2017 (10) TMI 207 - AT - Central Excise

Clandestine removal - M/s. PEPL had taken modvat credit of the said raw material - Held that - the appellants have admittedly manufactured and cleared the goods to PEPL without any documents and without payment of Central Excise Duty the appellants have cleared without M/s. PEPL had paid the duty on the same and in support of said argument. They have submitted the RT 12 returns of M/s. PEPL Ld. Counsel has argued that M/s. PEPL does not have manufacturing facility for the said transformers and therefore the duty paid by PEPL should be considered to be the duty paid by the appellant. The RT.12 return submitted do not by any where show how the goods cleared by the appellant can be treated as the same on which M/s. PEPL has paid the duty. No co-relation has been presented and in absence of the said co-relation the argument can only be rejected. In so far as demand of reversal of Cenvat Credit on clearance of 10,45,600 numbers by capacitors on which modvat credit was availed as inputs is concerned, the appellant have already reversed. This reversal however happened after a case was booked. In this regard we find the impugned order rightly confirmed the demand of reversal of cenvat credit. Confiscation of 89,800 Electrical Transformers which were seized from the premises of PEPL - Held that - The said goods were offered for release on redemption on payment of fine of ₹ 90,000/-. Since the goods were the cleared without payment of duty, the same are rightly been confiscated. The fine imposed in such circumstances is justified. Penalty u/r 173Q of Central Excise Rules, 1944 - Held that - there is sufficient cause for imposition of such penalty and uphold the same. Personal penalty of ₹ 50,000/- each has been imposed on Shri R.N. Garodia and Shri Arun N. Garodia. We find that these persons had acted in violation of Central Excise Rules and Act. The penalty of ₹ 50,000/- imposed on them is upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
- Duty evasion and clandestine clearance of goods
- Retraction of statements by appellants
- Availment and reversal of modvat credit
- Confiscation of goods and imposition of penalties

Analysis:

The case involved the appeal filed by M/s. Pixie Industries Ltd. and its directors against the confirmation of duty evasion and clandestine clearance of goods. The appellants argued that they were engaged in manufacturing transformers on a job work basis for another company, M/s. Penguin Electronics Pvt. Ltd. They claimed that the raw materials supplied to PEPL were not moved from their premises and that PEPL had taken modvat credit for the same. The Tribunal, in an earlier order, had remanded the case to the original adjudicating authority due to procedural lapses and lack of a speaking order.

The Advocate for the appellants highlighted that statements given by the appellants were retracted, and the duty on goods had already been paid by PEPL. However, the Revenue argued that the appellants had cleared goods without reversing modvat credit and evaded duty on electrical transformers. The Revenue pointed out discrepancies in the statements given by the directors of both companies, indicating clandestine clearances and lack of proper documentation.

The Tribunal observed that the retraction of statements by the appellants was strategically made and not disclosed to the Revenue promptly. It was noted that the appellants had cleared goods without proper documentation and payment of duty. The Tribunal rejected the argument that duty paid by PEPL should be considered as paid by the appellants, as there was no evidence to support this claim.

Regarding the reversal of modvat credit and confiscation of goods, the Tribunal upheld the impugned order. The duty on confiscated transformers was confirmed, and penalties were imposed on the appellants and their directors for violations of Central Excise Rules. The appeals were ultimately dismissed, affirming the duty evasion, clandestine clearance, and imposition of penalties.

In conclusion, the Tribunal found the appellants guilty of duty evasion and clandestine clearance of goods, rejecting their arguments and upholding the impugned order confirming duty, reversal of modvat credit, confiscation of goods, and imposition of penalties.