2011 (2) TMI 993 - AT - Central Excise

Non payment of duty - clandestine removal - demand of duty based upon the recovery of weighment slips, read with the statements of various persons recovered during investigation - manufacturing unit s contention is that balance 35 chits were showing particulars of coal ash removed by them - Held that - As against the detailed findings of the lower authorities indicating that the goods mentioned in the chits were rolls, which can only pertains to kraft paper and there being different truck nos. and quantities etc., the chits were not meant for coal ash, which the appellant, in their memo of appeal, have no where challenged or rebutted the finding of the lower authorities. They have simply written that 32 chits were meant for clearance of coal ash. In the absence of any rebuttal to the above finding of the lower authorities and on the face of acceptance of clandestine removal pertaining to 27 chits no justifiable reason to interfere in the above findings of lower authorities in respect of 35 chits. Similarly, in respect of 4 chits, claiming to be clearance of old machinery Machinery are covered under the definition of capital goods which are required to be duly accounted for and required to be cleared on payment/reversal of appropriate credit/duty or for job work/repairs as per procedure prescribed. Here, as find neither the assessee provided any duty paying documents nor any job work challan for removal of capital goods outside the factory. Hence, the same cannot be co-related with removal of machinery as claimed by the assessee. Thus as the assessee has already accepted/admitted in their statement regarding clearance of finished goods under the cover of said chits. demand of duty along with imposition of penalty equal to 100% of duty u/S 11AC upheld - an option to pay penalty equal to 25% of the duty be given. As regards penalty on Managing Director and Excise Assistant confirmed as find that from their statements recorded during the course of investigation, the said two appellants have admitted having indulged in clandestine removal.

Summary

Issues:
1. Confirmation of duty and Cess against the company.
2. Imposition of penalties on the Managing Director and Excise Assistant.
3. Dispute regarding clearance of coal ash and old machinery.
4. Adjudication process and appellate orders.

Confirmation of Duty and Cess:
The case involved M/s Super Delux Mills (P) Ltd, where duty of Rs.6,36,421 and Cess of Rs.5,185 were confirmed against them. The Central Excise officers found discrepancies in weighment slips and invoices, leading to the view that kraft papers were cleared without payment of duty. Statements of various individuals admitted to clandestine clearances, resulting in the initiation of proceedings with a show cause notice. The original adjudicating authority confirmed the duty, interest, and penalties, which were upheld by the Commissioner (Appeals). The Tribunal remanded the matter for re-adjudication, where relief was granted for some chits, but the demand and penalties were confirmed based on remaining discrepancies.

Imposition of Penalties:
Penalties of Rs.20,000 on the Managing Director and Rs.10,000 on the Excise Assistant were imposed under relevant rules for their involvement in clandestine removal. The penalties were upheld as the individuals had admitted to the wrongful activities during the investigation. The quantum of penalties was considered appropriate, and no interference was made in the imposed amounts.

Dispute Regarding Clearance of Coal Ash and Old Machinery:
The appellants disputed the confirmation of duty for certain chits meant for the removal of coal ash and old machinery. The advocate for the company argued that some chits were for non-taxable items and produced bills and invoices to support their claim. However, the lower authorities rejected these documents, stating discrepancies in the details provided. The Commissioner (Appeals) also found the presented evidence unreliable and rejected the plea, as it appeared to be an afterthought to cover up lapses. The findings of the lower authorities were not challenged effectively by the appellants, leading to the confirmation of duty for the disputed chits.

Adjudication Process and Appellate Orders:
The Tribunal carefully considered the submissions from both sides and upheld the demand of duty against M/s Super Delux Mills (P) Ltd. The penalty was imposed as per Section 11AC of the Central Excise Act, with an option provided to reduce the penalty amount if paid within a specified period. The penalties on the Managing Director and Excise Assistant were maintained due to their admission of involvement in clandestine activities. The appeals were disposed of accordingly, with no interference in the quantum of penalties imposed.

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