2006 (6) TMI 318 - AT - Central Excise

Summary

Issues:
1. Clandestine removal of goods without payment of Central Excise duty.
2. Reliability of the statement made by the Director.
3. Corroboration of evidence to establish clandestine removal.
4. Imposition and reduction of penalties.

Analysis:

Issue 1: Clandestine removal of goods without payment of Central Excise duty
The case involved the clandestine removal of electric capacitors by the appellants without issuing regular Central Excise invoices. The appellants were found to have removed finished goods under certain invoices cum delivery challans, resulting in evasion of Central Excise duty amounting to Rs. 2,68,567. Additionally, a shortage of insulating paper, an input for manufacturing capacitors, was also discovered, leading to a duty involved of Rs. 1,34,859.

Issue 2: Reliability of the statement made by the Director
The entire case relied on the statement of the Director, who admitted to the clandestine removal. However, the Director later retracted the statement, claiming it was made under duress. The appellants argued that the goods were returned for repairs and were not subject to duty evasion. The Tribunal noted the retraction was delayed and not submitted to the department, deeming it unreliable. The statement was considered voluntary and not under coercion, as it detailed the modus operandi of the clandestine removal.

Issue 3: Corroboration of evidence to establish clandestine removal
The appellants contended that there was no corroboration of the Director's statement and that the penalty imposed was excessive. They argued that since the statement was retracted and there was no other evidence supporting clandestine removal, the charges should not be upheld. The Tribunal, however, found the admission by the Director, coupled with documentary evidence, sufficient to establish the clandestine removal, dismissing the need for further corroboration.

Issue 4: Imposition and reduction of penalties
The show cause notice led to the imposition of penalties on the appellants. On appeal, the penalty on the corporation was reduced, but the Assistant Commissioner's decision was otherwise upheld. The Tribunal found no grounds to reduce the penalty on the Director, considering his active involvement in the clandestine removal. However, in light of the circumstances, the penalty on the corporation was reduced to Rs. 50,000, maintaining the demand confirmed by the Assistant Commissioner.

In conclusion, the Tribunal rejected the appeals, upholding the demand for duty evasion and penalties, emphasizing the importance of the Director's admission and the lack of corroborative evidence to dispute the clandestine removal of goods.