Court upholds admission under Central Excise Act, penalties impact liability.
M/s Bihar Foundry & Casting Ltd. through its Managing Director Sri Hari Krishna Budhia Versus The Commissioner of Central Excise, Ranchi Commissionerate, Ranchi
M/s Bihar Foundry & Casting Ltd. through its Managing Director Sri Hari Krishna Budhia Versus The Commissioner of Central Excise, Ranchi Commissionerate, ...
Issues Involved:1. Relevance of the statement recorded under Section 14 of the Central Excise Act, 1944 without complying with Section 9D.
2. Whether the duty demand was contested by the appellant before the authorities.
3. Whether the suo-moto deposit of differential duty liability can be said to be an admission of clandestine removal of goods.
4. Effect of the finality of the penalty imposed on the Managing Director on the appellant.
5. Basis of the impugned order: whether solely on the statement of the Managing Director or further material.
6. Basis of passing the impugned order: whether on the entries made in the private diary of the Managing Director.
Analysis:Issue 1: Relevance of the Statement under Section 14 without Complying with Section 9DThe court held that the statement recorded under Section 14 of the Central Excise Act, 1944 is per se admissible in evidence and does not require the formal proof of examination-in-chief before the adjudicating authority. The statement is subject to scrutiny by the adjudicating authority in the light of Section 24 of the Indian Evidence Act, which deals with the voluntariness of the statement. The court emphasized that the person making the statement under Section 14 is already under a statutory obligation to state the truth and is liable to penal consequences for making false statements. Therefore, the statement recorded under Section 14 can be relied upon by the adjudicating authority without the need for re-examination under Section 9D(1)(b). The court distinguished between statements recorded under Section 14 and other statements, such as those recorded under Section 21, which would require compliance with Section 9D(1)(b).
Issue 2: Contesting the Duty DemandThe court found that the appellant did not contest the duty demand related to the clandestine removal of goods before the adjudicating authority. The appellant's defense was primarily focused on the calculation of the duty amount and the treatment of the sale price as cum-duty price. The court noted that the appellant admitted the clandestine removal of goods by stating that the invoices could not be issued due to inadvertence. The appellant's claim for a refund of excess payment further indicated that the duty liability was accepted.
Issue 3: Suo-Moto Deposit as Admission of Clandestine RemovalThe court held that the suo-moto deposit of the differential duty before the issuance of the show-cause notice, coupled with the appellant's specific stand and conduct during the adjudication proceedings, amounted to an admission of clandestine removal of goods. The court noted that the appellant did not dispute the clandestine removal of goods but contested the calculation of the duty amount. The court also observed that the payment was not made under protest, and the appellant claimed a refund of only the excess amount, indicating acceptance of the duty liability.
Issue 4: Effect of Finality of Penalty on Managing DirectorThe court held that the finality of the penalty imposed on the Managing Director of the appellant company has a significant bearing on the appellant. The court noted that the penalty on the Managing Director was imposed under Rule 209A of the erstwhile Central Excise Rules, 1944, read with Rule 26 of the Central Excise Rules, 2001, for his involvement in the clandestine removal of goods. The court emphasized that the foundational facts for imposing the penalty on the Managing Director and the appellant company were identical. The court concluded that the finality of the penalty on the Managing Director, who was responsible for the sales and purchases of the appellant company, directly impacts the appellant company's liability.
Issue 5: Basis of the Impugned OrderThe court found that the impugned order was not based solely on the statement of the Managing Director recorded under Section 14 of the Central Excise Act, 1944. The court noted that there were further materials, including the private diary maintained by the Managing Director and the appellant's admission of clandestine removal of goods. The court observed that the appellant's defense focused on the calculation of the duty amount and the treatment of the sale price as cum-duty price, indicating acceptance of the duty liability.
Issue 6: Basis of Passing the Impugned Order on Private Diary EntriesThe court held that the entries made in the private diary of the Managing Director, coupled with other materials on record, formed a valid basis for passing the impugned order against the appellant. The court noted that the private diary was maintained by the Managing Director, who was responsible for the sales and purchases of the appellant company. The court emphasized that the appellant did not dispute the clandestine removal of goods and claimed that the invoices could not be issued due to inadvertence.
Conclusion:The court dismissed the appeal, holding that the statement recorded under Section 14 of the Central Excise Act, 1944, is admissible in evidence without the need for re-examination under Section 9D(1)(b). The court found that the appellant did not contest the duty demand related to the clandestine removal of goods and that the suo-moto deposit of the differential duty amounted to an admission of clandestine removal. The court also held that the finality of the penalty imposed on the Managing Director has a significant bearing on the appellant and that the impugned order was based on further materials, including the private diary entries and the appellant's admission of clandestine removal.