2023 (1) TMI 1045 - AT - Central Excise

Clandestine clearance - Clearance of sugar in excess to the quota allowed to them and on this excess clearances, parallel invoices were issued whereas no duty was paid on the parallel invoices - levy of penalty under Rule 26 for the charge of abatement in evasion of duty by the company - HELD THAT - The fact of clandestine removal done by the company M/s Shree Sardar Co-operative Sugar Industries Limited is not under dispute as the company has issued parallel invoices on which no duty was paid. The transaction were also not booked properly in the books of accounts. Against the said parallel invoices, the company also received the payment which intentionally not shown in the sales account but shown as deposit against the respective customers, therefore, it clearly transpires that the company and its board under systematic modus operandi, carried out the clandestine removal of the excisable goods - As per the facts of this case, the entire modus operandi can only be done by the board of the company which includes all the directors, it is beyond imagination that such a systematic act of clandestine removal and in proper accounting of the payment in the books as deposit can be done without the knowledge of the Directors of the company. Such type of act cannot be accepted from the employee of the company - Such type of act cannot be accepted from the employee of the company. It is also observed that the employee in their statement clearly stated that for the entire act, information is available with Shri Narendra C Solanki. Penalty under Rule 26 is decided on the basis of the fact of each case depending on the role of the person which varies from case to case. Therefore, considering the fact of the present case, the judgments are not applicable. Accordingly, I do not find any infirmity in the impugned order imposing penalty on the present appellants. Appeal dismissed.

Summary

Issues:
Clandestine clearance of excisable goods, imposition of penalty under Rule 26 for abatement in evasion of duty by company directors.

Analysis:
The case involved the company M/s Shree Sardar Co-operative Sugar Industries Limited clearing sugar in excess of the allowed quota, issuing parallel invoices without paying duty on them, and recording these excess clearances as deposits in the books of accounts. The company did not declare these clearances in the ER-1 Returns. The demand was confirmed against the company, and although an appeal was filed, it was deemed withdrawn as the company settled under the SVLDRS-2019 Scheme. The present appellants, who are Managing Director/Directors of the company, were imposed penalties under Rule 26 for abatement in evasion of duty.

The counsel for the appellants argued that one of the appellants was not directly involved in the day-to-day affairs and should not be penalized. For the other two appellants, it was contended that no proper investigation was conducted against them as no statements were recorded. The counsel relied on various judgments to support their arguments.

The Authorized Representative for the Revenue reiterated the findings of the impugned order, emphasizing the clandestine removal done by the company and the intentional misrepresentation in the books of accounts.

Upon considering the submissions and records, the Member (Judicial) found that the company's clandestine removal of goods was undisputed, with parallel invoices issued without paying duty and payments not properly accounted for. The systematic modus operandi involved the entire board of directors, including the present appellants. The Member noted that the directors' knowledge and involvement were crucial for such acts, and even though statements were not recorded for two appellants, their roles as directors implicated them in the evasion of duty. The Member distinguished the judgments cited by the appellants, stating that penalties under Rule 26 are decided based on the specific facts of each case. Consequently, the penalties imposed on the present appellants were upheld, and the appeals were dismissed.

The judgment was pronounced in open court on 23.01.2023.