2018 (11) TMI 825 - AT - Central Excise

Clandestine removal - CTD Bars - fictitious trading challan - case of the department is based on the evidences recovered during the search of the premises of M/s Balaji Steels on 24.03.2005 - admissible piece of evidence - reliability on statement recorded - case of appellant is that the demand is based in assumptions and presumptions. Held that - The diaries and other private documents recovered from the premises of broker are admissible pieces of evidence to establish the case of clandestine clearance against the noticee - in view of the said Section 36A, the department has prima facie discharged the burden of establishing the case of clandestine clearance against the appellants. It is also not the case of appellants, that the statements of recorded, were recorded under threat or duress and have been retracted by them immediately on the first available opportunity. In fact the statements made have never been retracted and on the repeated query from the bench, counsel for the appellant was not able to show any evidence to claim such retraction. Further from the adjudication order and the reply to show cause notice also it is evident that the appellants have never retracted their statements either in part or toto. In view of the evidences that have be produced and recovered during the course of investigation, along with the own admissions of the Director in the unit and the other conoticees, the Appellants contentions cannot be agreed with, that the charges made against them are based on presumptions and assumptions. On the contrary there is sufficient evidence to establish the charges against them - The reliance placed by the appellant on certain decisions of this tribunal in their appeal, cannot help their case because in the case of clandestine clearance the evidences recovered need to be examined in the fact of each case and it has to be shown that the ratio of the said judgment applicable to the facts/ evidences in the case under consideration - In absence of any such attempt on the part of the counsel to establish how those case are relevant for approving or disapproving the evidences in the present case mere citing of the decision will not advance the case of the appellants in matters of clandestine clearance which are fact and evidence based. There is no merit in the appeal and the appeal is dismissed - decided against appellant.

Issues Involved:
1. Recovery of basic duty and education cess.
2. Imposition of penalties under Section 11AC of Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002.
3. Recovery of interest under Section 11AB of Central Excise Act, 1944.
4. Confiscation of goods under Rule 25 of Central Excise Rules, 2002.
5. Imposition of penalties on individuals under Rule 26 of Central Excise Rules, 2002.
6. Validity of the evidence based on private records and statements.
7. Applicability of the principle of "Cum duty price".
8. Validity of the proceedings against a deceased individual.

Detailed Analysis:

1. Recovery of Basic Duty and Education Cess:
The Tribunal upheld the recovery of the total basic duty amounting to ?7,21,243/- and education cess amounting to ?14,425/- from the appellant under the first proviso to Section 11A(1) of the Central Excise Act, 1944. The amount of ?7,21,000/- paid voluntarily was appropriated against the duty demanded.

2. Imposition of Penalties under Section 11AC and Rule 25:
The Tribunal confirmed the imposition of a penalty of ?7,21,243/- on the appellant under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. The penalties were justified based on the evidence of clandestine removal of goods without payment of duty.

3. Recovery of Interest:
Interest at the appropriate rate was ordered to be recovered from the appellant under Section 11AB of the Central Excise Act, 1944 read with Rule 8 of the Central Excise Rules, 2002. The Tribunal found that the interest recovery was in line with the statutory provisions.

4. Confiscation of Goods:
The goods (CTD bars) valued at ?60,10,360/- were held liable for confiscation under Rule 25 of the Central Excise Rules, 2002. However, since the goods were not available, no order for confiscation was made. The Tribunal upheld this finding.

5. Imposition of Penalties on Individuals:
Penalties of ?5,00,000/- each were imposed on three individuals under Rule 26 of the Central Excise Rules, 2002. The Tribunal upheld these penalties based on the involvement of these individuals in the clandestine clearance operations.

6. Validity of Evidence:
The Tribunal examined the evidence, including private records and statements recorded under Section 14 of the Central Excise Act, 1944. It held that the diaries and private documents recovered from the broker were admissible pieces of evidence. The Tribunal relied on the Supreme Court's decision in the Jain Hawala Diaries case, which allows such documents to be used as evidence when corroborated with other independent evidence.

7. Applicability of the Principle of "Cum Duty Price":
The Tribunal did not find merit in the appellant's argument regarding the applicability of the "Cum duty price" principle, as the demand for duty was based on clandestine removal, which was well established by the evidence.

8. Validity of Proceedings Against Deceased Individual:
The Tribunal noted that one of the individuals, Shri Ghanshyam Pandey, had expired during the pendency of the appeal. Consequently, the proceedings against him for the imposition of penalty abated, and the appeal was dismissed.

Conclusion:
The Tribunal upheld the order of the Commissioner (Appeals) in all respects, confirming the recovery of duty, imposition of penalties, and recovery of interest. The appeals filed by the appellant and one individual were dismissed, while the appeal against the deceased individual abated. The Tribunal emphasized that the evidence presented, including private records and corroborated statements, sufficiently established the case of clandestine removal against the appellants.

← Previous Next →