2006 (7) TMI 424 - AT - Central Excise

Summary

Issues:
- Confirmation of demand of duty and imposition of penalty on the company and Director
- Validity of evidence from Trade Tax authorities
- Cross-examination of Trade Tax authorities
- Existence of parallel invoices and evasion of duty
- Penalties imposed under Section 11AC, Rule 173Q, and Rule 209A

Confirmation of Demand of Duty and Imposition of Penalty:
The appeals were against the order confirming the demand of duty and penalty on the company and Director. The authorities found discrepancies in the invoices issued by the appellant, leading to suspicion. The appellant admitted issuing parallel invoices to M/s. K.K. Rubber Products. The adjudicating authority upheld the demand and penalties. The appellant argued against the validity of evidence from Trade Tax authorities and sought to set aside penalties due to early duty payment. The Tribunal found the existence of parallel invoices indicated evasion of duty, upholding the demand of duty on the appellant.

Validity of Evidence from Trade Tax Authorities:
The Trade Tax authorities' report showed discrepancies in the invoices issued by the appellant. The appellant contested the use of this report as evidence. The Tribunal noted that the recovery of a parallel invoice from the appellant's factory to M/s. K.K. Rubber Products indicated evasion of duty, supporting the authorities' actions. The Tribunal rejected the appellant's argument against the validity of the Trade Tax authorities' report.

Cross-Examination of Trade Tax Authorities:
The appellant requested cross-examination of the Trade Tax authorities to establish the truth. However, the Tribunal found that the appellant's involvement in maintaining parallel invoices to evade duty was evident. The Tribunal deemed the denial of cross-examination justified, as the appellant failed to establish a case on merit.

Existence of Parallel Invoices and Evasion of Duty:
The Tribunal found that the existence of parallel invoices demonstrated the appellant's attempt to evade duty by issuing correct invoices to purchasers while using parallel invoices with lower values for duty calculation. The recovery of an unrecorded parallel invoice further supported the conclusion of evasion. The Tribunal upheld the demand of duty on the appellant based on the evidence of parallel invoices.

Penalties Imposed under Section 11AC, Rule 173Q, and Rule 209A:
The appellant had deposited the duty amount before the show cause notice was issued. Citing relevant case law, the Tribunal set aside the penalties imposed under Section 11AC, Rule 173Q, and Rule 209A. The Tribunal followed legal precedents to determine the appropriateness of penalties, ultimately setting them aside based on the timing of duty payment and specific rule violations.

In conclusion, the Tribunal allowed the appeals, setting aside penalties under Section 11AC, Rule 173Q, and Rule 209A, while upholding the demand of duty on the appellant due to the existence of parallel invoices indicating evasion of duty.