2007 (8) TMI 592 - AT - Central Excise

Summary

Issues involved: Clandestine removal of goods without payment of duty based on a recovered note book, authenticity of the statement obtained from the partner of the appellant, imposition of penalty under Section 11AC of the Central Excise Act, and the liability of the partner in the alleged irregularities.

Clandestine Removal based on Note Book:
The case involved the appellants engaged in processing man-made fabrics, where Central Excise Officers found a note book indicating goods cleared without duty payment. The partner of the appellant admitted to the removal of goods without duty payment, which was partially paid later. The authenticity of the note book and the partner's statement were challenged, citing coercion and lack of evidence. The Tribunal upheld the duty demand based on the note book as the appellants failed to provide a satisfactory explanation, leading to the confirmation of duty demand.

Imposition of Penalty under Section 11AC:
The appellant argued against the penalty under Section 11AC, stating the alleged offense predated its insertion. The Tribunal agreed with this argument and set aside the penalty under Section 11AC. However, a penalty under Rule 173Q(1) of the Central Excise Rules was imposed, which was reduced to Rs. 50,000. It was noted that a separate penalty on the partner was not warranted as there was no evidence of conscious knowledge of the irregularities by the partner, leading to the allowance of the partner's appeal.

Partner's Liability in Irregularities:
The Tribunal considered the partner's liability in the alleged irregularities, noting that there was no material showing the partner's conscious knowledge of the offenses. As a result, the partner's appeal was allowed, and the penalties were adjusted accordingly. The appeals were disposed of with these conclusions.