2013 (8) TMI 871 - AT - Central Excise

Clandestine removal of goods - Suppression of facts - Penalty u/s 11AC - Penalty on Directors of Company - Held that - it is evident that the appellant had suppressed production of the plastic pipes manufactured by the appellant in their statutory accounts and had cleared these goods without payment of Central Excise duty and without issue of invoices. - the goods appearing in the private records were manufactured by the appellant-firm but were not accounted for in the RG-1 register - This statement of the sole distributor also corroborates the clandestine removal of the goods by the appellant-firm. Therefore the argument of the appellant that there is no evidence to corroborate the suppression of production and clandestine removal of goods is not correct and has to be rejected - appellant has admitted clearly suppression of production and clearance of excisable goods without payment of duty. Therefore the onus shifts to the appellant to prove the contrary which the appellant has not discharged at all. The private records maintained by the appellant giving details of production and clearance of the goods is a corroborative evidence and entries made therein have been corroborated by the statements of Shri Vijay Makhija Managing Director of the appellant-firm and by the statement of Shri Anil Budhawani partner of the sole distributor-firm - finding of the adjudicating authority with respect to clandestine production and removal of goods cannot be faulted at all. Accordingly we uphold the demand of duty of Rs. 18, 57, 661/- along with interest thereon. Since the appellant has resorted to suppression of facts penalty under Section 11AC is clearly attracted. - Decided against assessee. Penalty on Shri Vijay Makhija Managing Director of the appellant-firm is reduced from Rs. 5 lakhs to Rs. 2 lakhs - However Penalties on Smt. Hema Makhija and Shri Arjun Mulchandani are set aside - Decided partly in favour of appellant.

Summary

Issues:
Violation of principles of natural justice regarding document submission, reliance on private records for evidence, imposition of duty demand, penalties on the appellant-firm and its directors.

Analysis:
1. Violation of Principles of Natural Justice: The appellant argued that the principle of natural justice was violated as they were not supplied with all relied upon documents. However, the tribunal found that the appellants were given opportunities to access the documents and appear for personal hearings, which they did not avail. The charge of denial of natural justice was rejected based on the facts available on record.

2. Reliance on Private Records: The appellant contended that private records cannot be relied upon for proving suppression of production and clandestine removal of goods. The tribunal disagreed, stating that the private records were corroborated by statements of the Managing Director and partner of the appellant-firm, admitting to the suppression. The tribunal upheld the reliance on private records as valid evidence.

3. Imposition of Duty Demand and Penalties: The adjudicating authority confirmed a duty demand of Rs. 18,57,661/- on the appellant-firm, along with interest and penalties under Section 11AC of the Central Excise Act, 1944. The tribunal upheld the duty demand and penalties, citing evidence of suppression of production and clandestine removal of goods, shifting the onus to the appellant to disprove the charges.

4. Penalties on Directors: The tribunal reduced the penalty imposed on the Managing Director from Rs. 5 lakhs to Rs. 2 lakhs, considering the duty amount involved. However, penalties on other directors were set aside due to lack of specific evidence showing their involvement in the affairs of the appellant-firm.

In conclusion, the tribunal upheld the duty demand and penalties on the appellant-firm, while reducing the penalty on the Managing Director. Penalties on other directors were set aside. The appeals were disposed of accordingly.