2018 (7) TMI 414 - AT - Central Excise

Clandestine removal - clearance of finished goods on various occasions without issuance of invoices and under-invoicing the value of the goods - Principles of Natural Justice - Held that - The appellant had made the averments without any reconciliation statement. In such situation, the findings of the lower authorities would be accepted - It is seen from the orders of the lower authorities that the adjudicating authority had examined the issues at length. In any event, the plea of the appellant that there was a delay in refund of duty in terms of the exemption Notification and therefore they cleared the goods without payment of duty, cannot be accepted - the demand of duty along with interest and penalty against the appellant company is sustainable. Penalty on Managing Director of the Appellant Company - Held that - Appellant contended that he had no knowledge of the alleged irregularity - In any event, the appellant No. 2 had deposited the duty partly during the investigation - imposition of penalty not justified. Appeal allowed in part.

Summary

Issues:
1. Duty evasion through under-invoicing and non-issuance of invoices.
2. Imposition of duty, interest, and penalty.
3. Knowledge and liability of the Managing Director.
4. Reconciliation statement and verification of facts.
5. Applicability of exemption notification for delay in duty refund.

Analysis:
1. The case involved duty evasion by M/s Kailashpati Cement Pvt. Ltd. through under-invoicing and non-issuance of invoices. The officers found discrepancies in the clearance of finished goods, leading to a demand of duty, interest, and penalty. The appellant company's Managing Director mentioned financial crisis as a reason for the irregularities, stating that invoices were issued after clearance to defer duty liability.

2. The adjudicating authority confirmed the duty demand and imposed penalties. The Commissioner (Appeals) upheld the decision, prompting the appeals. The appellant argued that goods were cleared without invoices due to delays in duty refund under an exemption notification. However, the Tribunal found the duty demand justified as per Rule 8 of CE Rules, 2002, emphasizing the need for duty payment at the time of removal.

3. The Tribunal considered the liability of the Managing Director, Appellant No. 2, who claimed ignorance of the offenses. Despite depositing duty partially during investigation, the penalty imposition on the Managing Director was deemed unjustified. The judgment differentiated between the company's liability and the individual's knowledge and involvement in the irregularities.

4. The Tribunal highlighted the lack of reconciliation statements and verification from transporters/buyers regarding the appellant's claims. The lower authorities' detailed examination of the case supported the duty demand and penalty imposition. The Tribunal emphasized the importance of providing substantiated claims and evidence in such matters to challenge the authorities' findings effectively.

5. The Tribunal dismissed the appellant company's appeal while allowing the appeal of the Managing Director, Shri. Kartik Sharma. The judgment emphasized the need for proper adherence to duty payment regulations and the consequences of non-compliance. The decision underscored the significance of individual liability based on knowledge and involvement in regulatory violations.