2017 (1) TMI 1464 - AT - Central Excise

Clandestine removal - shortage of goods - S.S. Ingots - S.S. Flats - case of Revenue is that since the statement furnished by appellant No. 2 that non-duty paid S.S. Flats seized from the cutters owned by the appellant No. 1 is voluntarily and not retracted no further evidence is required to prove clandestine removal of such goods - Held that - the Transporter Sh. Jaswant in his statement dated 17-2-2006 has confirmed that the goods of appellant No. 1 had been transported to various rolling mills including to the premises of Super Metal Re-rollers Pvt. Ltd. Delhi and also S.S. Flats were transported to the premises of cutters at Wazirpur Ind. Area Delhi. The above statements recorded by the Department corroborate the fact that SS Ingots were removed from the factory to the job worker for conversion into SS Flats which were seized from the premises of cutters. Further the voluntary statement of the appellant No. 2 that S.S. Flats stored in the premises of the cutters are not duty paid goods strengthen the case of Revenue that the S.S. Flats recovered from the premises of cutters were manufactured out of non-duty paid S.S. Ingots removed from the factory of the appellant No. 1 - demand of duty with penalty upheld. Considering the value of S.S. Flats seized from the premises of cutters and involvement of duty liability thereon the quantum of redemption fine and penalty reduced. Appeal allowed in part.

Summary

Issues: Duty demand, Confiscation of goods, Imposition of penalties, Redemption fine

The judgment involves an appeal filed by multiple appellants against an order passed by the Commissioner (Appeals), Central Excise, New Delhi. The case revolves around the shortage of S.S. Ingots found during a search at the factory of the first appellant, along with the discovery of S.S. Flats in the premises of two other appellants without proper documentation. The Department issued a show cause notice seeking duty demand confirmation, confiscation of goods, and penalties, leading to an adjudication order upheld by the Commissioner (Appeals) and subsequently appealed before the Tribunal.

Regarding duty demand and penalties, the appellants argued that the first appellant was not the manufacturer of S.S. Flats, thus Rule 25 of the Central Excise Rules, 2002 should not apply for confiscation and penalties. They also claimed that the other appellants were unaware of the liability for confiscation, hence penalties under Rule 26 should not be imposed on them. On the contrary, the Department contended that the statement provided by one of the appellants confirming the ownership of non-duty paid S.S. Flats was voluntary and remained unretracted, requiring no further evidence for proving clandestine removal of goods.

Upon hearing both sides and examining the records, the Tribunal noted that the appellants failed to produce duty-paying documents or any evidence of valid possession of the S.S. Flats found in their premises. The director of the first appellant confirmed that the seized goods belonged to the first appellant, were cleared without invoices, and duty was not paid on them. Additionally, a transporter's statement corroborated the removal of goods to various locations, strengthening the Revenue's case that the S.S. Flats were manufactured from non-duty paid S.S. Ingots of the first appellant. Consequently, the Tribunal upheld the duty demand confirmation and penalty imposition, dismissing the appeal against them.

In terms of redemption fine, the Tribunal found the imposed amounts to be excessive considering the value of the seized S.S. Flats and the duty liability involved. As a result, the Tribunal modified the order by reducing the redemption fines and personal penalties imposed on the appellants, aiming for a more just outcome. The redemption fines on the cutters were decreased, and personal penalties on the appellants were also reduced, concluding the disposal of the appeals with the modified terms pronounced in the open court on 19-1-2017.

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