2013 (3) TMI 321 - HC - Central Excise

Direction to deposit Rs 1 Crore as against the recovery of Central Excise duty of Rs. 7,74,09,518 and equal amount of penalty - assessee contested that there was no evidence whatsoever regarding the suppression of production and clandestine removal, photocopy of which original was not shown to the appellant and hence it could not be taken into consideration for imposition of excise duty - Held that - The CESAT has recorded finding that there is prima facie finding of suppression of production and clandestine removal. The balance sheets thus will not reflect the true and correct financial position of the company. The Tribunal was lenient enough in directing the appellant to deposit only Rs. 1 crore and waiving the remaining amount of Excise duty and penalty, which together with would amount to about Rs. 16 crores. Therefore, do not find any substantial question of law for consideration and interference in this appeal. The Central Excise Appeal is accordingly dismissed in-limine. And the appellant company is allowed sixty days time from today to deposit the amount.

Summary

Issues:
Challenge to order directing deposit of excise duty and penalty based on alleged suppression of production and clandestine removal.

Analysis:
The appellant challenged an order by the Custom Excise and Service Tax Appellate Tribunal (CESAT) directing the deposit of Rs 1 Crore against the recovery of Central Excise duty and penalty. The appellant argued that there was no evidence supporting the show cause notice and imposition of excise duty, emphasizing that the materials seized did not establish prima facie suppression of production and clandestine removal. The appellant's counsel contended that the photocopy of registers, the basis for the duty imposition, was inadmissible as evidence, citing relevant legal precedents. Additionally, it was argued that the seizure was not conducted by the competent authority as required by law.

The appellant further asserted that there was a lack of evidence regarding suppression of production and clandestine removal, and witnesses were not allowed to be cross-examined. The financial incapacity of the company to pay the deposit was highlighted, supported by the submission of balance sheets showing no reserves or surplus. On the contrary, the Standing Counsel for the Central Excise Department maintained that there was prima facie evidence of suppression and clandestine removal based on the search and seizure operations conducted.

The Court considered previous judgments, including Raghunath International Ltd Vs Union of India, to determine the validity of the show cause notice and the authority's actions. The Court analyzed the appellant's claim of undue financial hardship in depositing the duty, referencing legal principles from Benara Values Ltd Vs Commissioner of Central Excise and Ketan V. Parekh Vs Special Director. Ultimately, the Court upheld the CESAT's decision, noting the leniency in the deposit amount and dismissing the appeal. The appellant was granted sixty days to make the required deposit.