2018 (2) TMI 1012 - AT - Central Excise

Directors liable for duty evasion penalties in Central Excise Act case

The judgment dated 29/12/2017 upheld the demand of duty, interest, and penalty against the appellants under the Central Excise Act. The appeals were ... Penalty for suppression of production and clearance under Section 11AC - Assessment by assumed valuation using comparable invoices in absence of cooperation - Liability of directors for penalties for excise evasion - Confiscation and redemption fine - Denial of cross-examination and remand for de novo adjudicationAssessment by assumed valuation using comparable invoices in absence of cooperation - Denial of cross-examination and remand for de novo adjudication - Validity of demand of duty, interest and penalty and whether matter required remand for cross-examination of former employees - HELD THAT: - Tribunal found that the show-cause notice and adjudication were based not solely on employee statements but also on records recovered from the appellants' premises and from a third party. The appellants repeatedly refused to cooperate during investigation and declined to supply details of sizes and values, obliging Revenue to adopt comparative invoices. In absence of actual transaction value, applying value of similar goods under the applicable rules was held permissible. The request to remand for cross-examination of former employees who are untraceable was rejected because the appellants had not disputed the core facts and could not dislodge the adjudication merely by asserting the need to cross-examine missing employees; the evidence and records available were sufficient for decision. Consequently the appeals against demand, interest, penalty and confiscation were dismissed. [Paras 5, 6]Demand of duty, interest and penalty confirmed; remand for de novo adjudication to permit cross-examination of missing employees declined and appeal dismissed.Liability of directors for penalties for excise evasion - Penalty for suppression of production and clearance under Section 11AC - Whether Shri Hemant S. Parmar and Shri Vallabh S. Parmar are liable for penalties as directors - HELD THAT: - The adjudicating authority recorded that both directors were aware of the supplies and the manner of clearances without payment of duty, and that one director attempted to mislead the department by inconsistent statements. The Tribunal noted admissions in the appeal memoranda and that neither director placed a substantive challenge to the facts. Reliance on precedent upholding personal liability of directors for such conduct was accepted. On these findings the imposition of penalties on both directors under the relevant rules was held to be sustainable. [Paras 7, 8]Penalties imposed on Shri Hemant S. Parmar and Shri Vallabh S. Parmar upheld and their appeals dismissed.Final Conclusion: Appeals dismissed; demand of duty, interest and penalty (including penalties on the two directors) and measures of confiscation/related consequences upheld; no remand for cross-examination granted. Issues involved:Appeal against demand of duty, interest, penalty, and confiscation of goods under Central Excise Act.Detailed Analysis:1. Demand of Duty, Interest, and Penalty:- Appellants engaged in manufacturing steel doors/windows under Chapter sub-heading No.7308.30, 7308.90 & 7204.90 of CETA, 1985.- Goods seized due to suspicion of clearance without payment of duty.- Employees admitted to irregularities in clearance without proper procedure/documents or duty payment.- Show-cause notice issued for duty, interest, penalty under Section 11AC.- Appellants challenged order, citing need for cross-examination of involved persons and delayed document supply.- Tribunal found appellants trying to shift blame to untraceable ex-employees, challenging valuation without cooperation during investigation.- Tribunal upheld Revenue's valuation based on invoices due to appellants' non-cooperation.- Appeal dismissed due to lack of merit.2. Imposition of Penalty on Directors:- Director held liable for penalty under Central Excise Rules for awareness of irregularities.- Tribunal referred to High Court and Supreme Court decisions to justify penalty imposition.- Commissioner's findings highlighted deliberate attempts to mislead department and evade duty payment.- Directors failed to challenge case facts, instead shifting responsibility to untraceable employees.- Tribunal upheld penalty imposition on directors, dismissing appeals.The judgment pronounced on 29/12/2017 upheld the demand of duty, interest, and penalty against the appellants, dismissing their appeals due to lack of merit and justifying the penalty imposition on the directors for their involvement in the irregularities.