2014 (12) TMI 160 - AT - Central Excise

Clandestine manufacture and removal of goods - Goods manufactured in name of other company - Held that - Admittedly the appellants factory was searched subsequent to a search by Commercial Tax department of Government of Rajasthan. The Revenue has relied upon the documents recovered by the Commercial Tax Department and procured by them from the said department as also on the kachcha parchi recovered by the officers themselves during the course of their search in the appellants factory on 6.7.11. Number of statements of the proprietor of the unit stand recorded, which are inculpatory in nature and have not been retracted by them. We also find that the Revenue has approached the appellants buyers, who have given statements admitting the receipt of branded power cables as also the other cables without the cover of documents. Driver of the appellant has also admitted having transported the goods under the cover of kachchi parchis. All these evidence, according to us are sufficient to conclude that the appellant was indulging in clandestine activities. - Partial stay granted.

Summary

Issues involved:
1. Confirmation of duty against the appellant along with penalty and confiscation of seized goods.
2. Allegations of clandestine activities by the appellant in the manufacturing and sale of power cables with others' brand names.
3. Reliance on recovered documents and statements of involved parties as evidence.
4. Prima facie determination of appellant's involvement in clandestine activities.

Analysis:

Issue 1: Confirmation of duty, penalty, and confiscation
The Commissioner of Central Excise confirmed duty of Rs. 1,93,67,191 against the appellant, M/s. Power Control Corpn., along with an identical penalty under section 11 AC of the Act. Additionally, seized goods were confiscated with an option for redemption on payment of a fine of Rs. 10,000. A penalty of Rs. 2 lakhs was also imposed on Shri Ravish Chandra Gupta, the proprietor of Power Control Corpn., under Rule 26(1) of Central Excise Rules, 2004.

Issue 2: Allegations of clandestine activities
The appellant was found manufacturing power cables bearing others' brand names, with incriminating records recovered during a survey by the Commercial Tax Department leading to suspicions of exceeding prescribed clearances for Small Scale Industrial units. Statements of involved parties, including the proprietor admitting to manufacturing and clearing goods without payment of duty, were crucial in establishing the clandestine nature of operations.

Issue 3: Reliance on evidence
The Revenue relied on documents obtained from the Commercial Tax Department and seized during the search at the appellant's factory, along with statements of the proprietor, buyers, and the driver admitting to involvement in clandestine activities. The statements of buyers and the driver corroborated the findings, indicating the appellant's engagement in unauthorized manufacturing and sale activities.

Issue 4: Prima facie determination
While the extent of clandestine activities was not explicitly detailed in the impugned order, the Tribunal found sufficient evidence, including unretracted statements and corroborative testimonies, to conclude the appellant's involvement in clandestine removal. The Tribunal directed the appellant to deposit 50% of the confirmed duty within a specified period, with waivers on the balance amount and penalties subject to compliance.

This detailed analysis of the judgment highlights the key issues addressed, evidence relied upon, and the Tribunal's decision based on the findings presented during the proceedings.