2015 (11) TMI 1243 - AT - Central Excise

Evasion of duty - Clandestine clearance of goods - Imposition of penalty u/s 11AC - Held that - The final statements were recorded after showing the details and appellant No 1 and 2 have admitted of having clandestinely cleared goods without recording in the statutory records. It is well settled position in law that whatever has been admitted need not be proved. The admission of clandestinely clearance was admitted and continue to be admitted till date. The argument that Revenue has not produced any direct evidences is therefore irrelevant in the present facts and circumstances. In fact, appellant No. 1 have also deposited part of the duty during investigation. Under the facts and circumstances of the present case, we do not have any doubt whatsoever about clandestine clearance of the goods its s quantity or the value. - penalty under Section 11AC is imposable on the Appellant No. 1 as this is a case of suppression of fact with willful intention to evade payment of duty. We also note that appellant No. 2 has submitted that penalty cannot be imposed on him being partner of appellant No. 1 and penalty has been imposed on the appellant No 1. We find from the order that on appellant No. 1 penalty imposed is under Section 11AC of the Central Excise Act, 1944, while in case of appellant no. 2 penalty has been imposed under Rule 26 of Central Excise Rules, 2002. Purpose of Rule 26 and Section 11AC are different. - No merit in appeal - Decided partly against assessee.

Issues Involved:

1. Alleged evasion of Central Excise duty by clandestine clearance of goods.
2. Reliability of evidence and documents recovered.
3. Retracted statements and their admissibility.
4. Denial of cross-examination.
5. Imposition of penalty under Section 11AC and Rule 26 of Central Excise Rules, 2002.

Detailed Analysis:

1. Alleged Evasion of Central Excise Duty by Clandestine Clearance of Goods:
The case was initiated based on intelligence reports indicating that certain manufacturers were evading Central Excise duty by clandestinely clearing finished goods through a broker. Searches conducted on 18/12/2006 led to the recovery of hand-written notebooks and other documents detailing the sale, purchase, and dispatch of goods without payment of duty. These documents implicated multiple manufacturers, including the appellant, in the clandestine clearance of goods.

2. Reliability of Evidence and Documents Recovered:
The notebooks and palm-sized diaries recovered from the broker's premises and the office of M/s. Shri Salasar Ispat Pvt. Ltd. (SSIPL) contained detailed records of transactions, including those without payment of duty. The statements of the main partner of the appellant firm and the director of SSIPL corroborated the details in these documents. The tribunal found the documents to be precise and comprehensive, providing sufficient evidence of clandestine activities.

3. Retracted Statements and Their Admissibility:
The appellant argued that the statements were retracted and thus unreliable. However, the tribunal noted that the retractions were not accompanied by any correction of details or reasons for the initial statements' inaccuracy. Subsequent statements confirmed the earlier admissions. The tribunal relied on the Supreme Court's ruling in Commissioner of Central Excise, Mumbai Vs. M/s. Kalvert Foods India Pvt. Ltd., which upheld the reliability of statements recorded by Central Excise officers.

4. Denial of Cross-Examination:
The appellant contended that the denial of cross-examination of appellant No. 2 by appellant No. 3 was unjust. The tribunal found that even without considering appellant No. 2's statements, the evidence from the documents and appellant No. 3's own admissions were sufficient to support the findings. Therefore, the denial of cross-examination did not affect the outcome.

5. Imposition of Penalty under Section 11AC and Rule 26 of Central Excise Rules, 2002:
The tribunal upheld the imposition of penalties. For appellant No. 1, the penalty under Section 11AC was justified due to the willful evasion of duty. Appellant No. 2's penalty under Rule 26 was deemed appropriate as it served a different purpose from Section 11AC. Appellant No. 3's penalty under Rule 26 was also upheld, as the criteria for its imposition were satisfied. The tribunal noted that the penalties were less than 5% of the duty evaded, which was not excessive.

Conclusion:
The tribunal dismissed all three appeals, upholding the duty, interest, and penalties imposed by the original authority. The evidence from the recovered documents and the corroborating statements were deemed sufficient to establish the clandestine clearance of goods and the evasion of Central Excise duty. The retracted statements and the denial of cross-examination did not warrant a different conclusion. The penalties under Section 11AC and Rule 26 were found to be appropriate and proportionate to the evasion committed.

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