2018 (3) TMI 242 - AT - Central Excise

Tribunal Upholds Commissioner's Decision on Duty, Interest, and Penalties for Clandestine Manufacture

The Tribunal upheld the Commissioner's decision confirming duty, interest, and penalties under Section 11AC of the Central Excise Act, 1944 against the ... Clandestine removal - demand primarily based upon the records seized by the visiting officers including the labour con tractor record - Held that: - in the said case of R.A. Castings Pvt. Ltd. [2010 (9) TMI 669 - ALLAHABAD HIGH COURT], the Revenue's allegations were solely based upon electricity consumption. It was in that scenario, that the Court held that higher electricity consumption cannot be made basis for arriving at the excess production or steel ingots, In the present case, the Commissioner has himself observed that the reference to electricity consumption is only to corroborate the other evidences. Similarly, in respect of the project report and the capacity of the machine installed in the factory, he has observed that the same are corroborative evidences to the main allegations, which are primarily based upon the entries made in the packaging register and the labour contract register. Inasmuch as in the present case, the Revenue has been able to establish the procurement of the excess raw materials, excess payments made to the labourers, the excess electricity consumption and the excess installed capacity, the cumulative effect of all these evidences would lead to the inevitable conclusion that the appellants have manufactured and cleared clandestinely their final product. Appeal dismissed - decided against appellant. Issues involved:- Allegations of clandestine removal and manufacture of final product- Confirmation of duty, interest, and penalty under Section 11AC of the Central Excise Act, 1944- Adjudication based on various evidence including private records, electricity consumption, project report, capacity of machines, confessional statements, and procurement of raw materialsDetailed Analysis:1. The appellant, engaged in manufacturing Poly Propylene Glasses, filed an appeal against the duty confirmation of &8377; 30,14,062/-, interest, and penalty imposed by the Commissioner of Central Excise for alleged clandestine removal. The investigation included findings from a visit to the factory, statements of directors and employees, and scrutiny of private records, electricity consumption, and raw material procurement.2. The appellant's factory visit revealed discrepancies in records and excess production capacity. Statements of directors and supervisors admitted to excess production and payments to labor contractors. The investigation also involved verifying raw material suppliers and analyzing a project report submitted for a bank loan, which indicated higher production than recorded.3. The adjudication process involved the appellant claiming small-scale exemption and trading activities, disputing the allegations based on assumptions without evidence. The Commissioner considered various evidence, including private records, electricity consumption, confessional statements, and raw material procurement, to establish clandestine activities and confirm duty, interest, and penalties.4. The appellant challenged the findings, arguing against the reliance on electricity consumption, project report, and machine capacity. However, the Tribunal upheld the Commissioner's decision, emphasizing the corroborative nature of the evidence and the cumulative effect of excess raw material procurement, labor payments, electricity consumption, and machine capacity in establishing clandestine activities.5. The Tribunal rejected the appeal, citing the findings of the adjudicating authority as based on sufficient and positive evidence, including private records, confessional statements, and procurement details. The decision highlighted the importance of examining evidence independently in each case and upheld the duty confirmation, interest, and penalties imposed on the appellant.