2017 (10) TMI 896 - AT - Central Excise

Tribunal Upholds Penalties for Tax Evasion Scheme: Compliance is Key

The Tribunal upheld the decision to impose penalties on M/s.Mehra Copy House for its involvement in the systematic evasion of Central Excise duty. Despite ... Clandestine manufacture and removal - parallel invoices - Held that: - at the time of follow up action the proprietor of the appellant firm initially denied having received any writing and printing paper from M/s. Rana Mahendra Papers Limited. But subsequently, when they were confronted with deposits/pay slips of ICICI Bank, they admitted that they had received writing and printing paper on the parallel invoices from M/s. Rana Mahendra Papers Limited and also had made payments for the same. It clearly shows that the appellant were fully aware that they had received goods on which the duty had not been paid and which were liable for confiscation - also, the role of M/s.Mehra Copy House becomes clear that they were indulged in clandestine activity - appeal dismissed - decided against appellant. Issues: Systematic evasion of Central Excise duty, involvement of appellant in clandestine removal of goods, imposition of penalties, appeal against personal penalty under Rule 26 of Central Excise Rules, 2002.In this case, M/s.Rana Mahindra Papers Limited, a manufacturer of paper products, was found with unaccounted stock during a search by Central Excise officers, indicating systematic suppression of production and clandestine removal of goods. Private records and statements of dealers revealed the evasion scheme, with parallel invoices and multiple bank accounts used for transactions. Show cause notices were issued, leading to the confirmation of a duty demand of Rs. 61,05,196/- along with penalties, including a personal penalty of Rs. 89,615/- on the present appellant under Rule 26 of the Central Excise Rules, 2002. The appellant appealed against this decision.The advocate for the appellant conceded that there was no merit in the case on its merits, seeking leniency. The respondent argued against leniency, highlighting the appellant's involvement in the evasion scheme and mentioning the dismissal of the main appellant's appeal for non-prosecution by the Tribunal. After hearing both parties and examining the record, the Tribunal proceeded with the analysis.The role of M/s.Mehra Copy House, the present appellant, was clarified through the statement of its proprietor, revealing the receipt of unaccounted goods and payments made for them. Despite initial denial, subsequent admission upon confrontation with evidence established the appellant's awareness of receiving dutiable goods without payment. Consequently, the Tribunal found no merit in the appellant's appeal, upholding the Commissioner's order and dismissing the appellant's appeal.Therefore, the Tribunal upheld the decision based on the evidence of the appellant's involvement in the evasion scheme, leading to the dismissal of the appeal. The judgment serves as a reminder of the consequences of participating in activities aimed at evading Central Excise duty, emphasizing the importance of compliance with tax regulations and the severe penalties for non-compliance.