2015 (10) TMI 1143 - AT - Central Excise

Duty demand - Shortage of goods - Clandestine removal of goods - Held that - Three transporters namely M/s. Saurashtra Carrying Corporation, M/s. Jay Gujarat Goods Carrier, and M/s. Madhuvan Roadways accepted transporting of the goods to various parties without cover of invoices. There are two parties, who confirmed the receipt of the goods without invoice. The Director of the appellant company accepted in his statement clandestine removal of the goods. I find that the lower authorities had given detail finding on the clandestine removal of the goods. Hence, there is no merit in the submission of the learned advocate. However, I find that the Adjudicating Authority had not given the option to pay penalty of 25% of duty within specified period under Section 11 AC of the Central Excise Act, 1944. - appellant is given an option to pay penalty 25% of duty alongwith entire amount of duty and interest within 30 days, from the date of communication of this order as per provision of Section 11AC of Central Excise Act, 1944 - Appeal disposed of.

Summary

Issues: Alleged clandestine removal of goods without payment of Central Excise Duty; Confirmation of demand of duty, interest, and penalty; Validity of statements as evidence; Imposition of penalty on co-noticees; Failure to provide option to pay reduced penalty.

1. Alleged Clandestine Removal of Goods:
The case involved the appellants, engaged in manufacturing Aluminum Extrusion, facing allegations of clandestine removal of goods without payment of Central Excise Duty. Central Excise Officers found shortages of finished goods during a factory visit and recovered private records, leading to the allegation of clandestine clearance. Statements of company officials, transporters, and buyers were recorded to support the allegations.

2. Confirmation of Demand and Imposition of Penalty:
A Show Cause Notice was issued proposing a duty demand of Rs. 19,17,679.00 along with interest and an equal penalty amount. The Adjudicating Authority confirmed a duty demand of Rs. 16,53,172.00 with interest and imposed a penalty under Section 11 AC of the Central Excise Act, 1944. The Commissioner (Appeals) upheld the adjudication order and penalties on the appellants and co-noticees.

3. Validity of Statements as Evidence:
The appellant's advocate argued that clandestine removal could not be established solely based on transporter statements, questioning the acceptance of the Director's inculpatory statement. The appellants retracted their statements, claiming the proceedings lacked verification of raw material procurement and consumption.

4. Imposition of Penalty on Co-Noticees:
The Revenue's representative contended that belated retractions of statements were invalid. He highlighted the Director's admission of clandestine removal based on recovered documents and buyer statements as evidence supporting the charges against the appellants and co-noticees.

5. Judgment and Finding on Clandestine Removal:
After reviewing the evidence, the judge found transporters and buyers confirming goods receipt without invoices, along with the Director admitting clandestine removal. The lower authorities provided detailed findings on the matter, rejecting the advocate's submissions. However, a procedural error was noted regarding the penalty payment option under Section 11 AC.

6. Resolution and Penalty Imposition:
The impugned order was upheld, granting the appellant an option to pay a reduced penalty of 25% of duty along with the full amount of duty and interest within 30 days. The appeal was disposed of accordingly, providing clarity on the penalty payment provision under the Central Excise Act, 1944.