2007 (8) TMI 123 - AT - Central Excise

Demand on account of clandestine removal Contradictory statements Delay in furnishing documents Suppression of facts Manipulation in figures of actual production Clandestine activity proved Demand sustainable Composite penalty imposed Penalty on M D and Director is confirmed

Issues Involved:
1. Demand of duty based on Mathadi and Un-protected Labour Board records.
2. Demand of duty based on alleged trading activities.
3. Demand of duty based on clandestine removal of excisable goods.
4. Imposition of interest and penalties.

Issue-wise Detailed Analysis:

1. Demand of Duty Based on Mathadi and Un-protected Labour Board Records:

The first category of demand amounting to Rs. 55,80,483/- is based on records from the Mathadi and Un-protected Labour Board (BMUL) which provided labor to the appellant. The Secretary, Shri Nilkanth Tarachand Uprade, confirmed that payments were made for loading and unloading of finished goods and raw materials. The Tribunal found this statement to be authentic, noting that the payments were made at rates prescribed for loading and unloading only, not for other activities like shifting or stacking. The Tribunal also considered a file containing a handwritten chart of production for a specific period, which showed discrepancies between recorded production and actual production. The Managing Director and other employees admitted to maintaining these records, which corroborated the clandestine removal of goods. The Tribunal upheld the demand, stating that the clandestine activity was established by circumstantial evidence and did not require further corroboration.

2. Demand of Duty Based on Alleged Trading Activities:

The second category of demand amounting to Rs. 13,95,998/- pertains to the clearance of goods under the guise of trading activities. The appellant claimed to have purchased 702.065 MT of CTD bars from four firms, three of which were found to be non-existent. The Tribunal noted that the transporters and sales tax registrations did not support the appellant's claims. The Tribunal inferred that the purchases were fictitious and treated the goods as manufactured by the appellant. The Tribunal also considered the relationship between the appellant and M/s. Shiva Steels, noting that duplicate invoices were issued for the same quantities of goods. The Tribunal upheld the demand, citing the decision in Saraf Silicates v. CCE, which held that clandestine removal is established when goods are sold to fictitious firms without accountal.

3. Demand of Duty Based on Clandestine Removal of Excisable Goods:

The third category of demand amounting to Rs. 1,05,334/- is based on records seized from transporters. Although invoices were issued by M/s. Shiva Steels, the transporters stated that the goods were lifted from the appellant's premises. The Tribunal found that blank invoice books and delivery challans of M/s. Shiva Steels were recovered from the appellant's premises, establishing that the appellant used these invoices for their own manufacture. The Tribunal upheld the demand, stating that the transporters' statements were consistent and credible.

4. Imposition of Interest and Penalties:

The Tribunal addressed the imposition of interest and penalties under Sections 11AB and 11AC, noting that these provisions were introduced from 20-9-1996 and could not be applied retrospectively. Consequently, the demand for interest on the first and third categories was set aside. For the second category, the matter was remanded to the Commissioner to quantify the demand for the period after the introduction of these provisions. The Tribunal also addressed the imposition of joint penalties under Section 11AC and Rule 173Q, remanding the matter to the Commissioner to re-determine the penalties separately. The penalties on the individuals involved were upheld based on their admissions and involvement in the clandestine activities. However, the penalty on M/s. Shiva Steel was set aside, as penalties on the partners were already upheld.

Conclusion:

The appeals were disposed of in the above terms, with the Tribunal upholding the demands and penalties based on the evidence and statements provided, while setting aside or remanding certain aspects for re-determination.

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