2012 (7) TMI 835 - AT - Central Excise

Duty demand - Clandestine removal of goods - Penalty u/s 11AC - Fact admitted by authorized signatory - Held that - Statement of the authorised signatory clearly indicates that the appellants were removing the goods illicitly from the factory premises. On specific question from the Bench, the appellant s counsel was not able to state whether the said statement was retracted or any contrary evidence is produced on record except for the invoices which indicate purchase of textured yarn from the market. We find that the first appellate authority as well as the adjudicating authority in their orders have properly analysed the evidences produced by the appellant. We find only one small error in the said findings as regards the appellant s production of invoices, challans was not put to scrutiny by the lower authorities only on the ground that it was produced at appeal stage. Be that as it may, as there is admission by the authorised signatory of the appellant s firm and also there being no retraction, and there being no defence reply before the adjudicating authority, we consider the said statement as an evidence to hold that the appellant had in fact engaged themselves in illicit clearance of the final products from the factory premises during the month of April 1995. To that extent, the appellant s appeal against the impugned order stands rejected. During the relevant period provisions of Section11AC were not in existence and hence cannot be pressed in to services for imposition of equivalent amount of penalty. Since we have upheld the charge of clandestine removal of the goods from the factory premises of the main appellant, we hold that the main appellant is liable to be penalised under the provisions of Rule 173Q Erstwhile Central Excise Rules, 1944. In the facts and circumstances of this case is over view a little leniency may be required in imposing penalty on the appellant. Accordingly, in our considered view, the ends of justice will be met, if the penalty imposed under Rule 173Q of erstwhile Central Excise Rules, 1944, on the main appellant M/s. KDS Textiles Pvt. Ltd. is reduced - Decided partly in favour of assessee.

Summary

Issues:
Illicit removal of goods without payment of central excise duty, Admissibility of evidence, Penalty imposition under Rule 173Q and Section 11AC, Reduction of penalty amount.

Illicit Removal of Goods without Payment of Central Excise Duty:
The case involved a team of officers visiting the factory premises and discovering illicit removal of textured yarn without payment of central excise duty. The main appellant admitted to the illicit removal, which was further confirmed through detailed investigations and statements. The adjudicating authority upheld the demands and penalties raised in the show cause notice, with the first appellate authority concurring with the findings except for setting aside the demand for interest. The appellate tribunal, after considering submissions from both sides, found that the appellant had indeed engaged in the illicit clearance of final products from the factory premises in April 1995. Despite some errors in the lower authorities' scrutiny of the invoices and challans produced by the appellant, the tribunal held the demand for duty as confirmed against the appellant.

Admissibility of Evidence:
The appellant argued that the deliveries were not of textured yarn but were procured from the market for twisting at another premises. The lower authorities were not convinced by the appellant's documents and submissions, with the authenticity of the invoices and challans being questioned. However, the tribunal noted that the appellant failed to produce contrary evidence or retract the admission made by the authorised signatory, leading to the acceptance of the statement as evidence of the illicit removal of goods.

Penalty Imposition under Rule 173Q and Section 11AC:
The penalty on the appellant was imposed under Rule 173Q read with Section 11AC, but it was found that Section 11AC was not in existence during the relevant period. Therefore, the tribunal reduced the penalty amount imposed on the main appellant under Rule 173Q of the Erstwhile Central Excise Rules, 1944, from Rs. 5,36,655 to Rs. 2.5 lakhs. The personal penalty imposed on the individual was upheld at Rs. 20,000, considering the un-retracted statement made by the authorised signatory regarding the illicit removal of goods.

Reduction of Penalty Amount:
In view of the circumstances, the tribunal decided to reduce the penalty on the main appellant and maintain the penalty on the individual. The duty liability on the main appellant was upheld, with the penalty reduced to Rs. 2,50,000, and the personal penalty on the individual maintained at Rs. 20,000.

Conclusion:
The appeals were disposed of with the duty liability upheld on the main appellant, but with a reduced penalty amount. The penalty on the individual was maintained at the initial amount, considering the seriousness of the offence and the un-retracted statement made.