2016 (12) TMI 774 - AT - Central Excise

Evasion of duty - clandestine removal - imposition of penalty - Held that - The evidences gathered from three persons corroborated the questionable modus operandi of the appellant company as has been recorded in para 60 of the order. That establishes that there was proper application of mind by the adjudicating authority demonstrating loss of Revenue - Being satisfied that there was no evidence to rebut the finding of the adjudicating authority, we uphold the impugned order in so far as the appellant M/s. Selvakumar Spinners Pvt. Ltd. is concerned. In so far as penalty on the Managing Director is concerned, discarding plea of innocence by appellant it is submitted by Revenue that the Managing Director was involved consciously in evasion for which no reduction in penalty is permissible. The adjudicating authority appears to have presumption of conscious involvement of the Managing Director in para 61 of his order finding that there was knowledge and consent of the Managing Director to cause evasion. But his finding is not based on any cogent evidence. No doubt, pre-ponderance of probability is in favour of Revenue. But the penalty proceeding being qusi-criminal in nature, that cannot be imposed mechanically. However considering totality of facts and circumstance of the case and extent of evasion as well as human intervention in causing evasion, it is considered that imposition of penalty of ₹ 50,000/- on the managing Director is Justified. Appeal disposed off - decided partly in favor of appellant.

Issues:
1. Examination of incriminating evidences for evasion of excise duty
2. Contention of appellant regarding questionable modus operandi and penalty imposition
3. Evaluation of evidences and clandestine removal by authorities
4. Rigorous testing of evidence by adjudicating authority
5. Oblique motive and intention to cause evasion by the appellant
6. Concession in penalty by the adjudicating authority
7. Corroboration of modus operandi by evidence from three persons
8. Upholding the impugned order for the appellant company
9. Penalty imposition on the Managing Director for conscious involvement in evasion
10. Justification of penalty on the Managing Director

Analysis:
1. The adjudication order extensively analyzed incriminating evidences related to the evasion of excise duty amounting to ?12,60,279. The authority thoroughly examined the modus operandi followed by the appellant, evaluating implications and relative evidences gathered. Positive findings were made, establishing evasion based on the evidence presented.

2. The appellant contended that there was no questionable modus operandi involved and that the case lacked a basis of evidence. The penalty imposed on the Managing Director was challenged, stating his passive role in the evasion. Revenue supported the adjudication, emphasizing the lack of corroborative evidence to refute the modus operandi followed by the appellant.

3. The authorities below evaluated the evidences of clandestine removal, leading to the establishment of evasion. Both sides presented their arguments, and the appeals were considered for dismissal based on the evidence and contentions presented.

4. The adjudicating authority rigorously tested the strength of the evidence, highlighting the appellant's intention to cause evasion. Physical removals of goods without duty payment and unaccounted transactions were identified, with no substantial evidence presented by the appellant to counter the findings.

5. The adjudication order demonstrated a meticulous consideration of the case, aiming to reduce litigation. The authority extended a concession in penalty under section 11 AC of the Central Excise Act, 1944, based on the evidence and circumstances presented.

6. Evidence gathered from three individuals corroborated the appellant's questionable modus operandi, indicating a loss of revenue. The authority upheld the impugned order concerning the appellant company based on the lack of rebuttal evidence.

7. Regarding the penalty on the Managing Director, the adjudicating authority presumed conscious involvement in the evasion. Despite the lack of concrete evidence, a penalty of ?50,000 was imposed, considering the totality of facts, extent of evasion, and human intervention in the evasion process.

8. The judgment concluded by partly allowing the appeal of the Managing Director and dismissing the appeal of the company, based on the findings and considerations presented during the case proceedings.

← Previous Next →