2017 (12) TMI 1081 - AT - Central Excise

Clandestine removal - pig iron - evidences - penalty - Held that - the allegation appears to be presumptive, as the investigating officers have not stated a single instance, the name of the party etc. to whom Pig Iron was sold by the appellant, M/s Goyal. The allegation of sending of consignment of pig iron by M/s Apparent Iron & Steel Pvt. Ltd. Goa, is also presumptive - Mr. Onkar Nath Goyal had retracted his statement recorded on 09th March, 2005 and the same cannot be weighted for imposition of penalty. Confession cannot form of levy of Excise duty, much less retracted statements. Penalty set aside - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Alleged contravention of Central Excise Act and Rules.
2. Alleged clandestine removal and sale of pig iron.
3. Validity of the appellant's transactions and invoices.
4. Imposition of penalty under Rule 209A/26 of Central Excise Rules.
5. Reliance on confessional statements.
6. Invocation of the extended period of limitation.

Issue-wise Detailed Analysis:

1. Alleged Contravention of Central Excise Act and Rules:
The Department alleged that the appellant contravened the provisions of the Central Excise Act and Rule 209A of Central Excise Rules, 1944, read with Rule 26 of Central Excise Rules, 2002. The appellant was accused of being instrumental in selling pig iron at Agra, which was consigned to M/s Venus Casting Pvt. Ltd./Venus Loha Udyog Ltd., and returning the amount to these entities for bogus purchases of MS Ingots.

2. Alleged Clandestine Removal and Sale of Pig Iron:
The Department's investigation suggested that M/s Venus Casting Pvt. Ltd., M/s Venus Loha Udyog Ltd., and M/s Venus Enterprises were involved in evading Central Excise duty by manufacturing and clandestinely removing MS Ingots without payment of duty. The appellant was accused of facilitating this by selling pig iron at Agra and returning the sale proceeds under the guise of bogus purchases of MS Ingots.

3. Validity of the Appellant's Transactions and Invoices:
The appellant contested the show cause notice, arguing that there was no evidence of M/s Apparent Iron & Steel, Goa, consigning pig iron to M/s Venus Loha Udyog Ltd. through the appellant. The appellant claimed to have received consignments of MS Ingots under proper central excise invoices and made payments through bank cheques. The appellant argued that the invoices were statutory documents showing payment of duty and could not be rejected without evidence.

4. Imposition of Penalty under Rule 209A/26 of Central Excise Rules:
The learned Commissioner imposed a penalty of ?50,000 on the appellant, concluding that the appellant was involved in selling pig iron at Agra and returning the sale proceeds to M/s Venus Loha Udyog Ltd. through bogus purchases of MS Ingots. The Commissioner relied on the appellant's confessional statement, despite its retraction, and held that the appellant's contention lacked force.

5. Reliance on Confessional Statements:
The appellant argued that confessional statements, unless corroborated by other evidence, could not be relied upon. The appellant cited various judgments supporting this view. The learned Commissioner, however, did not agree and relied on the appellant's confessional statement, despite its retraction, to impose the penalty.

6. Invocation of the Extended Period of Limitation:
The Department invoked the extended period of limitation under the proviso to Section 11A(1) of the Central Excise Act, 1944. The appellant contested this, arguing that the Department failed to produce any evidence showing an intention to evade payment of duty.

Judgment:
The Tribunal considered the rival contentions and found that the appellant had provided particulars of genuine transactions. The allegation of clandestine sale of pig iron was deemed presumptive, as the investigating officers did not provide any specific instances or names of parties to whom pig iron was sold. The Tribunal noted that the appellant had retracted his confessional statement and that such statements could not form the basis for imposing a penalty. The Tribunal relied on precedents that held confessional statements, especially retracted ones, could not be the sole basis for levying excise duty or penalties. Consequently, the appeal was allowed, and the impugned order imposing a penalty on the appellant was set aside.

Conclusion:
The Tribunal concluded that the allegations against the appellant were based on presumptions and lacked concrete evidence. The retracted confessional statement could not be relied upon to impose a penalty. The appeal was allowed, and the penalty imposed on the appellant was set aside.

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