2018 (3) TMI 447 - AT - Central Excise

Clandestine removal - penalty u/s 11AC of the CEA 1944 - Held that - It is well settled law that the judicial precedence would be applied in the context of each facts of the case. In the present case, the Assessee is not disputing the demand of duty on clandestine removal of the goods and therefore imposition of penalty u/s 11AC of the Central Excise Act is liable to be invoked - the imposition of penalty on the Assessee is required to be upheld. Appeal dismissed - decided against Revenue.

Summary

Issues: Clandestine removal of goods, imposition of penalty under Section 11AC of the Central Excise Act, 1944, liability of the director, lapses in investigation, confirmation of demand of duty, appropriating duty already paid, modification of adjudication order, appellate jurisdiction.

Analysis:
1. Clandestine Removal of Goods: The case involved the clandestine removal of goods by the Assessee, a company engaged in the manufacture and clearance of Sponge Iron. The Officers of Directorate General of Central Excise, Intelligence conducted a search and issued a Show Cause Notice proposing duty demand, interest, and penalties based on the admission of clandestine removal by the Assessee.

2. Imposition of Penalty under Section 11AC: The Revenue argued for the imposition of penalties under Section 11AC, citing admission of clandestine removal by the Assessee and the director. The Adjudicating authority had imposed penalties on both the Assessee and the director, which were later set aside by the Commissioner (Appeals).

3. Liability of the Director: The Director of the Assessee admitted knowledge of the clandestine removal of goods, leading to the imposition of penalties on him. However, the Tribunal found insufficient evidence to uphold the penalty on the director, noting his cooperation with the Investigating Officer and payment of duty.

4. Lapses in Investigation: The Commissioner (Appeals) noted lapses in the investigation, including the failure to identify the authors of documents related to the cleared goods. Despite this, the Tribunal upheld the demand of duty on clandestine removal, invoking penalties under Section 11AC.

5. Confirmation of Demand of Duty: The Commissioner (Appeals) modified the Adjudication Order, upholding the demand of duty along with interest but setting aside the penalties imposed on the Assessee and its Director.

6. Appropriating Duty Already Paid: The Assessee had already deposited a significant amount towards the duty, which was appropriated by the Adjudicating authority. The Tribunal considered this while deciding on the penalties and confirmed the demand of duty.

7. Modification of Adjudication Order: The Tribunal, after hearing both sides, allowed the Revenue's appeal against the Assessee, upheld the penalties, and dismissed the appeal against the Director. The Cross Objection filed by the Assessee was disposed of accordingly.

8. Appellate Jurisdiction: The Tribunal exercised its appellate jurisdiction to review the findings of the Adjudicating authority and the Commissioner (Appeals), ultimately deciding on the imposition of penalties and confirming the demand of duty based on the admission of clandestine removal by the Assessee.