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2007 (8) TMI 116 - AT - Central ExciseClandestine removal - Alleged that appellant is clandestine removal of goods and accordingly demand were made along with interest and penalty under different section - Allegation proved demand and penalty u/s 11AC sustained and interest amount were set aside
Issues: Duty demand on Modvat credit availed on resins removed clandestinely, imposition of interest, penalty under Section 11AC, penalty under Rules 173Q and 226.
In this judgment by the Appellate Tribunal CESTAT, Mumbai, the duty demand of Rs. 1,27,283/- was confirmed against the appellants for availing Modvat credit on 6344.12 kgs. of resins removed clandestinely without duty payment from May 1997 to September 1998. The authorities also directed the recovery of interest under Rule 57-I(5) of the Central Excise Rules, 1944, along with imposing a penalty equal to the duty amount under Rule 57-I(4) read with Section 11AC, and an additional penalty of Rs. 1 lakh under Rules 173Q(1)(bb), 52A, and 226 of Central Excise Rules, 1944. The Tribunal noted that the department's case of clandestine removal was supported by a shortage of 1186 kgs. and a statement from the partner of the appellant-firm admitting the removal of 6344.12 kgs. of resin. This statement was corroborated by another employee of the firm, Kirti Mehta. As the partner also confirmed the removal in writing, and no satisfactory explanation was provided to refute the claim, the duty demand was upheld. Regarding the penalty under Section 11AC, the Tribunal observed that no reduction was permissible based on a judgment from the jurisdictional High Court. However, the Tribunal agreed with the appellants that the interest levy should be set aside as the duty became payable before the relevant provisions came into force. The Tribunal also found no justification for imposing penalties under Rules 173Q and 226 in addition to the penalty under Section 11AC, thus setting aside those penalties. Ultimately, the Tribunal partly allowed the appeal by setting aside the levy of interest and penalties under Rules 173Q and 226, while upholding the penalty under Section 11AC. The judgment provides a detailed analysis of the duty demand, interest imposition, and penalties, ensuring a fair and reasoned decision based on the evidence and legal provisions cited during the proceedings.
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