2014 (2) TMI 874 - AT - Central Excise

Waiver of pre-deposit of duty - Penalty u/s 11AC and Rule 26 of Central Excise Rules, 2002 - Demand of differential duty - Reliability of documents - Held that - Applicant company is manufacture and clearance of Silico Manganese from their factory for the period from 2005 to November, 2007 clandestinely without payment of appropriate duty - data was maintained in Tally accounting package and de-coded by the officers after getting necessary Password and user I.D. from the computer operator Shri Ajay Kr. Behara. In the said Pendrive, the data related to account information, inventory information, accounting choice, inventory vouchers, profit and loss account, stock scenario, ratio analysis, sales register, purchase register, zonal register were maintained. Directors has meticulously analyzed the data contained in the said Pendrive vis- -vis the statutory records maintained by the Applicant in the daily stock register and arrived at a finding that the sales which were not reflected in the DSA had been removed without payment of duty from the factory. The Directors cannot absolve themselves totally against such clearances - Applicant has failed to make out a prima facie case for total waiver of pre-deposit of dues adjudged against them - Conditional stay granted.

Summary

Issues:
Waiver of pre-deposit of duty and personal penalty under Central Excise Act, 1944 and Central Excise Rules, 2002.

Detailed Analysis:

1. Waiver of Pre-Deposit of Duty:
The Appellant sought waiver of pre-deposit of duty of Rs.1.82 Crores imposed under Section 11AC of Central Excise Act, 1944. The demand was confirmed for the removal of Silico Manganese during 2005-06 to November 2007 based on data recovered from a Pendrive in possession of a computer operator during a search of the factory premises. The Appellant argued that the recovered data cannot be relied upon as the Directors did not admit to the figures, and cross-examination of the computer operator was denied. The Appellant also contended that the department failed to provide evidence of clandestine removal through corroborative evidence. The Tribunal found that the data retrieved from the Pendrive was maintained in the ordinary course of business and indicated unaccounted clearances. The Tribunal held that the Appellant failed to make out a prima facie case for total waiver of pre-deposit and directed them to deposit 25% of the duty confirmed.

2. Personal Penalty under Rule 26 of Central Excise Rules, 2002:
The Appellant Directors were imposed a personal penalty of Rs.10.00 Lakhs each under Rule 26 of Central Excise Rules, 2002. The Appellant argued that there was no detailed allegation or discussion on the role of Directors in the alleged production and removal of goods clandestinely, and hence the penalty could not be imposed. The Tribunal noted that the adjudicating authority analyzed all evidence and found that the Directors were involved in clandestine manufacture and clearance of goods. The Tribunal agreed with the Revenue that the penalty was justified based on the evidence presented. The Tribunal directed each Director to deposit Rs.50,000 within twelve weeks, failing which the Appeals would be dismissed.

In conclusion, the Tribunal denied the total waiver of pre-deposit of duty, directing the Appellant to deposit 25% of the confirmed duty. The Tribunal upheld the personal penalty imposed on the Directors under Rule 26 of Central Excise Rules, 2002, and directed them to deposit Rs.50,000 each within twelve weeks.