2015 (12) TMI 1355 - AT - Central Excise

Duty demand - Clandestine removal of goods - Imposition of penalty - Held that - The evidence that was furnished by appellant from the scrap dealers was not found to be reliable. Preponderance of probability went in favour of Revenue. There was also no permission granted to appellant to make weighment of the scrap outside. Various oral evidences gathered went against the assessee and that remained unrebutted. There was very precise case of Revenue that the very materials discovered from the premises of the assessee particularly computer record proved the higher generation of scrap and clearance thereof as compared to the lower clearances made through invoices and such clearance of higher quantity of scrap corroborated by the evidence gathered from different parties. Record does not reveal that the appellant had defended the charge of clandestine clearance of higher quantity of scrap before the authorities below. Even no evidence was adduced before the Tribunal to defend. The daily register reveals the respective entries of the scrap clearance while the questionable Modus operandi of the appellant proved clearances of higher quantity of the scrap to the dealers. - Demand of duty confirmed, however penalty is reduced - Decided partly in favour of assessee.

Summary

Issues: Alleged clandestine removal of scrap, duty, interest, and penalty imposition.

Analysis:
1. The dispute in this case arose when the scrap generated by the assessee was sent outside for weighment due to the absence of weighing facilities inside the factory. The department alleged that the scrap cleared through invoices were less than the clearances shown in the dispatch register, indicating clandestine removal. The assessee, to resolve the dispute, deposited the duty and interest. The Tribunal found no case for penalty under section 11AC of the Central Excise Act, 1944, and Rule 25 of the Central Excise Rules, 2002.

2. The Revenue contended that the assessee did not account for the excess scrap cleared without paying duty, warranting the imposition of duty, interest, and penalty. Both sides presented their arguments, and the Tribunal examined the records thoroughly.

3. The adjudication order highlighted discrepancies in the clearances of scrap compared to the excise invoices. It was alleged that the original invoices were destroyed after negotiations, and invoices with lesser quantity and value were issued. The evidence provided by the appellant from scrap dealers was deemed unreliable, favoring the Revenue's case. The Tribunal noted that no permission was granted for weighment of scrap outside, and various oral evidences went against the assessee.

4. The evidence, including computer records and daily registers, indicated a higher generation and clearance of scrap than what was reflected in the invoices. The Tribunal found the appellant's modus operandi questionable, leading to the clearance of a higher quantity of scrap to dealers. The duty and interest levied were confirmed based on these findings.

5. Regarding the penalty, the Tribunal decided to reduce it to 25% of the duty element, considering that the assessee had already discharged the duty liability and interest before adjudication. As a penalty was confirmed under section 11AC of the Central Excise Act, 1944, no penalty was imposed under Rule 25 of the Central Excise Rules, 2002.

6. Consequently, the appeal was allowed partly, with the duty and interest confirmed but the penalty reduced.