2009 (6) TMI 810 - AT - Central Excise

Summary

Issues: Duty demand and penalty imposition for clandestine removal of chemical without payment of duty.

In this case, the Appellate Tribunal CESTAT, Ahmedabad, confirmed a duty demand of Rs. 4,62,127 against the appellant and imposed an equal amount of penalty under Section 11AC of the Central Excise Act for the clandestine removal of Vinyl Sulphone without payment of duty. The confirmation of duty and penalty was based on a note book showing the removal of the chemical without payment of duty and inculpatory statements of the Director and authorized signatory. The appellant did not dispute the clandestine removal but argued that the value of the chemical was lower than assessed. The appellant's request for a reduction in duty demand and penalty was based on the Director's statement that the disposed goods were of lower quality and fetched a lower price. However, the Tribunal held that the statements made immediately after the search, where the authorized signatory mentioned a higher price, were more credible than the Director's statement made six months later. The Tribunal noted that the appellants had not challenged the knowledge of the authorized signatory regarding the price of the goods, leading to the rejection of the claim for a reduced value.

Regarding the penalty, the Tribunal observed that the appellants debited a significant amount soon after the search, but neither the original adjudicating authority nor the appellate authority had specified the provisions of Section 11AC, which would have allowed for a reduced penalty if the duty, interest, and penalty were paid within a month of the order. Citing a decision of the Hon'ble Delhi High Court, the Tribunal held that failure to include such details in the order required granting the appellants 30 days to pay the penalty and other liabilities. Despite rejecting the appeal for a reduction in the value of the chemical, the Tribunal ordered that if the appellants paid the full duty amount with applicable interest and a penalty reduced to 25% of the duty liability within 30 days from the order date, the penalty would be reduced accordingly. The appeal was disposed of based on these terms.