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2018 (4) TMI 1015 - AT - Central ExciseClandestine manufacture and removal - parallel invoices - demand based on electricity consumption - Held that - the individual liability of duty alleged in the SCN and proposed to be recovered individually from M/s Super and M/s Omega has been arrived at on the basis of presumption that the clandestine activity was in the ratio of the consumption of electricity - Such a proposition is absurd and the quantification of individual liability is totally presumptive in nature. The SCN is totally presumptive - reliance placed on the ruling of Hon ble Supreme Court in the case of Commissioner of Central Excise Bangalore Vs. Brindavan Beverages Pvt. Ltd. 2007 (6) TMI 4 - SUPREME COURT OF INDIA where it was held that As no sufficient material much less any material has been placed on record to substantiate the stand of the appellant the conclusions of the Commissioner as affirmed by the CEGAT cannot be faulted. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Alleged clandestine manufacture and removal of goods by M/s Super and M/s Omega. 2. Apportionment of duty liability based on electricity consumption. 3. Admissibility of electronic evidence. 4. Imposition of penalties on directors and other parties involved. Detailed Analysis: 1. Alleged Clandestine Manufacture and Removal of Goods: The case involved M/s Super Fashion Fasteners Pvt. Ltd. and M/s Omega Zippers Pvt. Ltd., both engaged in manufacturing zip fasteners. On 21/09/2012, the officers of the Director General of Central Excise Intelligence conducted searches at the factory premises and residences of the directors, seizing documents, laptops, and a pen drive. The investigation revealed that both companies were not registered with Central Excise and allegedly engaged in clandestine manufacture and removal of goods. The show cause notice dated 17/07/2014 raised a demand based on the data retrieved from the pen drive, estimating a total sales value of ?62,27,06,851 for the period from April 2009 to March 2012. 2. Apportionment of Duty Liability Based on Electricity Consumption: The duty liability was apportioned between M/s Super and M/s Omega based on the ratio of electricity consumption. The show cause notice proposed the following: - M/s Super: ?3,24,93,572 on clearances valued at ?33,49,59,675. - M/s Omega: ?2,79,92,210 on clearances valued at ?28,47,74,568. The Original Authority confirmed the demands, modifying the total demand to ?3,16,15,384 for M/s Super and ?2,71,86,719 for M/s Omega. The Tribunal found this apportionment to be presumptive and not based on concrete evidence. 3. Admissibility of Electronic Evidence: The appellants argued that the data retrieved from the pen drive was not admissible under Section 36B of the Central Excise Act, 1944, as it did not satisfy the conditions for electronic evidence. The Tribunal noted the reliance on the Supreme Court ruling in Anvar P.V. Vs P.K. Basheer, which emphasized the need for a certificate accompanying electronic records. The Tribunal found that the data retrieved did not meet the requirements of Section 36B (2) and (4) of the Central Excise Act, 1944. 4. Imposition of Penalties: The Original Authority imposed penalties under Rule 26 of the Central Excise Rules, 2002, on the directors and other individuals involved. The Tribunal noted that the penalties were imposed without establishing that these individuals had control over the clearances or knowledge of the duty evasion. The penalties included: - ?25 lakh each on Shri Anupam Mehta, Shri Ashok Kumar Malhotra, and Shri Hitin Malhotra. - ?5 lakh each on Shri Amit Mehta, Shri Satish Kumar Bansal, Shri Umesh Gupta, Shri Shailesh Kharbanda, Shri Gulshan Kumar Bhatia, and Shri Ramandeep Singh. Judgment: The Tribunal found the show cause notice to be presumptive, relying on the Supreme Court ruling in Commissioner of Central Excise, Bangalore Vs. Brindavan Beverages Pvt. Ltd. The Tribunal set aside the impugned Order-in-Original and allowed all the appeals, granting consequential relief to the appellants as per law. The judgment emphasized the need for specific and indisputable evidence in demanding duty and imposing penalties. Conclusion: The appeals were allowed, and the demands and penalties imposed by the Original Authority were set aside due to the presumptive nature of the evidence and apportionment of duty liability. The Tribunal underscored the importance of concrete evidence and adherence to legal provisions in adjudicating such cases.
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