2020 (6) TMI 277 - AT - Central Excise

Clandestine Removal - Department alleged that the appellant had full knowledge regarding the manufacture of excisable goods in the factory premises and subsequent removal without following the due process of law and without payment of Central Excise Duty - Confiscation - Redemption Fine - Penalty - applicability of Section 11AC of Central Excise Act - HELD THAT - The only element for the applicability thereof, no doubt, is mensrea that is the intent to avoid the tax liability either in full or in half. The above observation that appellant knew about his goods to be excisable not only this he was also aware about the concept of SSI exemptions but failed to prove that his entire stock is covered under said SSI exemption. The absence of Central Excise Registration in the given scenario is nothing but the intent of the appellant to avoid his tax liability - It has been settled that for imposition of penalty mensrea has to be there. Further, admittedly, appellant has paid the duty as was demanded vide the subsequent show-cause-notice. The prosecution of the said subsequent show-cause-notice met the fate of deemed conclusion on the payment of duty demanded therein by the appellant - I am not at all convinced with the argument that the said deemed conclusion is applicable to the impugned show-cause-notice. The present show-cause-notice is with respect to violation of mandatory duty to obtain the Central Excise Registration before manufacturing and clearing the excisable goods. The said show-cause-notice is about confiscating such goods which have been, clandestinely, removed on account of the said violation. The subject matter of said show-cause-notice is altogether different than the show-cause-notice demanding duty. Question of double jeopardy does not at all arise for cause of action of both SCNs to be different. No doubt duty demand cannot be made for the same goods after entire duty liability has been discharged. However, liability towards confiscation remains. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
- Confiscation of goods inside factory and shop premises
- Imposition of redemption fine and penalty
- Allegation of clandestine removal of LED lights, bulbs, and panels
- Failure to obtain Central Excise Registration
- Violation of Central Excise Act and Rules
- Applicability of Section 11AC of Central Excise Act
- Intent to avoid tax liability
- Payment of demanded duty
- Judicial review of the impugned order

Analysis:

Confiscation of Goods and Imposition of Fine and Penalty:
The case involved the confirmation of confiscation of goods inside the factory and shop premises, along with the imposition of redemption fine and penalty. The appellant challenged Order-in-Appeal No. 60/CE/DLH/2018, which confirmed the confiscation and penalties but reduced the amounts. The appellant argued that all confiscated goods were acknowledged in their records, but not considered by the authorities. The appellant contended that there was no intent to remove goods without paying duty, and penalties were unjustified. However, the department maintained that the appellant knowingly engaged in clandestine removal of excisable goods, justifying the confiscation and penalties.

Allegation of Clandestine Removal and Violation of Rules:
The department alleged that the appellant was involved in the clandestine removal of LED lights, bulbs, and panels without following due process or paying Central Excise Duty. The appellant was accused of violating various provisions of the Central Excise Act and Rules. The raid conducted on the premises revealed unaccounted finished goods and raw materials, leading to the confiscation and penalty proceedings.

Failure to Obtain Central Excise Registration and Tax Liability:
One crucial aspect of the case was the appellant's failure to obtain Central Excise Registration despite manufacturing excisable goods. The appellant was found to be manufacturing various LED products without proper registration, indicating an intent to avoid tax liability. The absence of registration was considered a violation of excise rules and a clear indication of non-compliance.

Applicability of Section 11AC and Intent to Avoid Tax Liability:
The judgment discussed the applicability of Section 11AC of the Central Excise Act, emphasizing the requirement of mens rea or intent to avoid tax liability. The appellant's knowledge of the excisable nature of the goods and failure to obtain necessary exemptions or registrations demonstrated an intent to evade tax obligations. The absence of registration was deemed a deliberate attempt to circumvent tax responsibilities.

Payment of Demanded Duty and Judicial Review:
The appellant had paid the duty demanded in a subsequent show-cause notice, leading to the conclusion of that matter. However, the current show-cause notice focused on the violation of mandatory duties related to registration and clandestine removal. The judgment upheld the decision of the Commissioner (Appeals) to confirm the confiscation and penalties, citing the distinct nature of the violations and the lack of double jeopardy concerns. The judicial review found no grounds to interfere with the impugned order, resulting in the dismissal of the appeal.

This detailed analysis covers the key issues addressed in the legal judgment delivered by the Appellate Tribunal CESTAT, New Delhi, providing a comprehensive overview of the case and its implications.