2010 (1) TMI 588 - AT - Central Excise

Clandestine removal delivery challans issued were recovered and it was found that there were no corresponding central excise invoices or any other evidence to show that goods cleared under these delivery challans were cleared on payment of duty - dispute between the director and the company and by the time show cause notice was issued or during subsequent period, the director had left the company but no evidence to support his claim was made available - director has only tried to avoid penalty by claiming that he had not dealt with the goods physically and therefore penalty under Rule 26 could not have been imposed on him Held that - penalty has been imposed on the company or the firm, it does not mean that penalty is not required to be imposed or no penalty can be imposed on the director, partner or employees -

Summary

Issues:
1. Duty payment on goods cleared without corresponding invoices.
2. Imposition of penalties on the company and the director.
3. Evidence required for proving clandestine removal of goods.
4. Applicability of legal precedents in the case.

Analysis:

Issue 1:
The appellant, engaged in manufacturing organic chemicals, had duplicate delivery challans without corresponding excise invoices. The duty payable on these goods was calculated and paid by the appellant. Subsequently, penalties were imposed on both appellants. The consultant argued that the case solely based on delivery challans was insufficient. The department contended that the recovery of delivery challans and the director's admission statement were adequate evidence. The tribunal found the director's admission binding on the company, stating that the burden of proof shifted to the appellants, which they failed to discharge. The tribunal rejected the argument that the case required further investigation beyond the admitted facts.

Issue 2:
The director claimed no physical involvement with the goods and argued against the penalty under Rule 26 of the Central Excise Rules, 2002. However, the tribunal found the director's admission of recovery of delivery challans and voluntary duty payment as sufficient grounds for imposing a penalty. The tribunal emphasized that penalties could be imposed on directors despite penalties on the company. A lenient penalty of Rs. 5000 was imposed on the director.

Issue 3:
The tribunal emphasized that the admission of facts need not be separately proved and cited legal precedents supporting this principle. The tribunal highlighted the relevance of the director's admission and the recovery of delivery challans in establishing the intention to evade duty. The tribunal rejected the appellant's reliance on certain court decisions that were deemed irrelevant to the facts of the case.

Issue 4:
The tribunal referenced legal precedents, including decisions by the Hon'ble Supreme Court and various tribunals, to support the principle that admitted facts do not require further proof. The tribunal reiterated that the director's admission and recovery of incriminating documents were sufficient to establish liability. The tribunal also clarified that the company's penalty did not exempt the director from being penalized.

In conclusion, the tribunal found no merit in the appeals filed by the appellants and rejected them based on the evidence presented, the director's admission, and the legal principles governing the case.