2023 (2) TMI 891 - AT - Central Excise

Clandestine removal - Goods cleared without issuing invoices and CE duty was leviable on those goods - admission by the party itself - admissible evidences or not - extended period of limitation - penalties - HELD THAT - From the records it appears that investigations were carried out by the Department at the factory premises of the appellant where documents such as challans registers etc. were recovered. On co-relating the goods cleared under various challans with the invoices it was gathered that no invoices were issued in respect to the goods cleared under the said challans. It also did not show that they have been used for sending the material out of the factory for job work as they did not have any description of job worker or the nature of job work. Further it was found that the appellant maintained two sets of outward registers one with details of goods cleared under the invoices and the other under the cover of challans. Sh. Amit Rajput Director of the unit in his voluntary statement under section 14 of the Central Excise Act 1944 admitted that challans were cleared without issuing invoices and CE duty was leviable on those goods. In view of the specific admissions by Sh. Amit Rajput nothing further was required to be proved by the Department and also the recovery of challans during visit of factory clearly proves that goods so manufactured were clandestinely cleared from the factory under the guise of job work on which no Excise duty was paid. It is a settled principle of law that what is admitted by a party need not be proved. Extended period of limitation - HELD THAT - Invoking the extended period of limitation as the appellant willfully and intentionally suppressed material facts of clandestinely manufacturing and clearing finished goods without issuing proper invoices without maintaining statutory records and without filing statutory returns so as to avoid the imposition of excise duty the demand under the SCN is well within the time limit of five years under proviso to the then section 11A(1) now section 11A(4) of the CE Act 1944. Penalties - HELD THAT - On contravention of the provisions of the C E Act, 1944 and the Rules made thereunder the penalty under section 11AC is confirmed - Similarly the personal penalty imposed upon Sh. Amit Rajput Director of the unit under Rule 26(1) of the Central Excise Rules 2002 needs to be upheld as he was responsible for the clandestine manufacture and removal of goods as is evident from the documents recovered during the search which stands corroborated with his statements. That without his knowledge and active participation the goods could not have been clandestinely manufactured cleared from the factory since he being the director was responsible for the day to day affairs of his firm. He admitted the duty liability on the goods manufactured and cleared from his factory. Appeal dismissed.

Summary

Issues Involved:
Clandestine clearance of excisable goods without payment of excise duty; Admissibility of evidence based on voluntary statement of the Director; Extended period of limitation for demand; Imposition of penalty under section 11AC of the Central Excise Act, 1944; Personal penalty on the Director under Rule 26(1) of the Central Excise Rules, 2002.

Analysis:

1. Clandestine Clearance of Excisable Goods:
The case involved the appellant, a manufacturing firm engaged in producing auto parts, being accused of clandestinely clearing goods without paying excise duty. The investigation revealed discrepancies in maintaining records, with goods being cleared under challans without corresponding invoices. The Director admitted to these irregularities, confirming the evasion of duty. The Tribunal found the appellant guilty of suppressing material facts to evade duty, contravening provisions of the Central Excise Rules.

2. Admissibility of Evidence from Director's Statement:
The voluntary statements of the Director, admitting to the irregularities in clearing goods without invoices, played a crucial role in establishing the appellant's culpability. The Tribunal emphasized that what is admitted by a party need not be further proven, strengthening the case against the appellant for clandestine activities.

3. Extended Period of Limitation for Demand:
Considering the willful suppression of material facts by the appellant in clandestinely manufacturing and clearing goods, the demand under the Show Cause Notice fell within the extended period of limitation of five years. The Tribunal invoked this extended period to uphold the demand for excise duty, ensuring compliance with the statutory provisions.

4. Imposition of Penalty under Section 11AC:
The Tribunal confirmed the imposition of penalties under section 11AC of the Central Excise Act, 1944, due to the appellant's contravention of statutory provisions. The penalties were deemed necessary to deter similar violations and uphold the integrity of the excise duty regime.

5. Personal Penalty on the Director:
In addition to the penalties on the firm, the Director was held personally liable under Rule 26(1) of the Central Excise Rules, 2002. The Tribunal upheld this penalty, emphasizing the Director's responsibility for the clandestine activities, as evidenced by recovered documents and his statements. The personal penalty on the Director was deemed appropriate given his role in the firm's operations.

In conclusion, the Tribunal dismissed the appeals, affirming the decision of the adjudicating authority. The appellant's failure to respond to the Show Cause Notice or appear for hearings, coupled with the Director's admissions, led to the confirmation of demands and penalties. The judgment highlighted the importance of compliance with excise duty regulations and the consequences of attempting to evade such obligations.