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.

Issues Involved:
1. Clandestine clearances of M.S. Ingots.
2. Validity of evidence and retraction of statements.
3. Cross-examination of brokers.
4. Overlapping demands.
5. Invocation of extended period of limitation.
6. Demand of interest and imposition of penalties.
7. Personal penalties on directors and brokers.

Detailed Analysis:

1. Clandestine Clearances of M.S. Ingots:
The Commissioner confirmed the demand of ?56,68,565/- against the clandestine clearances of 1782.425 MTs of M.S. Ingots by M/s. ISSPL during July 2006 to December 2006. The investigation revealed that Appellant 1 was involved in the surreptitious removal of M.S. Ingots, which was corroborated by documents and statements from various individuals, including the directors and brokers.

2. Validity of Evidence and Retraction of Statements:
The appellants argued that the case was based on documents recovered from a third party and retracted statements. However, the statements of the directors were found to be voluntary and corroborated by other evidence. The retraction letters were sent under "Postal Certificate" and not by "Registered Post with AD," which did not inspire confidence. The Commissioner noted that the retraction was ambiguous and unsupported by concrete evidence, and the statements were corroborated by other independent evidence.

3. Cross-Examination of Brokers:
The appellants contended that the statements of brokers could not be relied upon as they were not cross-examined. However, the Commissioner provided opportunities for cross-examination, and one broker appeared and confirmed his earlier statements. The Tribunal held that non-appearance of witnesses for cross-examination, despite opportunities, does not violate principles of natural justice.

4. Overlapping Demands:
The appellants argued that the demand overlapped with an earlier demand based on electricity consumption. The Commissioner clarified that the earlier demand was based on a presumptive report, while the current demand was based on specific evidence of clandestine manufacture and clearance. The Tribunal found no evidence to support the claim of overlapping demands.

5. Invocation of Extended Period of Limitation:
The Commissioner invoked the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944, as the clandestine activities were well-planned and intended to evade payment of duty. The Tribunal upheld this finding, noting that the ingredients necessary to invoke the extended period were present.

6. Demand of Interest and Imposition of Penalties:
The Commissioner ordered the charging of interest under Section 11AB and imposed an equal penalty under Section 11AC for contravention of various provisions of the Central Excise Rules, 2002. The Tribunal found no reason to differ with the Commissioner's observations, which were based on decisions of the Hon'ble Apex Court.

7. Personal Penalties on Directors and Brokers:
The Commissioner imposed penalties on the directors and brokers for their involvement in the clandestine activities. The Tribunal upheld these penalties, noting that the individuals played key roles in the planned activity and were beneficiaries of the illicit gains. The appeals of the brokers who did not appear for hearings were dismissed ex-parte.

Conclusion:
The Tribunal dismissed the appeals, upholding the Commissioner's findings and penalties imposed for clandestine clearances, based on corroborated evidence and voluntary statements, and rejecting claims of procedural violations and overlapping demands.

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