2012 (10) TMI 418 - AT - Central Excise

Demand of duty and penalty - clandestine removal of goods alleged that M/s. New Era Metals was created artificially to camouflage illicit clearances - M/s. New Era Metals was engaged in trading activities. They have procured aluminum profiles from seven other trading units Held that - Trading units have paid sales tax on the transaction involved and the sales tax assessment by the authorities is also finalized - There is no concrete evidence on record to show manufacture of the goods by the appellant in that case and its clearance through a trading firm - in the absence of any evidence of excess consumption of raw material or of electricity to support the allegation of excess production and their removal, the demand cannot be upheld on the basis of clandestine removal - in the absence of any tangible and sufficient evidences the demand is not sustainable. It is well settled law that such documentary evidences are required to be given preference over the oral statements.

Issues Involved:
1. Demand of Rs. 2,94,85,968/- against M/s. Shreeji Aluminum Pvt. Ltd.
2. Imposition of penalties on various appellants.
3. Confirmation of demand based on statements and private records.
4. Denial of cross-examination requests.
5. Retraction of statements.
6. Evidence of clandestine manufacture and removal.
7. Penalty on directors and employees.
8. Penalty on trading units and marketing manager.
9. Confirmation of demand based on work orders and packing slips.

Comprehensive Issue-wise Analysis:

1. Demand of Rs. 2,94,85,968/- against M/s. Shreeji Aluminum Pvt. Ltd.
The demand was based on the alleged clandestine manufacture and removal of aluminum profiles by M/s. Shreeji Aluminum Pvt. Ltd. The Tribunal confirmed a part of the demand amounting to Rs. 26,20,792/- based on private production records and corroborative statements. However, the majority of the demand (Rs. 2,25,82,462/-) was set aside due to insufficient evidence to prove clandestine removal.

2. Imposition of Penalties on Various Appellants
Penalties were imposed on M/s. Shreeji Aluminum Pvt. Ltd. and its directors, employees, and associated trading firms. The Tribunal reduced the penalties on the directors and employees and set aside the penalties on trading units and the marketing manager, citing lack of sufficient evidence and the law declared in the case of M/s. Ekta Enterprises.

3. Confirmation of Demand Based on Statements and Private Records
The Tribunal found that the confirmation of demand based on statements and private records required corroborative evidence. The statements of employees and trading firm representatives were retracted, and the Tribunal emphasized the need for concrete evidence beyond mere statements.

4. Denial of Cross-Examination Requests
The Tribunal noted that the denial of cross-examination requests was not justified, particularly when the statements formed the basis of the demand. The lack of cross-examination was considered a denial of justice.

5. Retraction of Statements
The retraction of statements by various individuals was a significant issue. The Tribunal found that the retractions were not adequately addressed by the adjudicating authority and emphasized that retracted statements should not be the sole basis for demand without corroborative evidence.

6. Evidence of Clandestine Manufacture and Removal
The Tribunal highlighted the need for substantial evidence to prove clandestine manufacture and removal, such as proof of raw material procurement, excess power consumption, and transportation records. The lack of such evidence led to the setting aside of a large portion of the demand.

7. Penalty on Directors and Employees
Penalties on the directors and employees of M/s. Shreeji Aluminum Pvt. Ltd. were reduced due to the lack of sufficient evidence to prove their involvement in clandestine activities. The Tribunal imposed reduced penalties on the directors considering their roles.

8. Penalty on Trading Units and Marketing Manager
The penalties on trading units and the marketing manager were set aside based on the Tribunal's finding that they were not directly involved in the manufacture or removal of goods. The Tribunal relied on the precedent set in the case of M/s. Ekta Enterprises.

9. Confirmation of Demand Based on Work Orders and Packing Slips
The Tribunal found that the confirmation of demand based on work orders and packing slips required corroborative evidence. The presence of these documents alone was not sufficient to prove clandestine removal without additional supporting evidence.

Final Order:
1. The demand of Rs. 2,25,82,462/- is set aside.
2. The demand of Rs. 5,25,526/- and Rs. 33,424/- is set aside.
3. The demand of Rs. 26,20,792/- is confirmed.
4. Penalty on M/s. Shreeji Aluminum Pvt. Ltd. is set aside except for Rs. 26,20,792/-.
5. Penalties on Shri Paresh Patel and Shri Babubhai Patel are reduced to Rs. 75,000/- each.
6. Penalty on Shri A.K. Mondal is reduced to Rs. 10,000/-.
7. Penalties on all other appellants are set aside.

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