2015 (10) TMI 1227 - AT - Central Excise

Duty evasion - Clandestine removal of goods - Concession of penalty - Held that - appellate authority both in respect of shortage of goods and removals made as exhibited by chits discovered and entries found in the note books demonstrated unaccounted removal of goods resulting in evasion of duty. Therefore, demand of duty was confirmed. In such circumstances, no question of concession in penalty arises since that would encourage evasion. This can be said following the decision of the Hon ble High Court of Bombay in the case of Commissioner of Central Excise & Customs, Aurangabad Vs Padmashri V.V. Patil S.S.K. Ltd., reported in 2007 (7) TMI 6 - HIGH COURT, BOMBAY . Therefore, adjudication order is restored dismissing appeal of M/s. A.P. Steels and Revenue appeal is allowed restoring the adjudication order insofar as the penalty is concerned. - Decided against Revenue.

Summary

Issues:
1. Contention regarding duty payment and penalty imposition by authorities.
2. Dispute over penalty concession for clandestine removal of goods.
3. Confirmation of duty demand due to unaccounted removal of goods.
4. Role of appellant as a Manager in facilitating evasion.

Analysis:
1. The Respondent, M/s. A.P. Steels, raised concerns in appeal E/00626/2010 regarding the arbitrary determination of duty payment and baseless imposition of penalty by the authorities. The central argument was that duty was not payable, and the penalty was unjustly imposed.

2. The Revenue, on the other hand, argued against granting any concession in penalty for clandestine removal of goods. They contended that confirming duty on unaccounted removal of goods should not result in any leniency towards penalties. The Revenue emphasized that offering concessions in such cases would incentivize evasion, as stated in the decision of the Hon'ble High Court of Bombay in a relevant case.

3. After hearing both sides and examining the records, the appellate authority found evidence of unaccounted removal of goods leading to duty evasion. Consequently, the duty demand was upheld. The tribunal concluded that in such circumstances, no leniency in penalties should be granted to discourage evasion practices. Citing the decision of the Hon'ble High Court of Bombay, the adjudication order was restored, dismissing the appeal of M/s. A.P. Steels and allowing the Revenue's appeal to reinstate the penalty.

4. In the case of Shri D. Purushothaman, the adjudicating authority highlighted how this appellant, acting as a Manager, played a significant role in orchestrating the evasion scheme. The authority detailed the active involvement of the appellant in facilitating the unaccounted removal of goods. As this role was not refuted during the proceedings, the tribunal upheld the Commissioner (Appeals)'s decision to dismiss the appeal concerning Shri D. Purushothaman's involvement in the evasion activities.