2006 (11) TMI 426 - AT - Central Excise

Clandestine removal - Proof - Demand - Duty paid before issuance of show cause notice - Penalty - Equal to duty - Evidence

Issues Involved:
1. Legality of the seizure and confiscation of 308 pieces of fabric.
2. Validity and credibility of the private notebooks as evidence.
3. Admissibility of statements taken under alleged duress.
4. Denial of cross-examination of officers.
5. Applicability of Section 11A(2B) regarding payment of duty before the show cause notice.
6. Applicability of penalties under Section 11AC.

Detailed Analysis:

1. Legality of the Seizure and Confiscation of 308 Pieces of Fabric:
The appellants contended that the seized 308 pieces had not reached the RG-1 stage and thus should not have been confiscated. However, the Tribunal found that during the investigation, all concerned parties, including the partner, admitted that the pieces were ready for dispatch and meant to be cleared without payment of duty. Therefore, the claim that the pieces had not reached the RG-1 stage was not accepted. The Tribunal upheld the confiscation but reduced the redemption fine from Rs. 1,46,500/- to Rs. 50,000/-.

2. Validity and Credibility of the Private Notebooks as Evidence:
The appellants argued that the private notebooks were not maintained by the mills and were the work of disgruntled employees. The Tribunal, however, found that the notebooks contained detailed records of transactions, which were corroborated by the admissions of the partner, the printing master, the excise clerk, and 42 merchant manufacturers. These admissions confirmed the clandestine activities and manipulation of records. Therefore, the private notebooks were deemed credible evidence.

3. Admissibility of Statements Taken Under Alleged Duress:
The appellants claimed that the statements were taken under duress and that merchants were forced to pay the duty. The Tribunal dismissed this claim, stating it was unbelievable that all 42 merchant manufacturers were coerced into confessing and paying the duty. The consistent admissions by multiple parties corroborated the evidence of evasion.

4. Denial of Cross-Examination of Officers:
The appellants' request for cross-examination of officers was denied by the adjudicating authority. The Tribunal upheld this decision, noting that the case relied on the private records, excess stock, and admissions by the company's personnel and merchant manufacturers. Since the officers' statements were not used against the appellants, cross-examination was not warranted.

5. Applicability of Section 11A(2B) Regarding Payment of Duty Before the Show Cause Notice:
The appellants argued that since the duty was paid during the investigation and before the show cause notice, no penalty should be imposed under Section 11A(2B). The Tribunal clarified that Section 11A(2B) does not apply in cases involving fraud, collusion, or willful misstatement. Given the fraudulent nature of the evasion, the leniency under Section 11A(2B) was not applicable.

6. Applicability of Penalties Under Section 11AC:
The Tribunal emphasized that Section 11AC aims to deter evasion and reduce discretionary powers of adjudicating authorities. Once the ingredients of the offense under Section 11AC are proven, the authority must impose a penalty equal to the duty evaded. The Tribunal found that the appellants' actions constituted a well-planned evasion, justifying the penalties imposed. The legislative intent was to ensure that evaders do not escape penalties merely by paying the evaded duty before the show cause notice.

Conclusion:
The Tribunal sustained the demand of duty and penalties on the appellants, setting aside the confiscation of plant and machinery as too harsh, and reducing the redemption fine for the seized goods. The appeals were thus disposed of accordingly.

← Previous Next →