2008 (3) TMI 173 - HC - Central Excise

Pan masala/gutka were found to have been clandestinely removed by the Assessee - Revenue found certain loose sheets which according to the Revenue showed that there was systematic removal of gutka without payment of duty Director Accountant and the Production Supervisor of the Assessee admitted that the loose sheets reflected removal of goods from the factory in a clandestine manner Order of lower authorities holding clandestine removal is correct assessee s petition dismissed

Summary

Issues:
1. Quantum of penalty imposed under Section 11AC of the Central Excise Act, 1944.
2. Duty liability regarding clandestine removal of goods.

Analysis:

Issue 1: Quantum of Penalty
The petitioner challenged an order passed by the Customs, Excise, and Service Tax Appellate Tribunal regarding the penalty imposed under Section 11AC of the Central Excise Act, 1944. The counsel for the petitioner cited judgments related to penalty quantum. The Tribunal found evidence of systematic removal of gutka without duty payment based on intercepted goods and statements of the Assessee's Director, Accountant, and Production Supervisor. Despite the challenge on the authenticity of loose sheets, it was held that the loose sheets were maintained systematically and could have been detached from a notebook. The lack of identification of the author was deemed inconsequential due to the Director's admission. All authorities concluded that the Assessee had clandestinely cleared gutka without duty payment, and no substantial legal question arose on the merits.

Issue 2: Duty Liability
The Assessee's clandestine removal of gutka without duty payment was established through evidence collected during a search and seizure operation. The Revenue discovered three godowns and unused manufacturing machines during the search. Relying on the evidence, the Revenue concluded that the loose sheets represented the clandestine removal of goods. The Assessee argued against the use of loose sheets as incriminating evidence due to lack of author identification. However, all lower authorities upheld the clandestine removal finding, considering the systematic maintenance of the loose sheets and the Director's admission. The matter of penalty was adjourned for further consideration based on the request of the Assessee's counsel.

This judgment highlights the importance of maintaining accurate records and the weight given to admissions by responsible parties in establishing liability for duty evasion. The legal scrutiny of evidence and the assessment of penalty quantum under Section 11AC of the Central Excise Act, 1944, were central to the decision, emphasizing the need for thorough documentation and compliance with excise regulations to avoid legal repercussions.