2006 (10) TMI 347 - AT - Central Excise

Summary

Issues Involved:
1. Confiscation of diamond scalves and imposition of redemption fine.
2. Demand for central excise duty on clandestinely cleared diamond scalves.
3. Imposition of penalties on the appellant firm and its partners.
4. Confiscation of land, buildings, and other assets.
5. Imposition of penalties on customers under Rule 209A.
6. Eligibility for SSI exemption.
7. Validity of statements and evidence, including retraction and corroboration.
8. Denial of cross-examination and principles of natural justice.

Issue-wise Detailed Analysis:

1. Confiscation of Diamond Scalves and Imposition of Redemption Fine:
The Commissioner of Central Excise & Customs, Surat-I, ordered the confiscation of 273 pieces of diamond scalves valued at Rs. 46,41,000/- under Rule 173Q(1) of the Central Excise Rules, 1944. The appellant was given the option to redeem the confiscated goods by paying a fine of Rs. 24,00,000/- in lieu of confiscation.

2. Demand for Central Excise Duty on Clandestinely Cleared Diamond Scalves:
The appellant M/s. Everest Diamond Tools was ordered to pay central excise duty amounting to Rs. 43,22,840/- on 2404 pieces of diamond scalves valued at Rs. 4,08,68,000/- clandestinely cleared during 1997-98 under Rule 9(2) of the Central Excise Act. The adjudicating authority found that the appellant had manufactured and cleared these goods without obtaining central excise registration and without paying the required duty.

3. Imposition of Penalties on the Appellant Firm and Its Partners:
A penalty of Rs. 43,22,840/- was imposed on M/s. Everest Diamond Tools under Rule 173Q(1). Additionally, each partner of the firm, namely Shri Kanjibhai G. Gujarat, Shri Vallabhbhai D. Disora, Shri Jayantibhai N. Ansodaria, and Shri Arvind Bhai H. Sanghvi, was penalized Rs. 5,00,000/- under Rule 209A of the Central Excise Rules, 1944. The partners admitted to manufacturing and clearing the goods without central excise registration and without paying excise duty.

4. Confiscation of Land, Buildings, and Other Assets:
The Commissioner also ordered the confiscation of the land and buildings, 27 pieces of diamond scalves valued at Rs. 4,83,000/-, and 19 pieces of diamond scalves valued at Rs. 2,41,000/-, with the option to redeem them.

5. Imposition of Penalties on Customers under Rule 209A:
Penalties were imposed on various customers who had received the goods without payment of central excise duty and without central excise invoices. The customers included Shri Rachhodbhai Madhabhai Rizia, Shri Vinubhai (Vinodbhai) M. Rizia, Shri Pareshbhai Vagani, Shri Bharatbhai Popatbhai Patel, Shri Ghanshyambhai Narsinghbhai Patel, and Shri Himmatbhai Bachubhai Satani. They admitted to receiving the goods without payment of duty and without proper invoices.

6. Eligibility for SSI Exemption:
The appellant claimed eligibility for SSI exemption under Notification No. 1/93-C.E., as amended by Notification No. 16/97. The Commissioner acknowledged that the appellant was a small-scale industry and revised the demand accordingly, allowing the benefit of SSI exemption up to Rs. 30 lacs.

7. Validity of Statements and Evidence, Including Retraction and Corroboration:
The appellant's counsel argued that the demand was based on the statement of the managing partner, Kanjibhai, which was later retracted. The counsel contended that the statement was taken under duress and lacked independent corroboration. However, the Tribunal found that the statements were recorded in the presence of independent witnesses, and there was no valid reason to discard them. The Tribunal also noted that the retraction was made too late and lacked credibility.

8. Denial of Cross-Examination and Principles of Natural Justice:
The appellant argued that the denial of cross-examination of the excise officers resulted in a violation of natural justice. However, the Tribunal noted that no statements of these officers were recorded, and thus, there was no question of cross-examining them. The Tribunal found no basis for this contention.

Conclusion:
The Tribunal upheld the findings and reasoning of the adjudicating Commissioner, dismissing all appeals. The penalties imposed were deemed just and adequate. The Tribunal also rejected the appellant's submission to treat the determined value as price-cum-duty, noting that the goods were cleared clandestinely without excise registration.