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2011 (2) TMI 750 - AT - Central ExciseDemand - Clandestine activity and consequent confirmation of demand of duty against the appellant - Manufacture of processed man made fabrics on job work basis - Shri Maru Proprietor of M/s Maru Synthetics agreed with the fact that they had sent the grey fabrics to the appellant for processing under the cover of kachha delivery challans and after processing of the same they have received the final goods under the cover of kachha delivery challans without any cover of Central Excise invoices and without any payment of Central Excise duty - As such penalty under Section 11AC of Central Excise Act 1944 is required to be imposed to the extent of 100% of duty confirmed against the appellant. As such the question of apportionment of penalty under Section 11AC and Rule 25 does not arise. The fact that the penalty imposed upon the appellant has to be treated as having been imposed under Section 11AC of Central Excise Act 1944 - Hence The appeal is disposed off in above terms.
Issues:
1. Clandestine removal of goods without payment of Central Excise duty. 2. Confirmation of demand of duty, interest, and imposition of penalty. 3. Re-quantification of duty based on cum-duty price. 4. Imposition of penalty under Section 11AC of Central Excise Act, 1944. 5. Granting an option to pay reduced penalty within a specified period. Issue 1: Clandestine Removal of Goods The judgment involves the appellant engaged in manufacturing processed fabrics on a job work basis using grey fabrics supplied by merchant manufacturers. Central Excise officers visited the factory and found kachha delivery challans indicating removal of finished fabrics without proper documentation or Central Excise invoices. Statements from involved parties confirmed the clandestine removal of goods without payment of Central Excise duty. Issue 2: Confirmation of Demand and Penalty A show cause notice was issued proposing demand of duty, interest, and penalty. The Original Adjudicating Authority confirmed the demand and imposed penalties on both the appellant and the merchant manufacturer. The Commissioner (Appeals) upheld this decision, leading to the present appeal challenging the confirmation of demand and imposition of penalties. Issue 3: Re-Quantification of Duty The appellant requested re-quantification of duty based on treating the entire realization as cum-duty price. However, the appellate authority rejected this request, citing that the value adopted by Revenue, based on appellant's disclosure, was undisputed. The assessable value was determined based on the disclosed value of fabrics, which did not include duty, as the clearances were made without duty payment. Issue 4: Imposition of Penalty under Section 11AC The appellant contested the penalty imposed under Rule 25 of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944. The Tribunal differentiated this case from previous decisions, emphasizing that penalties must be 100% of the duty evaded, as per the law declared by the Hon'ble Supreme Court in a specific case. The penalty imposed was upheld under Section 11AC without the need for apportionment. Issue 5: Granting Option for Reduced Penalty While upholding the imposition of penalty at 100% of the duty, the judgment recognized the appellant's right to pay the entire dues along with 25% of the penalty within 30 days, as per a Tribunal decision. This option was granted to the appellant, allowing for a reduction in the penalty amount if the payment was made within the specified timeframe. This comprehensive analysis of the judgment highlights the issues of clandestine removal, confirmation of demand and penalties, re-quantification of duty, imposition of penalty under Section 11AC, and the granting of an option for reduced penalty payment within a specific period.
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