2019 (5) TMI 713 - AT - Central Excise

Clandestine removal - Jumbo Rolls - allegation in this show cause notice is that M/s SPPL cleared jumbo rolls of 3000m length and misdeclared them as of 1000m length and thereby under paid Central Excise duty - sufficient evidence of the alleged clandestine removal present or not - time limitation - HELD THAT - The documents of the transporter in this particular factual matrix is quite relevant because the goods have to be carried for a very long distance and the liability of the transporter for transporting the goods as well as the payment for transportation requires him to record the actual quantity of goods being transported. It does not matter whether the seller or the buyer pays for transportation. Nobody will pay for 3x quantity of goods when only x quantity of goods is transported. Further, in case of an accident or damage or theft the liability of the transporter will also be accordingly. No transporter will take upon him the liability of 3x quantity of goods when he is actually carrying x quantity of goods. In this case, the transporter not only issued GCNs but has also maintained computerised record of the goods transported presumably because he is dealing with two large companies. Both the GCNs and the statements by the transporter show the actual quantity of goods transported by weight. There is sufficient evidence of clandestine removal by SPPL. It is impossible to have every single document to show with mathematical precision the clandestine removal starting from raw material to their production and clearance because by its very nature, clandestine removal is done without recording the figures. If all figures were recorded faithfully in the documents there will not be any clandestine removal. Therefore, in each and every case of alleged clandestine removal the facts and circumstances must be evaluated to come to a conclusion if there is sufficient evidence of clandestine removal or otherwise. It is true that the officers have searched the premises of SPPL almost one year after the initial detection in the premises of M/s VH. If the search was conducted prior to this date they possibly would have found more evidence. Time Limitation - HELD THAT - Section 11A of Central Excise Act provides for demand to be raised within five years from the relevant date in case of suppression of facts which has been the present case - there are no basis for the argument of the learned counsel for the appellant that the demand must be raised within one year from the date on which the department comes to know of the alleged clandestine removal. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
1. Allegation of clandestine removal of goods by M/s Sanghi Polymers Pvt Ltd (SPPL).
2. Imposition of penalty on M/s Victor Hitech (VH) as recipients of clandestinely removed goods.
3. Adequacy of evidence supporting clandestine removal.
4. Applicability of limitation period for raising demand.

Detailed Analysis:

Clandestine Removal Allegation Against SPPL:
The case revolves around the allegation that SPPL clandestinely removed jumbo rolls of BOPP adhesive films by misdeclaring the length of the rolls in their invoices, thereby underpaying Central Excise duty. The Directorate General of Anti Evasion (DGCEI) conducted searches and issued a show cause notice based on the discrepancies found between the declared lengths and the actual lengths of the rolls transported, as evidenced by Goods Consignment Notes (GCNs) and test reports.

Penalty on VH:
VH, as the recipient of the clandestinely removed goods, was also penalized. The investigation included statements from the transporters and computer printouts which indicated the actual quantity of goods transported. The correlation between the length and weight of the rolls, as clarified by SPPL's Vice President, was used to substantiate the claims of clandestine removal.

Evidence Adequacy:
The appellant argued that no incriminating documents were found during the search of SPPL, and the evidence relied upon was primarily from transport documents and statements made in earlier proceedings. The department countered that the transport documents and test reports provided sufficient proof of clandestine removal. The tribunal found that the GCNs, which recorded the actual weight of the transported goods, were reliable evidence. The correlation between the weight and length of the rolls, as stated by SPPL's Vice President, supported the department's case. The tribunal concluded that there was sufficient evidence of clandestine removal based on the transport documents and test reports.

Limitation Period for Raising Demand:
The appellant contended that the demand was raised beyond the permissible period, arguing that it should be within one year from when the department became aware of the alleged clandestine removal. The tribunal clarified that under Section 11A of the Central Excise Act, the demand can be raised within five years in cases involving suppression of facts, fraud, or collusion. The tribunal found no merit in the appellant's argument and upheld the demand as being within the permissible period.

Conclusion:
The tribunal upheld the impugned order, confirming the allegations of clandestine removal by SPPL and the penalty on VH. It found that the evidence, primarily based on transport documents and corroborated by test reports, was sufficient to establish clandestine removal. The tribunal also ruled that the demand was raised within the appropriate limitation period as prescribed by law. The appeals were rejected, and the impugned order was affirmed.

Order:
The impugned order is upheld, and the appeals are rejected.