2009 (9) TMI 843 - AT - Central Excise

SSI exemption - clubbing of clearances - clandestine removal - reliability on invoices - demand of duty with interest and penalty

Summary

Issues Involved:
1. Clubbing of clearances by multiple firms.
2. Allegations of clandestine removal of goods.
3. Admissibility and reliability of evidence.
4. Capacity of the unit to produce the alleged quantity.
5. Procedure of receiving sale proceeds.

Detailed Analysis:

1. Clubbing of Clearances by Multiple Firms:
The Commissioner initially addressed the issue of clubbing clearances of seven firms controlled by two brothers. However, this demand was dropped, indicating that the Commissioner did not find sufficient evidence to support the clubbing of clearances by various units.

2. Allegations of Clandestine Removal of Goods:
The primary issue was the clandestine removal of ERW pipes by M/s. National Conduit Pipes. The Commissioner confirmed the demand of Rs. 17,79,094/- based on 62 invoices found at the Information Collection Centre (ICC) of the Punjab Government. The appellant's defense included claims that the invoices were misused by their drivers without their knowledge, and that the discrepancies in stock were minor. However, the Tribunal found these defenses unconvincing, particularly noting the identical nature of the affidavits from the drivers and the lack of crucial details in their statements.

3. Admissibility and Reliability of Evidence:
The appellants argued that the documents relied upon by the Department, including photocopies of invoices and documents recovered from third parties, were not admissible. The Tribunal, however, noted that the invoices were furnished by public authorities and were corroborated by other evidence, such as the identical nature of the invoices recovered from ICCs and those generated by the appellants' computers. The Tribunal dismissed the appellants' objections, emphasizing the corroborative evidence supporting the clandestine removal.

4. Capacity of the Unit to Produce the Alleged Quantity:
The appellants contended that their unit could not have produced the quantity alleged to have been clandestinely removed, based on an 8-hour shift capacity. The Tribunal rejected this argument, noting that the unit could operate beyond 8 hours and that the figures provided by the appellants were based on a limited operational timeframe. The Tribunal found the Department's assessment of the unit's capacity to be reasonable.

5. Procedure of Receiving Sale Proceeds:
The Tribunal highlighted the unusual and suspicious procedure followed by the appellants in receiving sale proceeds. The scrutiny of ledgers revealed that sales were accounted for through pay orders issued by a bank against cash deposits made by the appellants' accountant. This circuitous method of transaction further supported the allegations of clandestine activities.

Conclusion:
The Tribunal upheld the findings of the Commissioner, confirming the demand for duty and the imposition of penalties. The evidence presented by the Department, including corroborated invoices and the suspicious financial transactions, satisfied the preponderance of probability standard. The appeals were rejected, affirming the penalties imposed on the appellants for their involvement in the clandestine removal of goods.