2016 (7) TMI 1108 - AT - Central Excise

Director's Admitted Manufacturing of Wire Leads to Duty Upheld, Section 11AC Penalty Dismissed

The Tribunal upheld a Central Excise duty demand and penalties, including Section 11AC imposition, based on the Director's clear admission of ... Central Excise duty demand - penalties imposed - duty has been worked out on the basis of clearances computed on the basis of entries in various documents recovered during the investigation - Held that:- The statement of the Director of the appellant assessee was never retracted and is indeed supported by the documentary evidences collected during the investigation. In the case of K.I. Pavuney vs Astt. Collector Cochin [1997 (2) TMI 97 - SUPREME COURT OF INDIA] held that confessional statement, if found voluntary can form the sole bases for conviction. Needless to say that for conviction the level of evidence required is to meet the yardstick of proof beyond reasonable doubt while in quasi judicial proceedings it is to meet the yardstick of “preponderance of probability” only. However, there is force in the contention of the appellant that during the period when evasion took place Section 11AC ibid had not been enacted and therefore, penalty under Section 11AC cannot be imposed. We find that Section 11AC came in force on 28.09.1996 while period involved in this case falls within 1994-1995. Therefore, penlaty under Section 11AC of the Central Excise Act, 1944 is not attracted in this case. Issues:Appeal against Central Excise duty demand and penalties including Section 11AC imposition.Analysis:The appeal was filed against an order confirming a Central Excise duty demand and penalties, including Section 11AC imposition. The appellant argued that the case relied solely on the Director's statement without corroborative evidence. It was contended that manufacturing wire from wire rods does not constitute manufacture, citing a relevant case law. The appellant also challenged the imposition of penalties under both Section 11AC and Rule 173 Q simultaneously. On the contrary, the Department argued that the Director's admission of clandestine removal was supported by documents. The Tribunal considered both arguments and found that duty was calculated based on clearances from documents recovered during the investigation. The Director admitted to manufacturing wire and evading duty, supported by the availing of cenvat credit on inputs. The Tribunal noted that the appellant did not contest the manufacturing aspect during the investigation or adjudication stages. The Director's admission was deemed clear and unambiguous, with no retraction or duress alleged.The appellant failed to respond to the show-cause notice or attend hearings, raising a belated argument that wire was made from wire rods, not constituting manufacture. However, the Tribunal found no evidence supporting this claim, especially since the Director admitted to manufacturing wire and availing Modvat on inputs. The Tribunal highlighted that the appellant's late contention lacked merit due to the absence of supporting evidence throughout the proceedings. The Director's unretracted statement, supported by documentary evidence, was considered valid for conviction, meeting the required standard of proof.Regarding penalties, the Tribunal acknowledged the appellant's argument that Section 11AC was not in force during the evasion period, making its imposition invalid. Since the evasion period predated the enactment of Section 11AC, the Tribunal ruled that the penalty under this section was not applicable in this case. Consequently, the Tribunal allowed the appeal only to the extent of setting aside the penalty under Section 11AC, upholding the rest of the original order.In conclusion, the Tribunal analyzed the arguments presented by both parties, emphasizing the Director's admission and the lack of timely challenges to the manufacturing aspect. The decision to set aside the penalty under Section 11AC was based on the non-applicability of this provision during the evasion period.