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2024 (1) TMI 1155 - AT - Central ExciseClandestine removal - suppression of production, under valuation and clandestine clearance of sponge iron - demand confirmed on the basis of computer printouts seized from the Appellant s premises - under valuation - difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report - penalties. Demand of Rs.32,36,758/- has been confirmed on the basis of the details available in the computer print-out - HELD THAT - The Appellant stated that the computer print-out recovered from their office does not belong to them. It belonged to one Mr.Sanjay Bhalotia, a trader having business relationship with the Appellant. It is found that the said Sanjay Bhalotia through an affidavit dated 24.01.2008 claimed that those papers belonged to him and he had inadvertently left those papers on the table of Nimananda Pradhan on 19.05.2006 when he had visited the Appellant s Office about an hour before the search by DGCEI - the statement dated 18.02.2009 has no evidentiary value as the Appellant has not been informed about the contents of the statement. Without sharing it with the Appellant, it cannot be used against him. Accordingly, the statement dated 18.02.2009 cannot be taken to into cognizance. Demands of Rs.32,36,758/- and Rs 3,37,080/- have been worked out on the basis of the details available in the computer sheets recovered from the office of the Appellant - HELD THAT - The department has not followed the mandate under section 36B and the author of the entries made in the computer printout has not been identified. Accordingly, it is observed that the computer sheets recovered cannot be relied upon to work out the duty liability on the allegation of clandestine removal. As the demands mentioned at Sl. no (i) and (ii) of para 2 has been confirmed solely based on the data available in the computer print outs, the demand of Rs. 32,36,758/- and Rs 3,37,080/-confirmed only on the basis of computer print-outs seized from the Appellant s premises is not sustainable and accordingly, the same is set aside. Demand of Rs. 18,37,986/- confirmed on the basis of difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report - HELD THAT - In this case, the shortages have been arrived at on the basis of the registers maintained by the Appellant themselves. The reasons for the discrepancies have to be explained by the Appellant only, as they are the authors of the entries made in the Registers. However, the Appellant could not give any valid explanation for the shortages. Thus, the discrepancies in the registers itself is sufficient to corroborate the clandestine clearance. Accordingly, the demand of Rs. 18,37,986/-confirmed on the basis of difference between RG-1, Daily Production and Consumption of Material Report and Daily Stock Tally Report, is sustainable. The Appellant is liable to pay this duty along with applicable interest. As the Appellant has suppressed the actual production with an intention to evade payment of duty, they are liable for penalty equivalent to the duty evaded under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002. Penalty on the Director, Sh.C.S.Grewal - HELD THAT - It is observed that only part of the demand confirmed in the impugned order is held to be sustainable. Hence, the penalty can be imposed only in proportion to the demand confirmed. Accordingly, the penalty imposed on the Director Shri. C.S. Grewal from Rs. 10,00,000/- reduced to Rs. 2,00,000/-. Penalty imposed on Mr. Nimananda Pradhan, Manager - HELD THAT - The incriminating documents recovered have been found to be not reliable and the demand confirmed based on the document has been held as not sustainable. Hence, the penalty imposed on the Manager on that basis of these documents also will not survive. Accordingly, the penalty imposed on Shri. Nimananda Pradhan is set aside. Penalty imposed on Sh. R.S. Pandey, DGM, as the head of production - HELD THAT - It is observed that he is an employee of the company. His duty is to carry out the work as ordered by the management. He has accounted the production as advised by the Director of the company. In a family based private limited company, the Director is the ultimate beneficiary of the illegal activities. The Director has already been held responsible for the short accountal of sponge iron and penalty has been imposed on him. Thus, Mr. R.S.Pandey, DGM being employee of the company is not liable for penalty and accordingly the penalty imposed on him is set aside. Appeal disposed off.
Issues Involved:
1. Demand based on computer printouts. 2. Demand on the ground of undervaluation. 3. Demand based on discrepancies in production reports. 4. Penalties imposed on individuals. Summary: 1. Demand based on computer printouts: The demand of Rs. 32,36,758/- and Rs. 3,37,080/- was confirmed based on computer printouts seized from the appellant's premises. The appellant argued that the computer printouts did not belong to them but to a trader, Mr. Sanjay Bhalotia, who initially confirmed this through an affidavit but later disowned it in a written statement obtained by the Commissioner post personal hearing. The tribunal observed that the statement dated 18.02.2009 had no evidentiary value as it was not shared with the appellant. The tribunal also noted that the department did not follow the mandate under Section 36B of the Central Excise Act, 1944, which prescribes conditions for admitting computer printouts as evidence. Thus, the demands based solely on these computer printouts were set aside. 2. Demand on the ground of undervaluation: The demand of Rs. 3,37,080/- was based on the difference between the appellant's invoice values and the rates per MT in the computer printouts. Since the computer printouts were not admissible as evidence, this demand was also set aside. 3. Demand based on discrepancies in production reports: The demand of Rs. 18,37,986/- was confirmed based on discrepancies between RG-1, Daily Production and Consumption of Material Report, and Daily Stock Tally Report. The tribunal noted that these reports, including computer printouts maintained by the appellant, were admissible as evidence under Section 36B. The discrepancies in the reports indicated suppression of production and clandestine removal of goods. The tribunal upheld this demand, stating that the appellant failed to provide valid explanations for the discrepancies and that the intention to evade duty could be inferred from the records maintained by the appellant. 4. Penalties imposed on individuals: - The penalty on the Director, Shri C.S. Grewal, was reduced from Rs. 10,00,000/- to Rs. 2,00,000/- as only part of the demand was upheld. - The penalty on the Manager, Shri Nimananda Pradhan, was set aside as the incriminating documents were found unreliable. - The penalty on the DGM, Shri R.S. Pandey, was set aside as he was an employee acting under the Director's instructions. Order: - Demand of Rs. 32,36,758/- and Rs. 3,37,080/- set aside. - Demand of Rs. 18,37,986/- upheld along with applicable interest and penalty. - Penalty on the Director reduced to Rs. 2,00,000/-. - Penalties on the Manager and DGM set aside. - Central Excise duty along with interest and penalty to be appropriated from the amount deposited by the appellant. - Appeals disposed of accordingly. Pronounced in the open Court on 25.01.2024.
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