2018 (10) TMI 1201 - AT - Central Excise

SSI Exemption - opportunity of cross-examination declined - Clandestine procurement of raw-material used in the manufacture of excisable goods - ignorance of law - entire case of the Department as is also apparent from the Order of Commissioner (Appeals) is based upon the record as that of kachcha parchies being allegedly recovered from the appellants premises - extended period of limitation - Held that - Apparently and admittedly the appellant is engaged in manufacturing activities as well and has not been registered under Excise. Though the appellant was claiming an SSI exemption but as apparent on record that despite affording that exemption of ₹ 1.5 Crores, the Excise liability is still apparent against the appellant. The CA certificate of appellants own firm also corroborates the activity of the appellant as not only of re-selling but also of sale of manufactured items. Since ignorance of law can never be an excuse, the non-registration and non-discharge of the excise liability on the part of the appellant cannot be ruled out to be a strategy to avoid his liability. Extended period of limitation - Held that - The confirmation of confiscation of unaccounted finished goods is also opined to have no infirmity - the appellant has failed to discharge his liability of tax. He is not entitled to SSI exemption, his income being beyond ₹ 1.5 Crore. The non-registration despite doing excisable activity is rather opined to be the sufficient positive act on his part, which can be categorized as an act with intent to evade duty - Department was therefore justified to invoke the extended period of limitation. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Allegations of clandestine procurement of raw material and non-registration with the Central Excise Department.
2. Confirmation of demand and confiscation of unaccounted finished goods.
3. Opportunity for cross-examination and adherence to principles of natural justice.
4. Justification for non-registration and imposition of penalty.

Analysis:

Issue 1: Allegations of Clandestine Procurement and Non-registration
The appellant was accused of engaging in clandestine procurement of raw materials for manufacturing excisable goods without accounting for them or registering with the Central Excise Department. Show cause notices were issued, leading to a demand of ?17,98,287, later reduced to ?5,29,405. The appellant challenged the order before the Commissioner (Appeals) based on the lack of concrete evidence like "kachcha parchies." The appellant requested an opportunity for cross-examination, citing Circular No.1063/2/2018 and relevant case laws.

Issue 2: Confirmation of Demand and Confiscation
The Department justified the demand based on records recovered during a search, including statements from employees and the proprietor. The Commissioner upheld the demand, emphasizing the authenticity of the recovered documents and the absence of grounds for remand. The Tribunal observed the meticulousness of the Department's investigation and affirmed the order, dismissing the appellant's arguments.

Issue 3: Opportunity for Cross-examination
The Tribunal acknowledged the importance of cross-examination as a principle of natural justice but noted that the statements relied upon were recorded in the presence of the appellant. The Commissioner considered the request for cross-examination but found no mandate for official witnesses to be cross-examined by the assessee. The Tribunal concluded that the denial of cross-examination was justified given the appellant's activities and non-registration under Excise despite exceeding the SSI exemption limit.

Issue 4: Justification for Non-registration and Penalty
The Tribunal upheld the confirmation of confiscation of unaccounted finished goods, citing the appellant's failure to discharge tax liability and the intentional evasion of duty through non-registration despite engaging in excisable activities. The Tribunal deemed the non-registration a deliberate strategy to avoid liability, justifying the extended period of limitation and penalty imposition. The order was upheld, and the appeal was dismissed.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning in upholding the order.