2016 (12) TMI 282 - AT - Central Excise

Demand - Clandestine removal - suppression of facts - sponge iron - Held that - M/s PDIPL, the appellant admits the shortage of ₹ 103.815 MT of sponge iron in the form of admission statement dated 25.08.2008 given by Sh. A.R. Rao, General Manager (Commercial); the incriminating records/documents were also recovered from the factory of M/s P. D. Industries Pvt. Ltd., which corroborate the fact of clandestine removal of the subject goods found short during physical verification. The impugned order in para 10.2 gives the findings in this regard. There is no evidence produced by M/s PDIPL, the appellant, to counter the same. Therefore, there is no scope to interfere with the impugned order in this regard. In case of other part of the demand, which is of ₹ 18,39,809 against the suppressed production and clandestine removal of 549.660 MT of sponge iron, there are sufficient evidences available in the form of loose papers, log sheets, outgoing and incoming goods details and statement of GM (Commercial), Sh. A.N.Rao. M/s PDIPL also deposited the major part of this demand which was appropriated by the impugned order - Based on the evidences available on record we agree with the findings given in this regard by the impugned order. Thus there is no scope to interfere with the impugned order confirming above demand of ₹ 18,39,809 against the appellant. We have held that there is no scope to interfere with the impugned order confirming the demand of ₹ 3,06,902 and of ₹ 18,39,809 (i.e total of ₹ 21,46,711), and once above demands have been found sustainable there is no scope to interfere with the imposition of equivalent penalty of ₹ 21,46,711, where benefit of reduced penalty of 25 per cent of the duty confirmed and interest thereon has also been given under section 11 AC of Central Excise Act, 1994 by the impugned order. The part of the order concerning the demand of ₹ 52,31,280 on suppressed production and clandestine clearance of 5140.709 sponge iron is remanded for denovo decision to the adjudicating authority, who will provide reasonable opportunity of personal hearing and additional evidence, if need be to the Noticee-appellant M/s P.D. Industries Pvt Ltd. Consequently, the Revenue s appeal is allowed by way of remand to the adjudicating authority. Appeal disposed off by way of remand.

Issues:
1. Appeal against confirmed Central Excise duty, interest, and penalty.
2. Challenge regarding suppressed production and clandestine removal of sponge iron.
3. Evidentiary value of documents and statements in confirming duty demands.
4. Admissibility of confessional statements and evidential value.
5. Imposition of equivalent penalty and reduced penalty benefits.
6. Contradictory findings leading to remand for denovo decision.

Issue 1: Appeal against confirmed duty, interest, and penalty:
M/s P.D. Industries Pvt. Ltd. appealed against the confirmation of Central Excise duty of ?21,46,711 along with interest and equivalent penalty imposed by the Commissioner. The revenue also filed an appeal against the same order, highlighting the alleged suppression and clandestine removal of sponge iron by the appellant.

Issue 2: Suppressed production and clandestine removal of sponge iron:
The appellant admitted to a shortage of sponge iron and incriminating records were found during a physical verification, supporting the claim of clandestine removal. The demand included ?3,06,902 for a shortage of 103.815 MT and ?18,39,809 for the suppressed production and clandestinely removed 549.660 MT of sponge iron. The evidences, including loose papers, log sheets, and statements, corroborated the clandestine removal, leading to the confirmation of the demand.

Issue 3: Evidentiary value of documents and statements:
The loose papers recovered from the factory premises, along with statements from the General Manager, were considered as sufficient evidence to confirm the suppressed production and clandestine removal of sponge iron. The Commissioner emphasized the admissibility and evidential value of the documents and confessional statements in establishing the allegations.

Issue 4: Admissibility of confessional statements and evidential value:
Confessional statements by the General Manager were deemed admissible and substantial evidence, especially in cases of clandestine removal. The statements were considered to have evidential value without the need for additional proof, as per established legal principles and previous tribunal decisions.

Issue 5: Imposition of equivalent penalty and reduced penalty benefits:
The confirmed duty demands led to the imposition of an equivalent penalty of ?21,46,711, with a benefit of reduced penalty of 25% of the duty confirmed and interest under section 11AC of the Central Excise Act, 1994. The penalty imposition was upheld based on the sustained demands.

Issue 6: Contradictory findings leading to remand for denovo decision:
In another appeal by the Revenue, the Commissioner's order regarding suppressed production and clandestine removal of sponge iron was found to have inconsistent and contradictory findings. As a result, this part of the order was remanded for a denovo decision to the adjudicating authority, providing an opportunity for further hearing and additional evidence if necessary.

This comprehensive analysis of the judgment highlights the key issues, evidentiary considerations, legal principles, and outcomes of the appeals before the Appellate Tribunal CESTAT NEW DELHI.

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