2018 (11) TMI 963 - AT - Central Excise

Extended period of limitation - penalty - Clandestine removal - parallel invoices - Evidence in the shape of the invoices was recovered from the dealers and was confirmed by the buyers - Held that - In the instant case it was not a Revenue neutral situation and therefore, extended period and provisions of Section 11C can be rightly invoked. Since the case involved blatant misuse of the trust placed by Revenue on the assessee and the appellants have cleared the goods without preparing invoices, the imposition of penalties on the main appellant as well as Sh. Pradeep Harsora and Mangalam Drugs & Organics Ltd. is fully justified. Penalty u/s 11AC - benefit of reduced penalty - Held that - The option of paying 25% of penalty along with full duty and interest within 30 days is extended to the appellant. Appeal allowed in part.

Summary

Issues involved:
Confirmation of demand of Central Excise duty, imposition of penalty, personal penalties, inclusion of additional ground in appeals, clandestine clearances, parallel invoices, liability in clearance to specific company, misuse of self-removal procedure, imposition of penalty on individuals involved, justification of penalties, application of Rule 26 of Central Excise Rules, imposition of penalty under Section 11AC, option of paying duty with interest and penalty within a specified time frame.

Confirmation of demand of Central Excise duty and imposition of penalty:
The appeal filed against the confirmation of demand of Central Excise duty, penalty, and personal penalties was considered by the Appellate Tribunal. The case involved clandestine clearances based on parallel invoices. The appellant contested the liability except for clearance to a specific company. The argument was made that the demand was revenue neutral due to the company's registration and payment of Central Excise duty. However, the Tribunal found it to be a blatant misuse of the self-removal procedure. Evidence of parallel invoices for duty-free clearance was confirmed, justifying the demand and penalties.

Application of Rule 26 of Central Excise Rules:
The Tribunal analyzed the application of Rule 26 of the Central Excise Rules in the case. It was argued that penalties imposed under Rule 26 were not justified for certain individuals involved. The Tribunal referred to previous decisions and observed that the penalty under Rule 26 could be imposed in specific situations. It was clarified that penalties under Rule 26 could be imposed on individuals directly involved in issuing invoices without delivering goods or for fraudulent purposes. The Tribunal upheld the penalties on the main appellant and other involved parties based on the misuse of trust by Revenue and clearance of goods without proper documentation.

Imposition of penalty under Section 11AC:
The issue of imposing penalties under Section 11AC was raised by the appellants. They argued that the option of paying duty with interest and a reduced penalty within a specified time frame was not offered to them. Citing a decision of the Gujarat High Court, the Tribunal extended the option of paying a reduced penalty along with full duty and interest within 30 days to the appellants. The appeal of one appellant was partly allowed on these terms, while the appeals of other parties were dismissed.

This detailed analysis of the judgment covers the issues related to the confirmation of demand of Central Excise duty, imposition of penalties, application of Rule 26 of the Central Excise Rules, and the imposition of penalties under Section 11AC. The Tribunal's decision was based on the specific circumstances of the case, previous legal interpretations, and the arguments presented by the appellants and respondents.