Appeal partially allowed in sponge iron clandestine removal case under Section 36B mandate
CESTAT Kolkata partially allowed the appeal in a case involving clandestine removal and under-valuation of sponge iron. The tribunal set aside demands of Rs.32,36,758/- and Rs.3,37,080/- based on computer printouts as the department failed to follow Section 36B mandate and couldn't identify the author of entries. However, demand of Rs.18,37,986/- based on discrepancies in company's own registers was upheld as the appellant couldn't explain shortages. Director's penalty was reduced from Rs.10,00,000/- to Rs.2,00,000/- proportionate to confirmed demand. Penalties on Manager and DGM were set aside.
Issues Involved:
1. Demand based on computer printouts.
2. Demand on the ground of undervaluation.
3. Demand based on discrepancies in production reports.
4. Penalties imposed on individuals.
Summary:
1. Demand based on computer printouts:
The demand of Rs. 32,36,758/- and Rs. 3,37,080/- was confirmed based on computer printouts seized from the appellant's premises. The appellant argued that the computer printouts did not belong to them but to a trader, Mr. Sanjay Bhalotia, who initially confirmed this through an affidavit but later disowned it in a written statement obtained by the Commissioner post personal hearing. The tribunal observed that the statement dated 18.02.2009 had no evidentiary value as it was not shared with the appellant. The tribunal also noted that the department did not follow the mandate under Section 36B of the Central Excise Act, 1944, which prescribes conditions for admitting computer printouts as evidence. Thus, the demands based solely on these computer printouts were set aside.
2. Demand on the ground of undervaluation:
The demand of Rs. 3,37,080/- was based on the difference between the appellant's invoice values and the rates per MT in the computer printouts. Since the computer printouts were not admissible as evidence, this demand was also set aside.
3. Demand based on discrepancies in production reports:
The demand of Rs. 18,37,986/- was confirmed based on discrepancies between RG-1, Daily Production and Consumption of Material Report, and Daily Stock Tally Report. The tribunal noted that these reports, including computer printouts maintained by the appellant, were admissible as evidence under Section 36B. The discrepancies in the reports indicated suppression of production and clandestine removal of goods. The tribunal upheld this demand, stating that the appellant failed to provide valid explanations for the discrepancies and that the intention to evade duty could be inferred from the records maintained by the appellant.
4. Penalties imposed on individuals:
- The penalty on the Director, Shri C.S. Grewal, was reduced from Rs. 10,00,000/- to Rs. 2,00,000/- as only part of the demand was upheld.
- The penalty on the Manager, Shri Nimananda Pradhan, was set aside as the incriminating documents were found unreliable.
- The penalty on the DGM, Shri R.S. Pandey, was set aside as he was an employee acting under the Director's instructions.
Order:
- Demand of Rs. 32,36,758/- and Rs. 3,37,080/- set aside.
- Demand of Rs. 18,37,986/- upheld along with applicable interest and penalty.
- Penalty on the Director reduced to Rs. 2,00,000/-.
- Penalties on the Manager and DGM set aside.
- Central Excise duty along with interest and penalty to be appropriated from the amount deposited by the appellant.
- Appeals disposed of accordingly.
Pronounced in the open Court on 25.01.2024.
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