9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2023 (5) TMI 745 - AT - Central ExciseRecovery of duty alongwith Interest and penalty - Clandestine Removal - 3361.472 MT finished products i.e. MnO - delivery memos recovered from their premises which were used by the Appellant 1 for transportation/ clearance of the impugned goods from their premises to the premises of Appellant 2 -suppression and mis-representation of the facts or not - contravention of the provisions of Rule 4, 6, 8, 10, 11 and 12 of the Central Excise Rules, 2002 - extended period of limitation - CENVAT Credit - Revenue Neutrality - penalty. HELD THAT - From the facts of the case it transpires that the Appellant 1 and Appellant 2 are two companies duly constituted engaged in the identical business. Both the companies have common Director who is Appellant 3. Entire goods whether on job work basis or as produce of appellant 1, have been transported at the instance of appellant 1 to appellant 2 entirely against the Delivery Memo issued by them. There is no case of clearance made to any third person. Further it is evident that no proper one to corelation can be established between the goods cleared on Delivery Memos and the invoices issued by the appellant. It is quite evident the goods were necessarily to be cleared on the invoice containing the details as prescribed by the rules. Even if the private records other than the invoice i.e. delivery memo were to be considered as proper documents for the purpose of clearance of the goods then also they should have carried the necessary details. The fact that delivery memos that were used for the clearance of the goods did not contain the details as required in terms of the above stated rules is not in dispute. The contention of the appellant that this omission on their part was for the reason of ignorance of law can never be admitted as valid defence for the reason that appellant were registered under Central Excise from 2005 onwards, and in case they had any difficulty in following any of the provisions or in understanding the same they could have approached the jurisdictional officers. Ignorance of law is not an excuse for conducting the business in manner not sanctioned as per the law. Any exercise taken to correlate the delivery memos with the invoices would not yield any results. Further the explanation of assigning certain clearances made on the delivery memos, either in part or in complete towards job work, is based only on some specialized knowledge or the information that is available with the appellants and not disclosed in any transparent manner on the documents. The submissions made on this account which are not based on transparency in the documents cannot be verified. Hence these submissions need to be out-rightly rejected. The case made out against the appellants by the revenue is in respect of the documents delivery memos recovered from their premises which were used by the Appellant 1 for transportation/ clearance of the impugned goods from their premises to the premises of Appellant 2. It is also interesting fact that Appellant 1 and Appellant 2 though separately constituted companies have common director who is Appellant 3 and who is only active Director looking after the work of both the companies. It is more interesting to note that the entire product line of the Appellant 1 and Appellant 2 including the inputs and raw materials of both the units is identical. From the facts stated, investigation conducted, evidences collected both documentary and circumstantial , omission, commission and admissions, as narrated, it appears to that Appellant No. 1 has deliberately and willfully suppressed the production and clandestinely cleared the Manganese Oxide falling under CETH No. 2820 manufactured by them and removed 3361.472 MT valued at Rs. 5,09,00,262/-, without payment of Central Excise duty of Rs. 60,22,723/- (BED Rs. 58,53,738/- Ed. Cess Rs. 1,17,075/- S H cess Rs. 51,911/-), during the period from 05.12.2006 to 14.10.2009, without issuing Excisable invoices, without maintaining the statutory records with intent to evade payment of Central Excise duty. They thus, contravened the provisions of Rule 4, 6, 8, 10, 11 and 12 of Central Excise Rules, 2002. The duty so evaded is recoverable from them by invoking extended period of five (5) years under proviso to Section 11 A of Central Excise Act, 1944. Extended period of limitation - Revenue Neutrality - HELD THAT - In case of clandestine clearance against the delivery memo there could be no claim of CENVAT credit. The claim of revenue neutrality cannot be accepted in such case - by clearing the goods on the delivery memo, which cannot be co-related with the duty paying documents is an act of clandestine clearance and demand of duty against such clearances needs to be made by invoking the extended period of limitation as provided by the proviso to Section 11 A (1) of the Central Excise Act, 1944. Penalty - HELD THAT - Since the demand of duty is upheld by invoking extended period of limitation, in view of the decision of the Hon ble Supreme Court in case Rajasthan Spinning and Weaving Mill 2009 (5) TMI 15 - SUPREME COURT , penalty imposed on Appellant 1, under Section 11AC is justified. Since the penalty imposed under section 11AC of the Central Excise Act, 1944 on Appellant 1 is upheld, there are no justification for imposition of same amount of penalty under Rule 25 of the Central Excise Rules, 2002. Thus the penalty impose under Rule 25 on the Appellant 1 is set aside - Appellant 2 is the receiver of the goods cleared by the Appellant 1 against delivery memos. The finding recorded by the Commissioner, to the effect that these goods do not get reflected in their book of accounts is not challenged. Appellant 2 has knowingly dealt with goods which were liable for confiscation knowingly and hence penalty imposed under Rule 26 is upheld. Appeal partly allowed.
Issues Involved:
1. Whether the Appellant 1 clandestinely manufactured and removed MnO without proper invoices and payment of duty. 2. Whether the extended period of limitation under Section 11A of the Central Excise Act, 1944 is applicable. 3. Whether interest is recoverable under Section 11AB of the Central Excise Act, 1944. 4. Whether penalties are imposable on Appellant 1, Appellant 2, and Appellant 3 under Section 11AC of the Central Excise Act, 1944 and Rule 25 and Rule 26 of the Central Excise Rules, 2002. Summary of Judgment: Issue 1: Cladestine Removal of MnO The tribunal confirmed that Appellant 1 clandestinely manufactured and removed 3361.472 MT of MnO valued at Rs. 5,09,00,262/- without proper Central Excise invoices, statutory records, or payment of duty amounting to Rs. 60,22,723/- during the period from 05.12.2006 to 14.10.2009. The appellant's claim of ignorance of law was rejected as they were registered under Central Excise since 2005 and should have been aware of the requirements. The tribunal noted that the delivery memos used for clearance did not contain necessary details and could not be correlated with the invoices, indicating deliberate evasion. Issue 2: Extended Period of Limitation The extended period of limitation under Section 11A of the Central Excise Act, 1944 was invoked due to the deliberate suppression of facts and clandestine removal of goods by Appellant 1. The tribunal upheld the applicability of the extended period, citing precedents that allow for such an extension in cases of fraud, collusion, or willful misstatement. Issue 3: Recovery of Interest The tribunal confirmed that interest at the appropriate rate is recoverable under Section 11AB of the Central Excise Act, 1944. Since the demand for duty was upheld, the corresponding interest on the unpaid duty was also deemed payable. Issue 4: Imposition of Penalties - On Appellant 1: The tribunal upheld the imposition of a penalty under Section 11AC of the Central Excise Act, 1944, but set aside the additional penalty under Rule 25 of the Central Excise Rules, 2002. - On Appellant 2: The penalty under Rule 26 of the Central Excise Rules, 2002 was upheld as Appellant 2 knowingly dealt with goods liable for confiscation. - On Appellant 3: The penalty under Rule 26 was upheld as Appellant 3, being the director responsible for both Appellant 1 and Appellant 2, was aware of and involved in the clandestine activities. Conclusion: The appeals by Appellant 2 and Appellant 3 were dismissed, while the appeal by Appellant 1 was partly allowed by setting aside the penalty under Rule 25 of the Central Excise Rules, 2002. The tribunal emphasized the importance of maintaining proper records and following statutory requirements to avoid penalties and extended periods of limitation.
|
