2013 (2) TMI 390 - AT - Central Excise

Goods cleared without issuance of any Central Excise evidences or payment of Central Excise duty - duty demand with equal amount of penalty - assessee contested against invoking period of limitation - Appellant No. 1 contested that they have not manufactured the goods which were supplied to the buyers of Appellant No.2 but had only arranged the goods manufactured by some SSI units who are fully exempted - Held that - There is no doubt of supply of goods from Appellant No.2 to the buyers of Appellant No.1. and appellant have not submitted any purchase invoice of such unit from where they claimed to have bought the impugned goods. These transactions from SSI units with Appellant No. 2 were not properly accounted for and there is sufficient doubt about said transactions. As find from work orders that Appellant No. 1 had asked for excise invoice but Appellant No. 2 gave nothing for the supply of goods to their buyers. The Department has successfully unearthed the clandestine removal of the goods with intent to evade payment of duty as both the appellants could not produce any evidence for procurement of such goods. This is sufficient ground for involving extended period under Section 11A Pleas of the appellant in respect of penalty have strong ground as Appellant No. 2 have not contravened any provisions of Central excise act and rule made thereunder. They had placed work order to Appellant No. 1, the appellant had liability to pay Central Excise Duty which they had not complied with - reject the appeal of Appellant No 1 and allow the appeal of Appellant No. 2 by waiving the penalty imposed upon them.

Issues:
1. Appeal against order upholding lower adjudicating authority's decision.
2. Allegation of clandestine removal of goods without payment of Central Excise duty.
3. Lack of infrastructure for manufacturing goods.
4. Dispute regarding purchase orders and invoices.
5. Challenge against penalty imposition.

Analysis:
1. The appellant filed an appeal against the order upholding the decision of the lower adjudicating authority. The case involved searches at the premises of two companies with common directors, where it was found that one company admitted to taking over finished goods from the appellant and supplying them to consignees without Central Excise evidences. The department initiated proceedings and confirmed a demand against the appellant, along with penalties. The appellant contended that they lacked the infrastructure to manufacture the goods and procured them from the market. However, the Commissioner (Appeal) upheld the decision, leading to the current appeal.

2. The main issue revolved around the allegation of clandestine removal of goods without payment of Central Excise duty. The Commissioner (Appeal) found that the appellant had not manufactured the goods supplied to buyers but had sourced them from Small Scale Industry (SSI) units. The transactions with these units were not properly accounted for, raising doubts. The department successfully uncovered the clandestine removal, leading to the invocation of the extended period under Section 11A. The appellant's failure to produce evidence for procurement of goods supported the decision to confirm the demand.

3. The appellant argued that they lacked the infrastructure for manufacturing goods, and therefore, there could be no clandestine removal without payment of duty. They claimed to have informed the department about the closure of their factory and submitted monthly returns. However, the Commissioner (Appeal) found discrepancies in the work orders and lack of evidence for the claimed purchases, leading to the dismissal of the appeal.

4. Disputes arose regarding purchase orders and invoices. The appellant contended that the purchase orders received were not for manufacturing goods, and they did not receive any raw materials for production. The Commissioner (Appeal) noted discrepancies in the work orders, where invoices were instructed but not provided. The lack of proper documentation and accounting raised doubts about the transactions, supporting the decision against the appellant.

5. Regarding the penalty imposition, the Commissioner (Appeal) found strong grounds to reject the appeal of one appellant while waiving the penalty imposed on the other. The decision was based on the liability to pay Central Excise duty, which the appellant failed to comply with. The lack of evidence contrary to the findings supported upholding the penalty waiver and dismissal of the appeal lacking merit.

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