2017 (3) TMI 723 - AT - Central Excise

Clandestine removal - removal of finished goods under cover of parallel invoices and without debiting duty shown on such invoices - Held that - the contents of dispatch register, recovered lorry receipts, statement of Shri R.K. Bhadoria irrefutably supports the Revenue s stand that the subject goods were cleared without payment of Central Excise duty of ₹ 6,45,427/-. The assessee debited the said duty on 30.4.2002 voluntarily - there is no scope to interfere with the impugned order in this regard. Consequently, the confirmation of this demand of duty of ₹ 6,45,427/- along with interest and imposition of equivalent penalty on the assessee is hereby sustained. Shortage of 325.783 MT of MS Ingots and Blooms in the stock of the assessee appellant in comparison with the stock maintained in the daily stock account as on 30..4.2002 - demand - assessee appellant s argument is that the stock was ascertained on eye estimation basis and there was no actual weighment - Held that - there has been physical accounting of the Blooms and Ingots with proper multiplication with the average weight of such Bloom and Ingots, which was recorded in the Panchnama dated 30.4.2002. In the impugned order, it is mentioned that this is the practice followed in the steel industry and was accepted by the assessee - there is no scope to interfere with the impugned order in this regard, the demand of Central Excise duty of ₹ 4,95,738/- along with interest and imposition of equivalent penalty confirmed by the impugned order is hereby sustained. Imposition of penalty u/r 173Q of CER 1994 / Rule 25 of CER, 2001/2002 - Held that - It will not be reasonable to further punish the assessee by imposing a high penalty of ₹ 50 lakhs, when mandatory penalty to the tune of over rupees one and half crores (precisely ₹ 1,51,44,426/-) has already been imposed. Therefore, considering totality of facts and circumstances, we reduce the said penalty of ₹ 50 lakhs to 10% of the duty evaded which comes to ₹ 15,14,422/- (10% of confirmed duty demand of ₹ 1,51,44,426/-) and the same would be payable accordingly by the appellant assessee. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues Involved:
1. Confirmation of Central Excise duty demand along with interest and penalties.
2. Confiscation of land, building, plant, and machinery.
3. Imposition of penalties on individuals involved.
4. Revenue's cross-appeal regarding dropped duty demand.

Issue-wise Analysis:

1. Confirmation of Central Excise Duty Demand:
The Tribunal upheld the Commissioner’s decision confirming the demand of ?1,51,44,426/- along with interest and equivalent penalty. The demand was substantiated by evidence such as 262 parallel invoices supported by transport documents and weighment slips. The Tribunal dismissed the appellants' argument that photocopies of documents have no evidentiary value, emphasizing that other evidence corroborated the charges. The demand of ?79,57,994/- based on these invoices was sustained. Additionally, the demand of ?60,45,267/- for short accountal of production was upheld, rejecting the appellant's argument about quality control tests. The Tribunal also confirmed the demand of ?6,45,427/- based on lorry receipts and dispatch registers, and ?4,95,738/- for stock shortages, noting proper physical accounting practices.

2. Confiscation of Land, Building, Plant, and Machinery:
The Tribunal supported the confiscation of land, building, plant, and machinery used in the evasion of duty, considering the substantial duty evasion. However, the redemption fine for these assets was reduced from ?25 lakhs to ?6.25 lakhs, acknowledging the penalties already imposed on the appellant.

3. Imposition of Penalties on Individuals:
The Tribunal reduced the penalty on the appellant company from ?50 lakhs to ?15,14,422/- (10% of the confirmed duty demand), considering the already imposed mandatory penalty of ?1,51,44,426/-. For Shri N.K. Gupta, Vice President, the penalty was reduced from ?5 lakhs to ?1 lakh, taking a lenient view due to his status as a salaried employee, despite his involvement in the evasion activities.

4. Revenue's Cross-Appeal Regarding Dropped Duty Demand:
The Revenue's cross-appeal challenged the dropping of ?9,94,65,997/- duty demand based on Bilty Nakal Registers. The Tribunal noted that the evidence from these registers, along with statements from company officials, needed proper re-examination. The Tribunal remanded the matter to the original adjudicating authority for a fresh examination of the evidence and statements, directing a de novo adjudication with opportunities for both sides to present their cases.

Conclusion:
The appeals by M/s Prakash Industries Ltd. and Shri N.K. Gupta were partly allowed with modifications in penalties and redemption fines. The Revenue's appeal was allowed by way of remand for re-examination of the dropped duty demand. The Tribunal's decision balanced the need for penalizing duty evasion with considerations of fairness and proportionality in penalties.