2017 (11) TMI 1288 - AT - Central Excise

Private bonded warehouse license - it was alleged that M/s Adarsh diverted the duty free materials procured by them against the CT-3 certificates into the domestic market with the sole intention to evade Central excise duty and take undue advantage of the concessions provided to hundred percent EOUs for export promotion - penalties - Held that - The main kingpin was identified as Shri Mohammed Anwar General in the activities of the fraudulent 100% EOU. In his voluntary statements recorded on several dates, he admitted that the duty free inputs procured in the name of M/s Adarsh were illicitly removed into the domestic market. He also outlined the modus operandi employed for such diversion and named the persons who had helped them in this nefarious activity. Certain portion of the illegally diverted materials were seized from various premises of the buyers which confirmed the fact of diversion of the duty free raw material. The investigation established that Sh. Mohammed Anwar had fabricated the clearance documents to show fake deemed exports to other units- viz. M/s G N Rubber Tech and M/s Konark fashion - the diversion of raw materials was established - demand upheld. Penalties imposed on various persons - Held that - Since their active participation in the evasion of duty stands established, we find no reason to interfere with the penalties imposed on all the above persons - penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
- Challenge against penalties imposed on individuals involved in diversion of duty-free materials into the domestic market.

Analysis:
1. The case involved appeals against penalties imposed on five individuals for their involvement in diverting duty-free materials procured by a company into the domestic market. The company was found to have procured duty-free materials for export production but diverted them without payment of duty, evading Central excise duty and exploiting concessions meant for export promotion.

2. The investigation revealed that the company did not have the manufacturing capabilities to convert the procured materials into final products for export. Statements and technical reports confirmed that no commercial production took place, indicating fraudulent activities. The main orchestrator admitted to illicitly removing duty-free inputs into the domestic market, fabricating clearance documents, and involving accomplices in the scheme.

3. The judgment discussed the roles played by the individuals challenging the penalties. Detailed findings were provided for each individual, highlighting their active involvement in the diversion of materials. The accomplices were found to have knowingly participated in the illicit removal of goods, obstructed investigations, and facilitated fraudulent transactions, leading to evasion of duty.

4. The penalties imposed on the individuals were upheld as their active participation in the evasion of duty was established. The judgment concluded that there was no reason to interfere with the penalties, dismissing all appeals and upholding the original order demanding duty on diverted goods and imposing penalties on the involved individuals.

5. The Tribunal's decision, pronounced in open court, affirmed the impugned order, emphasizing the seriousness of the individuals' roles in the diversion scheme. The detailed analysis of each individual's involvement and the confirmation of penalties underscored the gravity of the offenses committed in evading Central excise duty through the diversion of duty-free materials into the domestic market.