2021 (11) TMI 655 - AT - Central Excise

Clandestine Removal - M. S. Ingots - alleged involvement in abetting / planning such surreptitious illegal activity - retraction of statements - opportunity of cross examination of witnesses - Rule 26 of the Central Excise Rules 2002 - HELD THAT - It is fundamental principle of judicial precedence that the decisions rendered by the courts and tribunal are not the law legislated by the Parliament and hence cannot be applied universally but should be applied after establishing the relevance and significant similarity with the facts of case under consideration and the decision sought to be relied upon. The facts in case of clandestine clearance do not render themselves to such similarity and hence the decision sought to be relied upon need to be examined with caution. It is established principle that clandestine activities are undertaken with secrecy under cover of darkness and would not leave the complete trail of evidence for the investigating authorities to detect and discover the said activities - If on the basis of the evidences adduced which would be of the nature as enumerated at (ii) of para 40 of the said decision the conclusions in relation to act of clandestine manufacture and clearance should be arrived at. In the instance case there are sufficient evidences as enumerated therein have been put forth to establish the case against the appellant within pre-ponderence of probability. Nothing has been brought on record to show that the demand made in present case based on the evidences and admissions/ confessions by the Director of Appellant 1 was covered under the earlier show cause notice. The earlier demand was based on certain studies conducted and on the basis of electricity consumption was made. The demand was in nature of presumptive demand and as per the submissions made by the appellant the appeal against the said order was dismissed not after consideration on merits but for the reason of non compliance with provisions of Section 35 F of the Central Excise Act 1944. Appellants have also not placed on records any document evidencing such dismissal of the appeal filed by them. There are no reason for not dismissing the appeals filed by these appellants under Rule 20 of CESTAT Procedure Rule 1982 and also on merits ex- parte for the reason that they were part of the entire activity of clandestine clearance undertaken by Appellant 1 - role of Appellant 3 4 has been clearly spelt out in planned activity of clandestine clearance the fact admitted by them in their statements recorded under Section 14 of Central Excise Act 1944. In view of the above admission of their involvement in activities of clandestine production and clearance by Appellant 1 the penalties imposed on them is upheld. Appeal dismissed.

1. ISSUES PRESENTED and CONSIDERED

The core issues considered in this judgment are:

Whether the clandestine manufacture and clearance of M.S. Ingots by the appellants were established based on the evidence presented.
Whether the statements recorded under Section 14 of the Central Excise Act, 1944, and subsequently retracted, could be relied upon as evidence.
Whether the penalties imposed on the directors and brokers involved were justified under the Central Excise Rules, 2002.
Whether the invocation of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944, was appropriate.
Whether the overlapping demands from previous proceedings were valid and justified.

2. ISSUE-WISE DETAILED ANALYSIS

Clandestine Manufacture and Clearance:

Relevant Legal Framework and Precedents: The case revolves around the clandestine removal of M.S. Ingots without payment of Central Excise duty, invoking provisions under Section 11A of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2002.
Court's Interpretation and Reasoning: The Tribunal found that the clandestine activities were established through corroborated evidence, including private records, statements from directors and brokers, and financial transactions. The Tribunal emphasized the circumstantial evidence and admissions made by the appellants.
Key Evidence and Findings: Evidence included private note books, cash books, and statements from directors and brokers admitting to clandestine activities. The Tribunal noted that the private records were meticulously maintained, recording both duty-paid and non-duty-paid transactions.
Application of Law to Facts: The Tribunal applied the principle of preponderance of probability, considering the clandestine nature of the activities and the corroborative evidence presented.
Treatment of Competing Arguments: The appellants argued that the case was based on assumptions and retracted statements. The Tribunal dismissed these arguments, emphasizing the corroborative nature of the evidence and the lack of credible retraction.
Conclusions: The Tribunal concluded that the clandestine manufacture and clearance were sufficiently established, justifying the demand for duty and penalties.

Reliance on Retracted Statements:

Relevant Legal Framework and Precedents: The Tribunal referenced several Supreme Court judgments, including Vinod Solanki and Surjeet Singh Chabbra, regarding the admissibility of retracted statements.
Court's Interpretation and Reasoning: The Tribunal held that the retraction of statements was not credible, noting the manner and timing of the retraction. The statements were considered voluntary and corroborated by other evidence.
Key Evidence and Findings: The Tribunal found that the retraction letters were not adequately substantiated and lacked credibility.
Application of Law to Facts: The Tribunal applied the principle that retracted statements could be relied upon if corroborated by other evidence.
Conclusions: The Tribunal concluded that the retracted statements were admissible and supported the findings of clandestine activities.

Imposition of Penalties:

Relevant Legal Framework and Precedents: Penalties were imposed under Rule 26 of the Central Excise Rules, 2002, and Section 11AC of the Central Excise Act, 1944.
Court's Interpretation and Reasoning: The Tribunal held that the directors and brokers were key participants in the clandestine activities and were liable for penalties.
Key Evidence and Findings: The Tribunal relied on the admissions and roles of the directors and brokers in facilitating the clandestine removals.
Application of Law to Facts: The Tribunal applied the legal provisions to the facts, emphasizing the active involvement of the appellants in the clandestine activities.
Conclusions: The Tribunal upheld the penalties imposed on the directors and brokers.

Extended Period of Limitation:

Relevant Legal Framework and Precedents: The extended period of limitation was invoked under Section 11A(1) of the Central Excise Act, 1944.
Court's Interpretation and Reasoning: The Tribunal found that the clandestine nature of the activities justified the invocation of the extended period.
Conclusions: The Tribunal upheld the invocation of the extended period of limitation.

Overlapping Demands:

Relevant Legal Framework and Precedents: The Tribunal considered whether the current demand overlapped with previous proceedings.
Court's Interpretation and Reasoning: The Tribunal found that the current demand was based on specific evidence of clandestine activities, distinct from previous demands based on electricity consumption.
Conclusions: The Tribunal concluded that the current demand was valid and not overlapping with previous proceedings.

3. SIGNIFICANT HOLDINGS

Core Principles Established: The Tribunal emphasized the admissibility of retracted statements when corroborated by other evidence and the application of the principle of preponderance of probability in cases of clandestine activities.
Final Determinations on Each Issue: The Tribunal upheld the demand for duty, penalties on directors and brokers, and the invocation of the extended period of limitation, while dismissing the appeals.

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