2016 (6) TMI 73 - AT - Central Excise

Confiscation of goods and imposition of penalty - Clandestine removal of goods - Empty trucks coming in the factory premises are not entered in the register - Auto Head Lamps and Halogen Bulbs seized had been labelled as having been manufactured in Pant Nagar and there was no evidence that the same were brought from Pant Nagar - Held that - appellant indulged in modus operandi of manufacturing goods at Jaipur and put labels to show their manufacture by Pant Nagar unit to evade payment of duty. Shri Mahipal Gupta, Managing Director and Shri Naresh Kumar Gupta, Chief Manager actively involved themselves in this modus operandi. The truck drivers also colluded with the appellant assesse inasmuch as they tried to weave a cock and bull story claiming to have brought the goods from Pant Nagar when they were fully aware that they had not brought goods from Pant Nagar and had taken empty trucks into the factory for loading the impugned goods. Thus the trucks were correctly held liable to confiscation. The said trucks drivers could not have colluded in this modus operandi in the manner aforesaid without the consent and knowledge of the transport company and therefore the transport company is also liable to penalty along with the drivers. Therefore, it is found that the case is established against the appellants at least on the yardstick of preponderance probability. Revenue is not required to prove its case with mathematical precision specially in cases involving deliberate and well-thought out modus operandi to evade duty. - Decided against the appellant

Issues Involved:
1. Confiscation of goods and imposition of redemption fine.
2. Imposition of penalties on various parties.
3. Confiscation of trucks and imposition of redemption fine.
4. Validity of the evidence and burden of proof.
5. Alleged clandestine removal and evasion of duty.
6. Role of transport company and truck drivers in the alleged evasion.

Issue-wise Detailed Analysis:

1. Confiscation of Goods and Imposition of Redemption Fine:
The Commissioner ordered the confiscation of goods valued at ?27,64,598/- under Rule 25 of the Central Excise Rules, 2002. Since the goods were provisionally released, a redemption fine of ?7,00,000/- was imposed under Section 34 of the Central Excise Act, 1944. The Commissioner also directed that appropriate Central Excise duty be paid on these goods at the time of clearance from the factory.

2. Imposition of Penalties on Various Parties:
Penalties were imposed on multiple parties:
- A penalty of ?5,00,000/- was imposed on M/s AIL (M) Jaipur under Rule 25 of the Central Excise Rules, 2002.
- A penalty of ?2,00,000/- was imposed on M/s Shree Karni Kripa Road Lines, Jaipur under Rule 26 (1) of the Central Excise Rules, 2002.
- A penalty of ?5,00,000/- was imposed on Shri Mahipal Gupta, Managing Director of M/s Autolite India Limited, under Rule 26(1) of the Central Excise Rules, 2002.
- A penalty of ?5,00,000/- was imposed on Shri Naresh Kumar Gupta, Chief Manager of M/s Autolite India Limited, under Rule 26 (1) of the Central Excise Rules, 2002.

3. Confiscation of Trucks and Imposition of Redemption Fine:
The trucks bearing Regn. No. HR-55-C 0507 and HR 38 K-5218 were ordered to be confiscated under Section 115 of the Customs Act, 1962, as applicable under Section 12 of the Central Excise Act, 1944. Since the trucks were provisionally released, a redemption fine of ?2,00,000/- on each truck was imposed under Section 34 of the Central Excise Act, 1944.

4. Validity of the Evidence and Burden of Proof:
The appellant contended that the burden of proof to establish clandestine removal was on the Revenue. They argued that M/s AML, Pant Nagar was fully equipped to manufacture the impugned goods and provided various documents like returns, challans, and Transit Declaration Forms. However, the Commissioner did not render any findings on these aspects in the impugned order.

5. Alleged Clandestine Removal and Evasion of Duty:
The Revenue argued that the goods seized were labelled as manufactured in Pant Nagar but were actually manufactured in Jaipur. The truck drivers could not provide evidence of bringing the trucks from Pant Nagar, such as toll receipts or fuel bills. The security guard stated that no entry was made for empty trucks, indicating that the trucks entered the factory empty. The Commissioner concluded that the appellant indulged in a modus operandi of manufacturing goods at Jaipur and labelling them as manufactured in Pant Nagar to evade duty.

6. Role of Transport Company and Truck Drivers in the Alleged Evasion:
The Commissioner found that the truck drivers colluded with the appellant in the alleged evasion. The transport company, M/s Shree Karni Kripa Road Lines, was also held liable for penalty as the drivers could not have colluded without the company's consent and knowledge.

Conclusion:
The Tribunal upheld the Commissioner’s order, finding that the case against the appellants was established on the yardstick of preponderance of probability. The Tribunal emphasized that in cases involving deliberate and well-thought-out modus operandi to evade duty, the Revenue is not required to prove its case with mathematical precision. The appeals were dismissed, and the penalties and fines imposed by the Commissioner were affirmed.

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