2013 (9) TMI 1006 - AT - Central Excise

Suppression of production of goods - Clandestine removal of goods - Imposition of penalty - Held that - Receipt of the material has been admitted by Shri Jagdish Prasad Tak the factory in charge and authorized signatory of the appellant firm in his statement dated 26-7-2004. Sale of the said material to the appellant has been confirmed by M/s. Hind Silk Mills also in their letter dated 14-9-1994. The appellant in their letter dated 30-7-1994 addressed to the investigating agency has confirmed that they had not entered the receipt of the said goods in their Form IV register and that they were voluntarily depositing the duty amount of 28, 33, 303/- towards the textured yarn manufactured and cleared without payment of duty out of the POY received from Hind Silk Mills. Shri Arun Bhartia Director of the appellant firm in his statement dated 25-10-1994 has confirmed the above facts. Thus the receipt of the said material and consumption of the same in the manufacture of PTY and clearance without payment of duty is clearly established and supported by the relevant records and statements. Appellant s plea subsequently that these shortages were lying as work-in-progress is clearly an afterthought and has been rightly rejected by the adjudicating authority. In the light of these evidences the conclusion of the adjudicating authority that the quantity found short was cleared by the appellant without payment of duty cannot be faulted at all. Once the charge of suppression of production and clandestine removal stand established penal consequences under Rule 173Q automatically follows. Therefore imposition of penalty on the appellant firm under Rule 173Q(1) and confiscation of land building plant and machinery under Rule 173Q(2) are mandated under the law and the quantum of penalty or fine imposed is not harsh or excessive when considering the amount of duty sought to be evaded. - Decided against assessee.

Summary

Issues:
- Allegations of evasion of excise duty through suppression of production and clandestine clearance of textured yarn.
- Confirmation of duty demands, penalties, and confiscation of assets by the adjudicating authority.
- Appeal challenging the findings of the adjudicating authority and seeking to set aside the impugned order.

Analysis:

Allegations of Evasion of Excise Duty:
The appellant, a texturiser of polyester yarn, was accused of evading excise duty by suppressing production and clandestinely clearing textured yarn. The investigation revealed discrepancies in accounting for 39107 kgs of polyester yarn manufactured from non-texturised yarn received from suppliers. Additionally, a shortage of 17190.98 kgs of yarn procured under a duty exemption scheme was identified. The appellant admitted to manufacturing and clearing 70229.066 kgs of yarn without proper accounting or duty payment. The suppliers confirmed the transactions, supporting the allegations of evasion.

Confirmation of Duty Demands and Penalties:
The adjudicating authority issued a show cause notice, confirming duty demands and imposing penalties under various rules of the Central Excise Act, 1944. The appellant challenged the findings, claiming proper utilization of raw materials and lack of evidence for clandestine removal. However, the authority relied on statements from directors and suppliers, along with material discrepancies, to uphold the duty demands, penalties, and confiscation of assets. The authority considered admitted facts and statements as valid evidence, citing legal precedents.

Appeal and Rejection:
The appellant contested the impugned order, arguing against the findings of suppression and evasion. Despite the appellant's submissions, the appellate tribunal upheld the impugned order, citing clear evidence of suppression and removal of goods without duty payment. The tribunal emphasized the established legal position that admitted facts do not require further proof. Consequently, the penalties and confiscation of assets were deemed appropriate under the law, given the gravity of the evasion.

In conclusion, the appellate tribunal found no flaws in the impugned order, thereby rejecting the appeal and affirming the duty demands, penalties, and asset confiscation imposed by the adjudicating authority. The decision was based on the clear establishment of suppression of production and clandestine removal, supported by statements and records, leading to the mandated penal consequences under the relevant rules.