2014 (2) TMI 1290 - Commission - Central Excise

Search - Seizure of the documents and records - Mis-declaration - Evasion of the duty - Interest - Penalty - time limitation - Held that - noticee number 1 while admitting and accepting their duty liability against such clandestine removals of finished goods, noticee number 1 deposited ₹ 30 lakhs through e-payment, they deliberately suppressed material facts relating to clandestine removal of finished goods without accountal and without payment of duty and maintained details relating to such clandestine removals in their private records with intent to evade duty. That noticee number 1 (applicant) by way of their deliberate acts or omission appears to have wilfully perpetuated fraud and suppressed material facts to gain unlawful monetary benefits by evading Central Excise duty payable to the Government - Hence extended period of limitation appears to be invocable as noticee number 1 (the applicant) had wilfully suppressed the actual quantity of finished excisable goods cleared by them clandestinely in their books of account with intent to evade payment of duty of excise leviable thereon. The Charge against the co-applicant - At para 10.2 of the show cause notice is that he definitely had prior knowledge relating to such evasion of Central Excise duty by way of clandestine removals, etc., by notice No. 1 and that such unlawful act would have never taken place without his consent. .. therefore, appears to have had knowledge or reason to believe that the goods thus removed in contravention of the provisions of law were liable for confiscation . therefore, appears to have rendered himself liable for penalty in terms of Rule 26 of the said Central Excise Rules, 2002. The DGCEI submissions on the co-applicant s application for settlement confirm this allegation. We agree with the finding that there was clandestine evasion of excise duty and that, therefore, full immunity from penalty cannot be granted to the applicant (Nos. 1 and 2) and also that immunity from prosecution granted to them should be subject to terms and conditions imposed regarding payment of duty, penalty and interest. The rest of the findings of the learned Member are in consonance with our view that there was clandestine clearance and evasion of duty by the applicant-company, where, the co-applicant has admitted that he looked after the business. Accordingly, we hold that he (the co-applicant) does not deserve full immunity from penalty. The allegation in the SCN against Shri Prabhu Narayan Singh, Director, is that he had prior knowledge relating to evasion of Excise Duty and such unlawful acts would never have taken place without his consent, these facts are also admitted by him in his voluntary statement. It was, therefore, proposed to impose a penalty under Rule 26 of the Central Excise Rules, 2002, which relates to any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater - Decided against the assessee.

Summary

Issues Involved:
1. Demand and recovery of Central Excise duty.
2. Demand and recovery of interest.
3. Imposition of penalty on the applicant and co-applicant.
4. Appropriation of the amount already paid by the applicant.
5. Grant of immunity from penalty and prosecution.

Detailed Analysis:

1. Demand and Recovery of Central Excise Duty:
The applicant, M/s. Jai Prabhuji Iron & Steels (P) Ltd., and the co-applicant, a director of the company, were involved in the clandestine removal of 765.37 MT of M.S. Ingots without payment of Central Excise duty. The Central Excise duty liability was determined to be Rs. 30,01,065. The applicants admitted the short-payment and deposited the said amount before approaching the Settlement Commission.

2. Demand and Recovery of Interest:
The applicant admitted an additional liability of Rs. 1,15,522 towards interest, bringing the total to Rs. 31,16,587. However, the DGCEI's report calculated the interest liability to be Rs. 97,504, which was settled and appropriated from the amount already deposited by the applicant. The excess amount of Rs. 18,018 paid towards interest was ordered to be returned to the applicant.

3. Imposition of Penalty on the Applicant and Co-applicant:
The applicant-company was found to have deliberately suppressed the removal of excisable goods without discharging duty liability, amounting to fraud and misdeclaration with intent to evade duty. The co-applicant admitted to having prior knowledge and involvement in the evasion activities. The Bench settled the case by imposing a penalty of Rs. 6,00,000 on the applicant-company and Rs. 3,00,000 on the co-applicant. The co-applicant's role was scrutinized, and it was concluded that he did not deserve full immunity from penalty due to his involvement and knowledge of the evasion activities.

4. Appropriation of the Amount Already Paid by the Applicant:
The Bench ordered the jurisdictional Commissioner to appropriate the settled amounts of Central Excise duty and interest from the deposits made by the applicant. The excess amount of Rs. 18,018 paid towards interest was to be returned to the applicant.

5. Grant of Immunity from Penalty and Prosecution:
The Bench granted immunity from prosecution to the applicants under the Act and Rules made thereunder, subject to the payment of the settled amounts. The immunity from penalty was granted in excess of Rs. 6,00,000 for the applicant-company and Rs. 3,00,000 for the co-applicant.

Conclusion:
The Bench settled the case under Section 32F of the Act, confirming the Central Excise duty liability of Rs. 30,01,065 and interest of Rs. 97,504. Penalties of Rs. 6,00,000 on the applicant-company and Rs. 3,00,000 on the co-applicant were imposed. Immunity from prosecution was granted, subject to the payment of the settled amounts. The excess interest paid was ordered to be refunded. The order emphasized that the settlement would be void if obtained by fraud or misrepresentation.