2010 (3) TMI 700 - AT - Central Excise

Clandestine removal - documents recovered broker of final product of assessee - statement recorded from broker was retracted and broker could not be produced for cross-examination by the assessee Held that - statement could not be used to find evasion

Issues Involved:
1. Confirmation of Central Excise duty demands.
2. Imposition of penalties on various individuals.
3. Reliability of evidence and statements not subjected to cross-examination.
4. Clandestine production and clearance of CTD bars.
5. Validity of retracted statements and their impact on the case.

Issue-wise Detailed Analysis:

1. Confirmation of Central Excise duty demands:
The appeals were filed against the confirmation of Central Excise duty demands by the Commissioner. The Commissioner confirmed Rs. 2,37,956/- and Rs. 13,20,056/- under Section 11A of the Central Excise Act, 1944, based on documents recovered during searches. The Tribunal found that the document recovered from Shri Om Prakash Sharma, which reflected transactions in MS ingots and CTD bars, was accepted by the Managing Director of SSPL as correct. Thus, the demand of Rs. 2,37,956/- was sustained. However, the demand of Rs. 13,20,056/- was vacated due to lack of reliable evidence and the inability to cross-examine Shri Rameshwarlal Rathi.

2. Imposition of penalties on various individuals:
Penalties were imposed on M/s. SSPL and several individuals under Section 11AC of the Central Excise Act and Rule 26 of the Central Excise Rules, 2002. The Tribunal upheld the penalty of Rs. 15,58,012/- on M/s. SSPL, finding it justified based on the confirmed duty demand. However, personal penalties on individuals, including S/Shri Suresh Kumar Singhal, Naresh Kumar Agarwal, Vijay Kumar Agarwal, Rameshwarlal Rathi, and Ratan Gupta, were vacated. The Commissioner had not examined their individual roles or recorded categorical findings justifying the respective penalties.

3. Reliability of evidence and statements not subjected to cross-examination:
The Tribunal addressed the issue of the reliability of evidence and statements not subjected to cross-examination. It was argued that the evidence of Shri Om Prakash Sharma and the broker were not reliable as they were third-party witnesses not produced for cross-examination. The Tribunal found that the document recovered from Shri Om Prakash Sharma had evidentiary value as it was accepted by the Managing Director of SSPL. However, the statement of Shri Rameshwarlal Rathi, which was retracted and not subjected to cross-examination, could not be used to find evasion by SSPL.

4. Clandestine production and clearance of CTD bars:
The Tribunal examined the allegations of clandestine production and clearance of CTD bars. The Commissioner found that the document recovered from Shri Om Prakash Sharma showed details of receipt of MS ingots and clearances of CTD bars. The Tribunal upheld the finding of illicit removals of CTD bars based on this document. However, the demand of Rs. 13,20,056/- based on documents recovered from Shri Rameshwarlal Rathi was vacated due to lack of reliable evidence.

5. Validity of retracted statements and their impact on the case:
The Tribunal considered the validity of retracted statements and their impact on the case. Shri Rameshwarlal Rathi and Shri Ratan Gupta retracted their initial statements after about two years. The Commissioner rejected these retractions as afterthoughts. The Tribunal found that the retraction statements were not reliable and upheld the demand of Rs. 2,37,956/- based on the document recovered from Shri Om Prakash Sharma. However, the demand of Rs. 13,20,056/- based on retracted statements was vacated.

Conclusion:
The Tribunal upheld the demand of Rs. 2,37,956/- and the penalty of Rs. 15,58,012/- on M/s. SSPL. The demand of Rs. 13,20,056/- and personal penalties on individuals were vacated due to lack of reliable evidence and failure to justify the penalties. The Tribunal emphasized the importance of cross-examination and reliable evidence in adjudicating cases of duty evasion and penalties.

← Previous Next →