2018 (8) TMI 11 - AT - Central Excise

Imposition of penalty - clandestine removal - penalty - Held that - The ld. Commissioner have considered the entire facts in Detail in a pragmatic manner. He has recorded categorical finding that the allegations in the SCN against Mr. Sharma are not substantiated. Further, the statement in question also does not lead to any such conclusion as all replies to the query raised, appear to be a mere declaration of the happenings in the subject matter - The said mere declarations were not countered or vetoed by the Department during the investigation nor a suggestion made by Mr Sharma that being a member of the management he was aware of the matter and actively engaged and are involved in the illicit removal of capital goods and raw materials etc. Appeal dismissed - decided against Revenue.

Issues Involved:
1. Non-imposition of penalty on the respondent Shri Gopi Kishan Sharma.
2. Allegations of clandestine removal of goods by the assessee.
3. Denial of exemption under relevant notifications and recovery of duties.
4. Confiscation and penalties on the assessee and co-noticees.
5. Forfeiture of surety by M/s Manasvi Investment Pvt. Ltd. (MIPL).

Issue-Wise Detailed Analysis:

1. Non-imposition of penalty on Shri Gopi Kishan Sharma:
The primary issue in the appeal by Revenue was the non-imposition of penalty on Shri Gopi Kishan Sharma, who was the Vice President (Finance and Accounts) at the time of the alleged clandestine removal of goods. The Revenue argued that Mr. Sharma was actively involved in the illicit activities and that his role was pivotal in the removal of goods without proper permissions and duties. However, the Commissioner, after re-adjudication, found that the allegations against Mr. Sharma were not substantiated by concrete evidence. The Commissioner noted that Mr. Sharma's responsibilities did not involve handling excise-related matters or the removal of goods. His statements during the investigation were mere declarations of the happenings, and there was no corroborative evidence to support the allegations against him. Consequently, the Commissioner dropped the proposal for imposing a penalty on Mr. Sharma.

2. Allegations of clandestine removal of goods by the assessee:
The assessee, M/s Reliance Silicone India Ltd., was found to have clandestinely cleared capital goods, components, raw materials, semi-finished goods, and finished goods without proper permission from SEEPZ, without preparing invoices, and without paying the appropriate Customs/Central excise duties. These actions were in contravention of the conditions laid down in Notification No. 53/97-Cus. dated 3.6.1997 read with Notification No. 1/95-CE. The Department issued Show Cause Notices (SCNs) demanding recovery of duties and proposing penalties and confiscation of seized goods.

3. Denial of exemption under relevant notifications and recovery of duties:
The Commissioner initially denied the benefit of exemption under Notification No. 53/97-Cus. and confirmed the demand for recovery of customs duty amounting to ?10,44,42,708/- and ?12,48,030/-. Similarly, the benefit of exemption under Notification No. 1/95-CE was denied, and the demand for Central Excise duty amounting to ?1,24,43,931/- and ?9,96,999/- was confirmed. The amounts already paid by the assessee were appropriated against these demands. Interest was also ordered to be recovered.

4. Confiscation and penalties on the assessee and co-noticees:
The Commissioner ordered the confiscation of goods under seizure with an option to redeem them on payment of a fine of ?25 lakhs. Penalties were imposed on the assessee and co-noticees under various sections of the Customs Act and Central Excise Act. Specifically, a penalty of ?25 lakhs was imposed on Shri Gopi Kishan Sharma under Rule 26 of the Central Excise Rules 2002 read with Section 112 of the Customs Act. However, this penalty was later dropped upon re-adjudication.

5. Forfeiture of surety by M/s Manasvi Investment Pvt. Ltd. (MIPL):
The confirmed dues up to ?15 crores were ordered to be recovered by forfeiture of the surety given by MIPL as per the conditions of the bond executed for setting up the 100% EOU.

Judgment Summary:
The appeal by Revenue challenging the non-imposition of penalty on Shri Gopi Kishan Sharma was dismissed. The Tribunal found that the Commissioner had considered the entire facts in detail and recorded categorical findings that the allegations against Mr. Sharma were not substantiated. The statements made by Mr. Sharma were mere declarations of the happenings and were not countered by the Department during the investigation. There was no concrete evidence to prove Mr. Sharma's active involvement in the illicit removal of goods. Consequently, the Tribunal upheld the Commissioner's decision to drop the penalty proceedings against Mr. Sharma and dismissed the Revenue's appeal.

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