2012 (1) TMI 315 - HC - Central Excise

Summary

Issues involved:
The issues involved in this case are:
1. Alleged evasion of Central Excise duty by manufacturing and removing excisable goods clandestinely.
2. Imposition of duty, interest, and penalty under Section 11A of the Central Excise Act, 1944.
3. Deletion of penalty and interest by the Tribunal.
4. Questions of law proposed for consideration by the High Court.

Alleged Evasion of Central Excise Duty:
The Directorate General of Central Excise Intelligence found that excisable goods were being manufactured and removed clandestinely to evade Central Excise duty. The companies involved did not issue invoices or follow proper procedures, leading to the discovery of a significant evasion of duty.

Imposition of Duty, Interest, and Penalty:
A show cause notice was issued proposing duty under Section 11A of the Act, along with interest and penalty. The Joint Commissioner of Customs & Central Excise imposed duty and penalty on the companies and their partners, a decision upheld by the Commissioner (Appeals).

Deletion of Penalty and Interest by the Tribunal:
The Tribunal, in its judgment, deleted the penalty, interest, and duty imposed by the adjudicating authority. It found that there was no direct evidence of clandestine removal by the companies and that the order-in-original was based on surmises and conjectures.

Questions of Law Proposed:
The High Court considered several substantial questions of law, including whether the assessee could be held liable without direct evidence, whether the Tribunal erred in setting aside the demand for duty and penalty, and whether the Tribunal failed to record submissions made by the Departmental Representative.

The High Court, after examining the evidence and submissions, found no cause for interference. The Tribunal had carefully reviewed the orders and evidence before it, noting that the production was sold to another entity on payment of Central Excise duty. The lack of direct evidence linking the companies to clandestine removal led the Tribunal to conclude that the order-in-original was based on speculation.

The High Court further observed that the basis for levying penalties was undermined by the lack of evidence supporting clandestine removal. As the Tribunal found no illegality or perversity in its decision, the appeal was dismissed, and no costs were awarded.