty imposed on Shri Raviraj, partner is set aside. Appeal allowed in part. Issues:1. Clandestine removal of goods confirmed with penalties imposed.2. Evidence of clandestine removal based on torn out invoices and statement of authorized signatory.3. Contention regarding lack of specific details on torn out invoices.4. Consideration of statement by authorized signatory admitting to the practice.5. Admissibility of retraction of statement by authorized signatory.6. Confirmation of demand, interest, and penalty on main appellant.7. Setting aside demand on goods seized and penalty on partner of the appellant.Analysis:1. The appellant appealed against an order confirming the demand for clandestine removal of goods and imposing penalties. The case involved a search at the factory premises where torn out invoices were found, indicating goods not entered in records. A show cause notice was issued based on this evidence, leading to the confirmation of duty demand and penalties on both appellants.2. The appellant's counsel argued that the Revenue failed to provide concrete evidence of clandestine removal, citing the lack of specific details on torn out invoices. They highlighted discrepancies in the charges and emphasized that certain goods had already been cleared and duty paid, thus should not be demanded twice.3. The Revenue contended that the torn out invoices found in the dustbin were linked to the clandestine removal of goods, supported by the statement of the authorized signatory admitting to the practice. They argued that the evidence supported the demand for duty and penalties.4. Upon reviewing the submissions, the judge found that the absence of invoice numbers or consignee names on torn out invoices did not negate the allegation of clandestine removal. The statement by the authorized signatory further confirmed the practice of reusing torn invoices for clearing goods clandestinely.5. The judge noted that the Revenue presented evidence in the form of torn invoices and the statement by the authorized signatory, which corroborated the allegations. The appellant's attempt to retract the statement through a late-filed affidavit was deemed inadmissible, leading to the confirmation of the demand and penalties on the main appellant.6. The judgment confirmed a demand of Rupees 40,883 along with interest and penalties on the main appellant, while setting aside the demand on goods seized during the investigation. Additionally, a penalty imposed on the partner was overturned as separate penalties on partners of a partnership firm were not permissible.7. Ultimately, the appeals were disposed of with the specified terms, emphasizing the findings related to clandestine removal, evidence presented, and the admissibility of statements in the case.