2017 (9) TMI 1432 - AT - Central Excise

Clandestine removal - penalty - Held that - the seized documents were found from the factory premises of the appellant. In reply to show cause notice, it is stated that after roasting the Bidis, they are labelled with different brands and are recorded as labelled Bidis in the RG-12A Register and are cleared from the factory on payment of duty. It is stated that total unlabelled Bidis are recorded in their RG-12A Register as unlabelled Bidis and tax is paid on said unlabelled Bidis after roasting and branding. I find that the statement made by the appellant in reply to the show cause notice is without any substance. It is noticed that the appellant had not filed any reconciliation statement on the basis of the quantity as shown in the seized documents and the clearance of the goods as mentioned in the RG-12A Register. Penalty on manager and accountant - Held that - they are the employees of the appellant firm and acted on the instructions of the Managing Partner of the appellant firm. There is no material available on record for imposition of penalty on Md. Serajul Haque and Shri Mihir Singha, employees of the appellant firm and the penal provisions cannot be invoked against them - the Managing Partner, Md. Jalaluddin Biswas had been directly involved in the clandestine removal of the goods. It is found that Md. Jalaluddin Biswas had admitted in his statement that the entire activities of the appellant firm is controlled by him. Therefore, the imposition of penalty is justified. Amount of penalty reduced - decided partly in favor of appellant.

Summary

Issues: Alleged clandestine manufacturing and removal of Handmade Biris without proper accounting and payment of Central Excise duty; Rejection of evidentiary value of recovered documents; Imposition of penalties on the appellant and its employees.

Analysis:
1. The case involved M/s. Murshidabad Biri Works, accused of clandestinely manufacturing and removing Handmade Biris without proper accounting and payment of Central Excise duty. Central Excise Officers recovered a chatt Bidi Register and daily production slips from the factory, leading to a demand notice for duty evasion covering the period from 01.04.2006 to 29.12.2008.

2. The Adjudicating Authority confirmed the duty demand, interest, and penalties on the appellant and its employees. The Commissioner(Appeals) upheld the decision. The appellant argued that the case was built on assumptions and lacked concrete evidence. They presented daily production accounting slips and challenged the evidentiary value of the recovered chits.

3. The appellant's consultant contended that the recovered chits lacked staff signatures and no stock verification was done. However, the Central Excise officers sent the seized documents for handwriting examination, which confirmed their authenticity. The appellant failed to provide a reconciliation statement between seized documents and clearance records, weakening their case.

4. The Adjudicating Authority's order revealed the appellant's refusal to sign the recovered documents and lack of stock verification. The expert's report supported the seized documents' authenticity. The appellant's defense regarding labeling and clearance processes was found unsubstantiated due to the absence of a reconciliation statement.

5. The Tribunal found the appellant's arguments lacking substance and upheld the duty demand, interest, and penalties on M/s. Murshidabad Bidi Works. However, the appellant was granted the option to pay a reduced penalty of 25% of the duty within 30 days. The penalties on the appellant's employees were set aside, except for the Managing Partner directly involved in the clandestine activities.