2017 (3) TMI 766 - AT - Central Excise

Clandestine removal - confiscation - demand calculated based upon the loose sheets of private records as found for the period 2006-07 to 16.12.2010 - Held that - It is undisputed that the said note book was recovered from the appellant s premises and the Director was confronted with the said note book and it was admitted as being maintained for clandestinely removed goods. We have no hesitation to uphold the demand of duty on the goods clandestinely removal as recorded in the private note book as the appellant has no explanation for such clandestinely removed goods nor are they able to show that the duty liability has been discharged - demand upheld. Confiscation - finished goods which were found during visit of the officers remained unaccounted in statutory book - Held that - the appellant has been clearing the goods clandestinely without recording the same in the statutory books as indicated by us herein above while upholding the demand of duty on clandestine gods. In our view, the adjudicating authority was correct in confiscating the finished goods which were found unrecorded and redemption fine imposed in lieu of confiscation is also appropriate. We find no reason to interfere with such reasonable order passed by the adjudicating authority on the confiscation of the unaccounted goods. As regards the demand of duty confirmed , due to difference in balance sheet figure, we find that the appellant had filed balance sheet certified by the Chartered Accountant, it is found that There is also no reconciliation to come to the conclusion that the figures shown as sales figure in the loose sheet of balance sheet recovered from the appellant premises are correct sale figure. We also note that, on mere perusal of the said loose sheets which were photocopies, there is some gaps and omissions which could not be answered by the officers of the Department, for example, there is total mismatch of sales figures indicated to the manufacturing expenses recorded. In view of foregoing , we are of the view that in the absence of any corroborative evidence to support the claim that sales figure in which appears in loose sheets of balance sheets are acceptable, we are of the opinion that demand on this count needs to be set aside. The demand of duty on this count is set aside. Penalty u/r 26 of CER, 2002 on Director - Held that - on the face of the fact that he has accepted that there was clandestine removed goods as recorded in the private note book, we uphold penalty is imposable but reduce the same to to ₹ 3 lakhs. Appeal disposed off - decided partly in favor of appellant.

Summary

Issues:
1. Confirmation of duty demand based on clandestinely removed goods recorded in private note book.
2. Confiscation of unaccounted finished goods.
3. Demand of duty based on difference in balance sheet figures.
4. Imposition of personal penalty on the Director.

Analysis:

Issue 1:
The first issue concerns the confirmation of duty demand on goods clandestinely removed and recorded in a private note book recovered from the appellant's premises. The Tribunal upheld the demand as the appellant failed to provide any explanation for the clandestinely removed goods or show discharge of duty liability. Thus, the appeal on this ground was rejected, and the original order for duty demand, interest, and penalty was upheld.

Issue 2:
The second issue involves the confiscation of unaccounted finished goods found during the officers' visit, which were not recorded in statutory books. The Tribunal rejected the appellant's explanation that the goods were being tested, stating that the appellant had a history of clandestine clearances. Therefore, the adjudicating authority's decision to confiscate the unaccounted goods and impose a redemption fine was deemed appropriate and upheld.

Issue 3:
Regarding the demand of duty based on the difference in balance sheet figures, the Tribunal analyzed the discrepancies between the audited balance sheet and loose balance sheets recovered. While the loose sheets indicated higher sales figures, the appellant argued they were prepared to secure loans and impress customers. The Tribunal found insufficient evidence to support the claim that the sales figures in the loose sheets were accurate. As a result, the demand of duty based on this ground was set aside, along with the associated interest and penalty.

Issue 4:
Lastly, the Tribunal addressed the imposition of a personal penalty on the Director under Rule 26 of the Central Excise Rules, 2002. While acknowledging the acceptance of clandestine removal of goods, the Tribunal deemed the original penalty amount excessive and reduced it from ?8 lakhs to ?3 lakhs. The impugned order was modified accordingly in respect of the penalty on the individual.

In conclusion, the Tribunal disposed of both appeals, maintaining the duty demand on clandestinely removed goods but setting aside the demand based on balance sheet discrepancies. Additionally, the confiscation of unaccounted goods and the reduced personal penalty on the Director were upheld.