2016 (7) TMI 299 - AT - Central Excise

Clandestine removal of goods - extended period of limitation - the appellants have submitted that there is not much evidence on record to reflect upon the clandestine activity. It is seen that they are not disputing the fact of receipt of tobacco as also the fact of receipt of huge number of packing material. - Held that - Revenue have procured evidence of receipt of unaccounted tobacco, receipt of packing material as also sale of final product to the assessee s dealers. The appellants have not been able to rebutt the above evidence with any counter evidence. On the contrary, they have accepted the receipt of said material. Infact, we find that the order passed by the original adjudicating authority is very justifiable order as it also extends benefit to the assessee in respect of tobacco traded by them as also takes into account the correct formula for use of the packing material. In such a scenario, it can be justifiably held that appellant during the relevant period were indulging in clandestine manufacture and clearance of their final product, though they were reflecting nil production in their RT 12 returns. - Demand confirmed - Matter remanded for computation of duty liability - Decided against the assessee.

Summary

Issues:
- Demand of duty and penalty confirmed against the appellant
- Allegations of clandestine manufacture and removal
- Appellant's contention of limitation on issuance of show cause notice
- Evidence of clandestine activity and rebuttal by the appellant
- Calculation of duty liability and extension of benefit
- Imposition of penalty equivalent to duty under section 11AC
- Penalty on the proprietor and authorized signatory

Analysis:

The judgment by the Appellate Tribunal CESTAT New Delhi pertains to the disposal of three appeals arising from the same impugned order confirming a demand of ?1.20 lakh against the appellant M/s. Santosh Kumar Kishanlal Jain, along with penalties. The appellant, engaged in the manufacture of unmanufactured tobacco, was found to have discrepancies in stock and production during a visit by Central Excise officers. Subsequent investigations revealed purchases of tobacco and packing material, leading to a show cause notice for clandestine removal and duty demand of ?31,12,935. The original adjudicating authority confirmed a duty demand of ?1,20,000 and imposed penalties. This order was upheld by the Commissioner (Appeals), prompting the present appeal.

The appellant primarily challenged the impugned order on the ground of limitation, arguing that the issuance of the show cause notice was time-barred. However, the Commissioner (Appeals) rejected this contention, citing ongoing investigations into allegations of clandestine activities. The appellant also disputed the evidence of clandestine activity but failed to provide counter evidence, leading to the confirmation of duty demand and penalties by the authorities.

Regarding duty liability calculation, the Tribunal directed the original authority to consider the entire consideration as cum duty, in line with legal precedent, and remanded the matter for recalculation. The penalty equivalent to duty under section 11AC was upheld due to the appellant's involvement in clandestine activities. However, the penalty on the proprietor was set aside to avoid double penalization, following established legal principles. Similarly, the penalty on the authorized signatory was also revoked due to lack of evidence implicating their involvement in the clandestine activities.

In conclusion, all three appeals were disposed of by the Tribunal, emphasizing the duty to extend benefits in duty liability calculations and the need for evidence-based imposition of penalties, while ensuring fairness and adherence to legal principles.