2010 (4) TMI 1030 - AT - Central Excise

Clandestine manufacture and removal - plywood and block board - under-invoicing of accounted clearances - evasion of duty - SSI exemption - clubbing of clearances

Summary

Issues Involved:
1. Undervaluation of accounted clearances.
2. Clandestine manufacture and clearances.
3. Clubbing of clearances for determining SSI exemption.
4. Confiscation of goods and currency.
5. Penalty imposition.

Detailed Analysis:

1. Undervaluation of Accounted Clearances:
The Commissioner found that the appellants had undervalued clearances of plywood and blockboards during the material period. The evidence included a letter dated 15-7-1996 seized from a dealer and the office of Shri Mohammed Arabi, indicating revised prices for different varieties of plywood. Statements from various employees and dealers corroborated that the actual prices charged were higher than those quoted in invoices, and the differential amount was collected in cash. The Commissioner rejected retractions of initial statements made by employees, finding them unreliable due to the lapse of time and lack of substantiation. The adjudicating authority's findings were based on strong circumstantial evidence and sound reasoning.

2. Clandestine Manufacture and Clearances:
The Commissioner relied on private records seized from the offices of the appellants, which included details of production, removal, and sale of excisable goods. These records were admitted to be authentic by the employees who maintained them. Invoices used for transportation of goods corroborated the entries in these records. The Commissioner found that the appellants had engaged in clandestine clearances based on these private records and statements from employees and dealers. The findings were supported by strong circumstantial evidence and sound reasoning.

3. Clubbing of Clearances for Determining SSI Exemption:
The Commissioner dropped the proposal to club the clearances of all the appellant units, failing to find that they operated as a single unit. The proposal to club clearances contained in 12 periodical show cause notices was also dropped.

4. Confiscation of Goods and Currency:
The Commissioner confiscated plywood valued at Rs. 2,86,389.20 seized from Shri Khaleel Rahiman and plywood valued at Rs. 15,056.20 seized from Shri Mansarool Huck under Rule 173Q of Central Excise Rules, with options to redeem the same on payment of fines. The penalties imposed on Shri Khaleel Rahiman and Shri Mansarool Huck were found to be legal and proper. The Commissioner dropped the proposal to confiscate the currency of Rs. 20,66,940/- for want of evidence that it represented sale proceeds of clandestinely cleared excisable goods.

5. Penalty Imposition:
Penalties were imposed on the appellants and individuals for their involvement in evasion of duty. The penalties were to be readjudicated after the requantification of liabilities of the assessees.

Conclusion and Remand:
The Commissioner's findings on undervaluation and clandestine clearances were upheld based on the principle of preponderance of probability. The cases were remanded to the Commissioner to take a fresh decision on the claim that the turnover included proceeds from the sale of non-excisable goods. The penalties imposed on the appellants and individuals were to be readjudicated after the requantification of liabilities. Appeals against the order-in-original passed in adjudication of show cause notice No. 20/98, dated 20-3-1998, and appeals filed against liabilities confirmed against A5 were rejected. Other appeals were allowed by way of remand, with directions for fresh adjudication.