2017 (12) TMI 483 - AT - Central Excise

Clandestine removal - Penalty - section 11A (5) of the CEA, 1944 - case of appellant is that when an assessee pays duty along with penalty to the extent of 25% of duty, before issuance of SCN, it should not suffer penalty equal to the amount of duty - Held that - There was no case of availability of details relating to the transactions available on record. That led to the inference of evasion which could not be rebutted - this is a total proved case of material facts leading to clandestine removal of finished goods - demand upheld - appeal dismissed - decided against appellant.

Issues:
1. Interpretation of sub-section (5) of section 11A of the Central Excise Act, 1944 regarding penalty payment.
2. Consideration of deliberate evasion and penalty imposition.
3. Comparison of decisions in AAR KAY Industries Vs. CCE and Alagappa Cements Pvt. Ltd.
4. Analysis of Section 11AC and 11A(5) provisions for penalty imposition.
5. Evaluation of evidence in the case of unaccounted finished goods and deliberate evasion.
6. Examination of input/output analysis and clandestine removal inference.
7. Reference to judicial precedents in Bajrang Petro Chemicals (P) Ltd. and Goyal Ispat Ltd. cases.
8. Differentiation between cases of inability to explain shortages and objective criteria for penalty imposition.
9. Application of legal principles in SISCO Industries Ltd. case for clandestine removal determination.
10. Dismissal of appeal based on established evasion in the present case.

Analysis:
1. The appellant argued for a concession in penalty under sub-section (5) of section 11A, stating that paying 25% of the duty should prevent penalty equal to the duty amount. However, the Revenue contended that deliberate evasion warrants full penalty imposition as per Section 11AC, supported by the decision in Alagappa Cements Pvt. Ltd. case.

2. The Tribunal analyzed the provisions of Section 11AC and 11A(5) to determine penalty imposition criteria. It noted that intentional duty evasion under specific circumstances allows for penalty equal to the duty amount. The case's facts revealed deliberate evasion, leading to the rejection of penalty concession.

3. Judicial precedents from AAR KAY Industries and Alagappa Cements Pvt. Ltd. were compared regarding penalty concessions for deliberate evasion. The Tribunal considered the decision in Alagappa Cements Pvt. Ltd. as relevant, emphasizing that deliberate evasion does not warrant penalty immunity.

4. The Tribunal examined the evidence of unaccounted finished goods and deliberate evasion, including abnormal burning loss, unestablished input/output ratio, and shortages. These factors indicated deliberate evasion, justifying the penalty equal to the duty amount.

5. Input/output analysis highlighted the appellant's failure to prove normal output levels, leading to the inference of clandestine removal. The appellant's inability to provide satisfactory explanations reinforced the penalty imposition decision.

6. Reference to judicial precedents like Bajrang Petro Chemicals (P) Ltd. and Goyal Ispat Ltd. cases supported the penalty imposition based on unexplained shortages and lack of transaction details. The Tribunal emphasized the importance of clear evidence in penalty considerations.

7. Distinction was made between cases lacking objective criteria for shortage determination, as seen in SISCO Industries Ltd., and the present case with substantial evidence of clandestine removal. The Tribunal dismissed the appeal due to established evasion in this case.

This comprehensive analysis of the judgment showcases the Tribunal's thorough consideration of penalty imposition criteria, deliberate evasion evidence, and relevant legal precedents, leading to the dismissal of the appeal based on the established evasion in the case.

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