2014 (10) TMI 884 - AT - Central Excise

Order of pre deposit - Demand of Central Excise Duty - clandestine removal - Held that - The material fact manifesting evasion of ₹ 9,39,10,915/- as outcome of investigations, gravity of allegations and strength of evidences on record prima facie show that interest of revenue has been prejudiced by the appellant causing loss to it. This calls for pre-deposit to work out an interim modality since balance of convenience tilts in favour of Revenue and without pre-deposit order, irreparable injury may be sustained by Revenue. We are of the opinion that order of pre-deposit shall not cause under hardship to the appellants in view of the ratio laid down by Supreme Court in the case of Benara Valves Ltd. v. CCE reporting (2006 (11) TMI 6 - SUPREME COURT OF INDIA ). Therefore keeping in view above findings and prejudice caused to Revenue, Appellant (M/s. KPPPL) are directed to deposit an amount of ₹ 5,00,00,000/- (Rupees five crores only) within eight weeks of receipt of this order and submit compliance on 30-12-2014. Subject to compliance to this direction, realisation of the balance of amount of duty of ₹ 4,39,10,915/- followed by interest on the duty as well as penalty shall remained stayed during the pendency of the appeal.

Issues Involved:
1. Demand and recovery of Central Excise Duty.
2. Imposition of penalties on various appellants.
3. Alleged clandestine removal of goods.
4. Validity of evidence and statements recorded.
5. Prima facie case and pre-deposit requirements.

Detailed Analysis:

1. Demand and Recovery of Central Excise Duty:
The Commissioner confirmed the demand for Central Excise Duty amounting to Rs. 9,39,10,915 on M/s. KPPPL. The demand was based on the alleged clandestine removal of Gutkha and Pan Masala without payment of duty. Intelligence indicated that M/s. K.P. Marketing, acting as a distributor, received "Rajshree" brand Gutkha from M/s. KPPPL without payment of duty. Searches and investigations revealed unaccounted finished goods and documents indicating such clandestine activities.

2. Imposition of Penalties:
Penalties were imposed on various appellants including directors and associated entities:
- Rajendra Prasad Tripathi, Director: Rs. 1 Crore.
- Rajendra Kumar Gaur, Director: Rs. 1 Crore.
- Pannalal Shyamshukla (Jain), Proprietor of M/s. K.P. Marketing: Rs. 50,00,000.
- M/s. Kamla Kant & Co.: Rs. 50,00,000.
- Shashikant Chaurasia: Rs. 25,00,000.
The penalties were based on their alleged involvement in the clandestine removal and evasion of duty.

3. Alleged Clandestine Removal of Goods:
The investigation revealed that M/s. KPPPL allegedly removed finished goods clandestinely, using different routes and methods to avoid detection. This included transporting goods via railway parcels without accompanying Central Excise documents. Various statements and documents were relied upon to substantiate these allegations.

4. Validity of Evidence and Statements Recorded:
Statements from various individuals, including employees and associates of M/s. KPPPL and related entities, were recorded to build the case. These statements indicated the modus operandi of transporting Gutkha without payment of duty. However, the appellants contested the validity of these statements, arguing that they were based on assumptions and lacked conclusive proof of clandestine removal from the factory.

5. Prima Facie Case and Pre-deposit Requirements:
The Tribunal considered the gravity of the allegations and the strength of the evidence on record. It was observed that the clandestine removal of goods resulted in significant evasion of duty. Consequently, the Tribunal directed M/s. KPPPL to deposit Rs. 5,00,00,000 within eight weeks and submit compliance. The balance amount of Rs. 4,39,10,915 and associated penalties were stayed during the pendency of the appeal. The stay applications for penalties by other appellants were also considered, and a waiver of pre-deposit was granted during the appeal's pendency.

Conclusion:
The Tribunal found a prima facie case of duty evasion by M/s. KPPPL and directed a substantial pre-deposit. The case involved detailed investigations, statements, and analysis of seized documents, indicating clandestine removal of goods and evasion of Central Excise duty. The final determination of penalties and demands would be subject to further hearings and detailed examination of evidence.

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