2018 (1) TMI 259 - AT - Central Excise

Tribunal Upholds Department's Findings on Clandestine Clearances; Penalties Affirmed Despite Limited Partner Reduction

The Tribunal upheld the Department's findings of clandestine clearances against the appellant, rejecting the appellant's defense due to insufficient ... Clandestine removal of goods - corroborative evidences to hold against the appellant on the charge of clandestine removal - cash receipt entries pertaining to their trading activity in scrap - Held that: - the trading activity involving turnover of huge amounts and which was not an occasional business activity; hence cannot fail the memory/miss the attention of the appellants, whatever may be the circumstances they were under - the appellants also failed to prove with documentary evidence that the subject cash entries pertains to their scrap sales. No doubt, the VAT returns/some scrap purchase documents submitted by the appellants may show that the appellants were into trading activity of scrap, but these alone would not establish that the subject cash entries were related to such scrap sales and to rebut the evidence collected, without any cogent and corroborative evidence on record. Cash entries relating to M/s TUL - Held that: - there is no matching/correlation of even single entry to get convinced by the appellant s contention. Further, the documents available in record (weighment slips/register entries/etc) pertaining to clandestine clearances made to TUL, discussed in the notice, would prove beyond doubt that the appellant had the practice of clearing the ingots clandestinely, which fact not disputed by the appellant. The department had adduced evidence in the form of scrap and sponge iron (raw materials for manufacture of ingots) purchased from M/s Archana Iron Trades and M/s Sheetal Shipping respectively, as discussed at para 5.3.2 and 5.3.3. of the notice - The department cannot be expected to unearth every piece of evidence which is in the domain knowledge of the manufacturers engaged in such activity to prove the case with mathematical precision. Therefore, in cases of clandestine clearances, as the one before me, the preponderance of probabilities, in the face of evidence collected and statements recorded, the charge against the appellants held to be as proved. Shri Ramanuj Agarwal and Ambika Prasad who were the partners of the M/s Raghava Ispat had admitted the clandestine clearances and these statements were never retracted. The partners of the M/s Raghava Ispat, having admitted clandestine removals, giving details, it cannot be said these statements were given out of confusion lack of documents as they are the only persons who will be benefited by the clandestine operations. Appeal dismissed - decided against appellant. Issues Involved:1. Allegations of clandestine clearances by the appellant.2. Demand of Central Excise duty and imposition of penalties.3. Adequacy of evidence presented by the Department.4. Appellant's defense regarding cash transactions and trading activities.5. Statements and admissions by the appellant and associated parties.Issue-wise Detailed Analysis:1. Allegations of Clandestine Clearances:The core issue revolved around the clandestine removal of MS ingots by the appellant. The Department, based on intelligence and scrutiny of private records, alleged that the appellant received significant amounts from six units for clandestine clearances. The appellant contended that these cash receipts were part of their trading activities in scrap, not clandestine clearances.2. Demand of Central Excise Duty and Imposition of Penalties:A show cause notice was issued demanding Central Excise duty of Rs. 24,88,770 and proposing penalties under Section 11AC of the Central Excise Act, 1944. The Adjudicating Authority confirmed the demands and imposed penalties, which were upheld by the First Appellate Authority with a reduction in the penalty for one partner from Rs. 24,88,770 to Rs. 1,00,000.3. Adequacy of Evidence Presented by the Department:The appellant argued that the Department's case was based on presumptions without corroborative evidence such as production capacity, electricity consumption, or vehicle clearances. The Department, however, relied on private records and statements from buyers admitting to receiving goods clandestinely. The First Appellate Authority found the appellant's defense unconvincing, noting the lack of documentary evidence to support the claim that cash entries were related to scrap trading.4. Appellant's Defense Regarding Cash Transactions and Trading Activities:The appellant presented evidence of Central Excise invoices and VAT records for certain transactions, arguing that the cash receipts were part of legitimate business activities. However, the First Appellate Authority found no correlation between the cash entries and the scrap sales. The appellant's failure to provide ledger extracts or other convincing evidence led to the rejection of their defense.5. Statements and Admissions by the Appellant and Associated Parties:The Department relied on statements from buyers and partners of the appellant admitting to clandestine clearances. The appellant's contention that these admissions were made under duress was not supported by evidence. The First Appellate Authority emphasized that the admissions were never retracted and were consistent with the evidence of clandestine activities.Conclusion:The Tribunal upheld the findings of the lower authorities, concluding that the Department had established a case of clandestine clearances against the appellant. The appellant's defense was found lacking in credible evidence, and the admissions by the appellant and associated parties were deemed valid. Consequently, the appeals were rejected, and the impugned order was upheld.