Clandestine removal proved by transport records and admission, but separate partner penalty failed without a distinct role.

Recovered lorry receipts from factory premises, together with an un-retracted partner's admission, were treated as sufficient evidence of clandestine removal; the extended period, duty demand, interest and penalty against the firm were sustained. The Tribunal rejected the challenge to valuation because the invoice-based method matched the admission and supporting records. A separate penalty on the partner under Rule 26(1) was set aside because no distinct, independently established role was shown once the firm had already been penalised, and duplicate penalty was held unwarranted in the absence of a separate attributable act.

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Issues: (i) Whether the duty demand, interest and penalty against the firm were sustainable on the basis of lorry receipts recovered from the factory and the partner's un-retracted statement admitting clandestine clearance. (ii) Whether separate penalty could be imposed on the partner under Rule 26(1) of the Central Excise Rules, 2002 when penalty had already been imposed on the partnership firm.

Issue (i): Whether the duty demand, interest and penalty against the firm were sustainable on the basis of lorry receipts recovered from the factory and the partner's un-retracted statement admitting clandestine clearance.

Analysis: The records showed recovery of lorry receipts from the factory premises, some of which matched duty-paid invoices while others had no corresponding invoices. The partner's statement recorded much later was not retracted and contained an admission that goods covered by the remaining receipts were cleared without invoice and without payment of duty. The objection to valuation based on invoice values was rejected because the same valuation method had been accepted in the statement. The Tribunal held that the recovered documents together with the voluntary, un-retracted admission constituted sufficient evidence to establish clandestine removal, justify invocation of the extended period, and sustain the consequential interest and penalty.

Conclusion: The demand of duty, interest and penalty against the firm was upheld and answered against the assessee.

Issue (ii): Whether separate penalty could be imposed on the partner under Rule 26(1) of the Central Excise Rules, 2002 when penalty had already been imposed on the partnership firm.

Analysis: The Tribunal noted that the partner had no independently established specific role warranting separate penal action once the firm itself had been penalised. It relied on the principle that a partner is not a separate legal entity from the firm for the purpose of duplicate penalty, and followed the view that where the firm has already suffered penalty, a further penalty on the partner is not justified in the absence of a distinct attributed act.

Conclusion: The penalty on the partner was set aside and this issue was decided in favour of the assessee.

Final Conclusion: The firm's liability for duty, interest and penalty was sustained, but the separate penalty on the partner was deleted, resulting in only partial relief.

Ratio Decidendi: A recovered set of transport documents coupled with a voluntary and un-retracted admission can establish clandestine removal, but a partner cannot be subjected to a separate penalty for the same matter when the partnership firm has already been penalised and no distinct role is specifically established.

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