2013 (1) TMI 637 - AT - Central Excise

Waiver of pre-deposit - Penalty u/s 11AC - Clandestine manufacture of goods - Unaccounted manufacture - Clandestine removal from their registered factory premises without payment of duty - Assessee is engage in manufacture of M.S. Bars and Rods - under Chapter 72 of CETA - Statements were recorded u/s 14 of the CEA, 1944 - Directors admit that manufacture and clearances of excisable goods without payment of excise duty in a clandestine manner - Appreciation of evidences collected by the Department from the possession of applicants/appellants Held that - Principle of Rule of evidence that facts admitted need not be proved. There is a prima facie case against the appellants that they have indulged in unaccounted manufacture and clearance of excisable goods without payment of duty from their registered factory premises. Appellants could not able to make out a prima facie case in their favour for total waiver of pre-deposit of the dues. Hence, direct to deposit 25% of the duty confirmed. Directors are directed to deposit 10% of the penalty imposed on each of them.

Summary

Issues Involved:
1. Violation of principles of natural justice.
2. Non-supply of un-relied upon documents.
3. Clandestine manufacture and removal of goods.
4. Adequacy of opportunities for personal hearing.
5. Merits of the case based on evidence.

Detailed Analysis:

1. Violation of Principles of Natural Justice:
The appellants argued that there was a serious violation of principles of natural justice as they were not granted an adjournment for the personal hearing they requested. The adjudicating authority decided the case ex-parte. The tribunal found that the adjudicating authority had given three opportunities for personal hearing on different dates (12th, 22nd, and 29th March 2010) and followed the adjudication procedure laid down under Section 33A of the Central Excise Act, 1944. Therefore, there was no violation of principles of natural justice.

2. Non-supply of Un-relied Upon Documents:
The appellants contended that they had requested un-relied upon documents through a letter dated 22/26th March 2010, which were not supplied to them. However, the tribunal noted that the appellants had acknowledged receipt of copies of seized records and documents in their letter dated 12th March 2010 and did not mention the non-supply of documents as a reason for not filing a reply to the SCN. The issue of non-receipt of un-relied upon documents was raised for the first time on 22nd March 2010. The tribunal found that the appellants had not taken steps to collect the un-relied upon documents as per the facility accorded to them in the SCN and concluded that the appellants were not serious in participating in the adjudication proceedings.

3. Clandestine Manufacture and Removal of Goods:
The case involved the clandestine manufacture and removal of goods from the factory without payment of duty. During a raid, the DGCEI officers recovered private diaries containing details of clandestine purchase of raw materials and sale of finished goods. The directors admitted to the entries in the diaries and the clandestine manufacture and clearance of goods. The tribunal found that the appellants had indulged in unaccounted manufacture and clearance of excisable goods without payment of duty based on the evidence collected, including the diaries and statements of the directors.

4. Adequacy of Opportunities for Personal Hearing:
The tribunal noted that the adjudicating authority had accorded ample opportunity for personal hearing and followed the procedure for adjudication as laid down under Section 33A of the Central Excise Act, 1944. The judgments cited by the appellants were found not applicable to the instant case as they involved situations where no opportunity for hearing was provided. The tribunal agreed with the judgments cited by the revenue that adequate opportunities for personal hearing were provided, and non-supply of un-relied upon documents did not result in a violation of principles of natural justice.

5. Merits of the Case Based on Evidence:
The tribunal emphasized the role of the judiciary in discovering the truth and administering justice. The evidence included private diaries maintained by the directors, which detailed the clandestine purchase of raw materials and sale of finished goods. The directors admitted to the entries in the diaries and the clandestine manufacture and clearance of goods. The tribunal found that the evidence on record, including the diaries and statements, supported the finding of clandestine manufacture and removal of goods without payment of duty. The tribunal directed the appellants to deposit 25% of the duty confirmed, excluding the amount already deposited, and 10% of the penalty imposed on each director within eight weeks, failing which the appeals would be dismissed.

Conclusion:
The tribunal concluded that there was no violation of principles of natural justice, the appellants had not taken steps to collect un-relied upon documents, and the evidence supported the finding of clandestine manufacture and removal of goods. The tribunal directed the appellants to deposit a portion of the duty and penalty confirmed, with the balance amount waived and recovery stayed during the pendency of the appeal upon compliance.