2015 (10) TMI 1544 - AT - Central Excise

Duty demand - Clandestine removal of goods - Held that - Central Excise officers visited appellant s factory on 10.07.2003 and the appellant produced the copies of the invoices by 04.08.2008 before the Commissioner (Appeals). We agree with the findings of the Commissioner (Appeals) and such invoices, can not be accepted at this belated stage. It is also noted that the appellant have not submitted any reconciliation of the demand of duty in respect of the said invoices. The shrinkage as claimed on the basis of sample invoices, the appellant has not produced any authentic basis for shrinkage. - appellant had paid duty during investigation and the adjudicating authority should have extended the benefit to pay reduced penalty of 25% of duty within stipulated period. - Adjudicating authority shall re-quantify the demand of duty by extending the benefit of cum-duty price. We also direct that the appellant may opt to pay the entire amount of duty alongwith interest and penalty of 25% of duty within 30days from the date of communication of this order, as per Section 11AC of the Central Excise Act, 1944 - Appeal disposed of.

Summary

Issues:
1. Demand of Central Excise duty based on recovered documents
2. Reduction of penalty by Commissioner (Appeals)
3. Benefit of cum-duty price not extended
4. Payment of penalty under Section 11AC of the Central Excise Act, 1944

Analysis:

Issue 1: Demand of Central Excise duty based on recovered documents
The case involved the appellant engaged in processing Man Made fabrics on job work basis. Central Excise officers recovered documents during a factory visit, leading to a demand notice for duty. The appellant argued that the demand was not supported by clearances of goods and that the authorities did not investigate further. However, statements by company representatives and recovered files indicated clandestine removal of goods. The adjudicating authority modified the duty demand based on various documents. The Commissioner (Appeals) considered invoices produced by the appellant but found them post-search, questioning their authenticity. The Commissioner upheld the duty demand, emphasizing the lack of evidence to support the appellant's claims.

Issue 2: Reduction of penalty by Commissioner (Appeals)
The penalty imposed on the appellant's Director was reduced by the Commissioner (Appeals) while upholding the adjudication order in other aspects. The appellant argued that the adjudicating authority did not consider wastage due to shrinkage, which was contested based on sample invoices. The Commissioner found discrepancies in the appellant's claims regarding shrinkage percentages and rejected the plea for recalculating the quantity based on higher shrinkages. The Commissioner also noted the absence of reconciliation for the duty demand related to the invoices produced post-search, leading to the rejection of the appellant's submissions.

Issue 3: Benefit of cum-duty price not extended
The appellant contended that the benefit of cum-duty price should be extended, citing a Tribunal decision in a similar case. The Tribunal agreed with the appellant, emphasizing that the price indicated in documents should be deemed as cum-duty price, even in cases of clandestine removal. The Tribunal supported the appellant's argument for extending the cum-duty benefit, highlighting the need for a re-quantification of the duty demand with this benefit.

Issue 4: Payment of penalty under Section 11AC of the Central Excise Act, 1944
The appellant had paid an amount during the investigation, which was adjusted in the adjudication order. However, the appellant claimed the option to pay a reduced penalty of 25% of duty under Section 11AC was not extended by the adjudicating authority. The Tribunal agreed with the appellant, directing the adjudicating authority to allow the appellant to pay the reduced penalty within a specified period, in accordance with the Central Excise Act.

In conclusion, the Tribunal upheld the adjudication order with modifications, emphasizing the re-quantification of duty with the benefit of cum-duty price and the option for the appellant to pay a reduced penalty as per Section 11AC.