2018 (1) TMI 263 - AT - Central Excise

Clandestine manufacture and removal - recovery of Kaccha slips showing unaccounted sale of wrist watches and recovery of price tags of various models with MRP of above ₹ 500/- per piece - corroborative evidence on unaccounted clearances of dutiable items - Held that - the nature of goods is such that detailed documentation on transportation may not be forthcoming. These are wrist watches which do not require lorries/vehicles to transport, considering the scale of operation undertaken by the main appellant. In fact, in the appeal filed by the appellants, no substantial ground has been taken to contest the case on merit. General observation has been made regarding lack of evidence and non- application of extended period etc. Benefit of reduced penalty - Held that - in case duty demanded along with the interest is paid within 30 days of communication of the order, the amount of penalty to be paid shall be 25% of the penalty imposed subject to the condition that such reduced penalty is also paid within the period so specified. In the present case, the appellants did not discharge the full duty liability with interest along with 25% of the penalty within 30 days of receipt of the adjudication order. As such, there is no question of availing provision of reduced penalty in the present case. Extended period of limitation - Held that - The case has been made based on the private records and certain price tags recovered from the unit of the appellant which were corroborated independently by the two Directors of the main appellant. As such, we note that the present case is covered by the proviso clause of Section 11A(1) for demand for extended period. Appeal dismissed.

Summary

Issues:
- Central excise duty liability and penalties imposed on the main appellant and two Directors.
- Eligibility of SSI exemption for the main appellant.
- Evidence of manufacture and clearance of wrist watches with MRP above ?500 per piece.
- Application of Notification No. 8/2003-CE and 8/2006-CE.
- Reduction of demand and penalties on appeal.
- Contestation of penalties and reduced penalty under Section 11AC.
- Compliance with provisions of Section 11AC for reduced penalty.
- Justifiability of demand for extended period.
- Admissibility of private records and price tags as evidence.

Analysis:

The main issue in this case pertains to the central excise duty liability and penalties imposed on the main appellant and two Directors based on investigations indicating manufacture and clearance of wrist watches with MRP above ?500 per piece. The original authority confirmed the duty liability and penalties, which were reduced on appeal, with the exemption to Notification No. 8/2003-CE considered in the impugned order. The main appellant contested the evidence of manufacture, SSI exemption denial, fraud allegations, and penalties, arguing for reduced penalties under Section 11AC.

The Tribunal noted the Revenue's case was supported by Kaccha slips and price tags recovered, corroborated by statements from individuals involved with the main appellant. The Directors admitted clearance of watches with MRP above ?500 but failed to explain raw material procurement and sales details satisfactorily. The appellant's argument of lack of evidence on unaccounted clearances was dismissed, with the Tribunal emphasizing the importance of complying with Section 11AC for reduced penalties.

Regarding compliance with Section 11AC, the Tribunal clarified that the appellants did not pay the full duty liability, interest, and 25% penalty within 30 days of the adjudication order, thus not qualifying for reduced penalty. Citing a decision of the Hon’ble Bombay High Court, the Tribunal stressed strict compliance with Section 11AC provisions and the time limit for reduced penalty payment. As the case fell under the proviso clause of Section 11A(1) for demand for an extended period, the Tribunal found no reason to interfere with the impugned order, ultimately dismissing the appeals based on the evidence from private records and price tags recovered.

In conclusion, the Tribunal upheld the duty liability and penalties imposed on the main appellant and Directors, emphasizing the importance of complying with statutory provisions like Section 11AC for reduced penalties and the justifiability of demand for an extended period based on the evidence presented during the investigation and adjudication process.