2015 (1) TMI 375 - AT - Central Excise

Suppression of production - Clandestine clearance of goods - Entry not recorded in RG-1 Register - Parallel invoices - Penalty under Rule 25 read with section 11AC - Held that - So far as recovery of parallel invoices are concerned, that was undisputed to be belonging to the appellant. The pulpable plea of different hand-writing over the documents was not proved. When hand-writing experts known to law opined against the appellant, there was no necessity to rely upon any other expert, who was not recognised by law. Therefore, appellant s plea of hand-writing experts opinion was not considered has no relevance when the concerned employees in their statement admitted to have knowledge about such incriminating evidence against the appellant. The parallel invoices not being found to be irrelevant and not liable to be discarded, exhibiting quantum of clearance mentioning the value thereon unaccounted, ld. adjudicating authority made correct evaluation of such evidence as unaccounted transactions on the relevant date and raised the demand thereon. - Adjudicating authority has worked out very clearly the loss of revenue with precision taking the aggregate value of 23 parallel invoices in the adjudication order. He has categorically recorded that the invoices were recovered from the factory and were prepared by employees of the appellant company, which was confirmed by them to have prepared the same. The appellant could not rule out unaccounted transactions exhibited by such invoices. The settled position of law being that possession follows the title, clandestine clearance of goods made through the invoices not finding place in statutory record were bound to be contributory to the evasion of duty of the aforesaid amount. Therefore, the demand relating to parallel invoices is confirmed. Slips recorded production made by appellant on different dates. Such fact was not rebutted showing irrelevancy thereof in evidence leading any evidence to the contrary. The appellant could not repel the allegation of Revenue that such slips resulted in evasion of duty to the above extent. Nothing could be either proved to demonstrate that those slips were not recovered from the factory nor there was absence of live link between the slips and the appellant. Also, contents of the slips showing the nature of goods manufactured by the appellants could not be ruled out. Investigation found that the slips were intimately connected with the activities of appellant and contents thereof demonstrating the clearances of excisable goods not finding place in the production register of appellant could not be ruled out by appellant. It was plain and simple case of deliberate omission of production figures appearing in the slips unrecorded in the statutory record resulting in evasion of duty. Appellant s plea that those were not related to appellant failed to succeed when author of the slips confirmed that the goods appearing therein were being manufactured by appellant and duty thereon not paid. So far as penalty of ₹ 47,47,307/- imposed on the appellant M/s. Agmotex Ltd. is concerned, looking into the evasion caused making clearances unaccounted through parallel invoices, penalty of ₹ 18,17,159/- is confirmed and penalty of ₹ 29,30,148/- related to unaccounted clearance as was established by incriminating slips is also confirmed for no evidence came to record to prove irrelevancy thereof. Accordingly, aggregate penalty of ₹ 47,47,307/- is confirmed. - Decided against assesse. In adjudication, Shri Shishir Agarwal, Director and Rajiv Sharma, Manager have faced penalty of ₹ 3,00,000/- and ₹ 1,00,000/- respectively under Rule 26 of Central Excise Rules, 2002. It may be stated that without human intervention, no artificial jurisdiction person shall cause evasion. There is always human element involved in committing evasions. Therefore, both the appellants are liable to penalty for their involvement and intimate connection with the loss of Revenue caused. However, considering the quantum of penalty imposed on them as disproportionate and penalty of ₹ 47,47,307/- imposed on the appellant company is confirmed, penalty imposed on these persons is reduced. Accordingly, there shall be penalty of ₹ 1,00,000/- and ₹ 50,000/- on Shri Shishir Agarwal, Director and Rajiv Sharma, Manager respectively. - Decided partly in favour of appellants.

Summary

Issues:
1. Duty demand against M/s. Agmotex with penalties under Central Excise Rules, 2002.
2. Allegation of parallel invoices leading to duty demand of Rs. 18,17,159.
3. Allegation of clandestine removal of goods leading to duty demand of Rs. 29,30,148.
4. Imposition of penalties on Director and Manager under Rule 26 of Central Excise Rules, 2002.

Issue 1: Duty demand against M/s. Agmotex with penalties under Central Excise Rules, 2002.
The appeals were made against a duty demand of Rs. 47,47,307 against M/s. Agmotex, including penalties under Rule 25 of Central Excise Rules, 2002. The duty demand comprised Rs. 18,17,159 related to parallel invoices and Rs. 29,30,148 related to clandestine removal of goods. Penalties of Rs. 3,00,000 on the Director and Rs. 1,00,000 on the Manager were imposed under Rule 26 of Central Excise Rules, 2002.

Issue 2: Allegation of parallel invoices leading to duty demand of Rs. 18,17,159.
Investigations revealed the recovery of parallel invoices from the factory of the appellant, indicating goods cleared clandestinely. The duty demand of Rs. 18,17,159 was based on these invoices. The adjudicating authority confirmed the evasion of duty based on the recovery of 23 parallel invoices prepared by employees of the appellant company. The appellant's arguments regarding hand-writing experts and the relevance of the recovered documents were dismissed. The possession of these invoices by the appellant and the unaccounted transactions led to the confirmation of the duty demand.

Issue 3: Allegation of clandestine removal of goods leading to duty demand of Rs. 29,30,148.
Further investigations revealed slips detailing suppressed production of goods not recorded in statutory registers, resulting in a duty demand of Rs. 29,30,148. The slips indicated the suppression of production of PV shirtings, leading to the evasion of duty. The appellant's attempts to challenge the relevance of the slips and the recovery of documents were unsuccessful. The adjudicating authority confirmed the duty evasion based on the unrecorded production figures in the slips, establishing the evasion of duty.

Issue 4: Imposition of penalties on Director and Manager under Rule 26 of Central Excise Rules, 2002.
Penalties of Rs. 47,47,307 were imposed on M/s. Agmotex Ltd., with penalties of Rs. 3,00,000 on the Director and Rs. 1,00,000 on the Manager. The penalties were related to the evasion caused through parallel invoices and unaccounted clearances based on the slips. The involvement of the Director and Manager in the evasion led to the imposition of penalties. However, the penalties on the individuals were reduced considering the disproportionate nature of the penalties imposed.

This judgment upheld the duty demand against M/s. Agmotex Ltd. based on the findings of parallel invoices and suppressed production indicated by recovered slips. The penalties imposed on the Director and Manager were partially allowed, acknowledging their involvement in the evasion but reducing the penalties due to disproportionality. The decision emphasized the importance of maintaining accurate records and adhering to statutory requirements to prevent duty evasion and ensure compliance with Central Excise Rules, 2002.