2017 (10) TMI 553 - AT - Central Excise

Tribunal upholds demand for excise duty, stresses need for evidence

The tribunal dismissed the appeals filed by the assessee and individuals, upholding the demand of Rs. 14,20,482/- with interest and penalties for alleged ... Clandestine removal - MS ingots, CTD bars and TMT bars - it appeared that more than one invoice was issued under the same serial number - Department took the view that the invoices seized from the premises of Mr. Koteeswaran are the parallel set of invoices of assessee used for clearing bars and rods without accounting and without payment of Central Excise duty, involving evasion of duty of ₹ 16,18,197/- - major grievance that has been voiced by the assessee right from the adjudication stage is that copy of the Statement of Shri Koteeswaran was not supplied to them - Held that: - there has been no role ascribed to Mr.Koteeswaran in the whole modus operandi. Neither is there any charge or allegation in the body of the SCN that he has aided or abetted in facilitating clandestine removals/unaccounted clearances by the assessee and consequent evasion of central excise duty. On the other hand, specific contraventions have been listed in respect of other noticees like S/Shri C.Sukumaran and Rangarajan that they were concerning themselves in the activities of clandestine production, removal and suppression of facts and in the case of Shri Saranana Sankar, that he was concerned with purchasing and dealing with excisable goods which he knew or reason to believe are liable for confiscation under Central Excise law. When the department themselves did not find any infraction, abetment or implicatory role on the part of Mr.Koteeswaran, his non-inclusion as a noticee in the Show Cause Notice cannot be touted as a ground by the assessee to set aside the entire proceedings ab initio. The contention of the assessee on this point will therefore not succeed. Another contention of appellant is that the when the notice states that invoices recovered from the premises of Mr. Koteeswaran are parallel sets of invoices and relied upon the statement given by him has also been relied upon, however no notice was issued to Mr. Koteeswaran - Held that: - The SCN not only encloses the mahazar drawn at the residence of Mr.Koteeswaran on 1.7.2005, but also the statement recorded from Mr.Koteeswaran and the made up file recovered under mahazar from his residence. The claim of the assessee that statement of Mr.Koteeswaran was not received by them does not merit acceptance since in their response to the SCN vide letter dt. 18.1.2007 of the assessee, referred to in para-10 of the order of adjudicating authority, they have made reference to the claims made by Shri Koteeswaran in his statement dt. 2.7.2005. Evidently, such a contention would not be able to be made without having received a copy of statement of Mr. Koteeswaran. Cross-examination of Shri Koteeswaran - Held that: - Facts on record brings out that in their own letter dt. 8.1.2007, in response to SCN, assessee had inter alia requested for cross examination of 9 persons, however they had not sought such cross examination of Mr.Koteeswaran. It is also seen that in response to the said request, cross examination of the witnesses was permitted and done by the counsel for the assessee on 12.2.2007 of all the 9 persons as per the request of the assessee. This being so, the lower authorities cannot be faulted for not having cross examination of Mr. Koteeswaran. Coming to the demand of differential Central Excise duty, it is seen that whereas the SCN had proposed total demand of ₹ 39,85,598/- on various counts, each of these allegations have been analyzed in detail by the adjudicating authority. In fact, the adjudicating authority has taken note of the retraction of the earlier statements by various persons during the cross examination. After detailed analysis, the adjudicating authority has found that the charge of unaccounted procurement of raw material is not sustainable since they have been based only on the statement of scrap dealers, which have been retracted in cross examination, without any other evidence to corroborate such allegations. Extended period of limitation - penalty u/s 11AC - Held that: - the extended period of limitation is very much invokable in this case and accordingly, the demand of duty of ₹ 14,20,482/- under Section 11A (2) of the Central Excise Act, 1944 will sustain - So also penalty imposed under Section 11AC of the Act read with Rule 25 of Central Excise Rules, 2002 will also sustain. Decided against appellant. Issues Involved:1. Alleged clandestine removal of final products without payment of Central Excise Duty.2. Seizure and examination of documents from various premises.3. Demand of Central Excise duty and imposition of penalties.4. Non-supply of statement and non-issue of notice to Mr. Koteeswaran.5. Departmental appeal on non-confirmation of certain demands.Issue-wise Detailed Analysis:1. Alleged Clandestine Removal of Final Products:The primary issue revolves around the clandestine removal of products by the assessee without paying Central Excise Duty. The department conducted searches at various premises, including the factory and office of the assessee, and seized documents indicating unaccounted clearances. The seized invoices suggested that the assessee used parallel sets of invoices to evade duty, leading to a demand of Rs. 39,85,598/- for the period from July 2003 to June 2006.2. Seizure and Examination of Documents:The searches led to the seizure of invoices from Mr. Koteeswaran's premises, which were alleged to be parallel sets used for unaccounted clearances. Similar findings were made from the premises of Annai Agencies, Sri Vari Traders, and Balaji Traders, indicating unaccounted sales and evasion of duty. The duty on these unaccounted clearances was calculated and formed the basis for the show cause notice issued to the assessee.3. Demand of Central Excise Duty and Imposition of Penalties:The original authority confirmed a demand of Rs. 14,20,482/- along with interest and imposed equal penalties under Section 11AC of the Central Excise Act, 1944. Penalties were also imposed on individuals associated with the assessee under Rule 26 of the Central Excise Rules, 2002. The Commissioner (Appeals) upheld these findings, leading to the present appeals by the assessee and the individuals.4. Non-supply of Statement and Non-issue of Notice to Mr. Koteeswaran:The assessee contended that the statement of Mr. Koteeswaran was not supplied to them and that he was not issued a show cause notice or cross-examined. The tribunal found that the statement was indeed part of the relied upon documents and had been provided to the assessee. Furthermore, the assessee had not requested cross-examination of Mr. Koteeswaran during the adjudication process. The tribunal rejected the contention that the non-issue of a notice to Mr. Koteeswaran vitiated the proceedings, as no specific role or allegation was ascribed to him in the show cause notice.5. Departmental Appeal on Non-confirmation of Certain Demands:The department's appeal challenged the non-confirmation of demands related to unaccounted procurement of raw materials and unaccounted manufacture of MS ingots and CTD bars. The adjudicating authority had dropped these demands due to lack of corroborative evidence and reliance solely on retracted statements. The tribunal upheld the adjudicating authority's findings, emphasizing the need for tangible documentary evidence to support such allegations.Conclusion:The tribunal dismissed the appeals filed by the assessee and the individuals, upholding the demand of Rs. 14,20,482/- along with interest and penalties. The departmental appeal was also dismissed, affirming the adjudicating authority's decision to drop certain demands due to insufficient evidence. The tribunal emphasized the importance of corroborative evidence in establishing allegations of unaccounted procurement and manufacture. The appeals were disposed of in the above terms.