2003 (9) TMI 240 - AT - Central Excise

Imposition of penalty is mandatory, in case of raid - the assessee demanded duty deposited before the issuance of SCN - Search conducted at the factory premises - Confirming the duty and the penalty - - HELD THAT - It is well settled that admission made by the maker can be accepted as a substantial piece of evidence under the law. He cannot be later on, permitted to turn round and deny that his admission was not voluntary, unless he is able to establish that the admission was extracted from him under coercion, duress, threat, etc. This being the position in law, in my view, the admission made by Shri Aaloke Surie, the proprietor of the appellant's firm which he never retracted by alleging to had been taken out from him, by beating, coercion, provided substantial piece of evidence for proving the allegations against him, as contained, in the SCN. He even deposited the duty amount without any protest. Therefore, the non-preparation of the panchnama and joining of the independent witnesses, under these circumstances, has got no bearing on the merit of the case. Regarding the imposition of mandatory penalty u/s 11AC, the contention of the Counsel, in my view, cannot be subscribed as it would only render the mandatory provisions of this Section nugatory, in-effective. The Apex Court in Zunjarrao Bhikaji Nagar case 1999 (8) TMI 142 - SUPREME COURT has dealt with the provisions of this Section and Rule 173Q and observed that penalty is imposable under these provisions. Even otherwise those observations that penalty under Rule 173Q and Section 11AC would not be leviable when duty amount had been voluntarily paid before issue of SCN, are not attracted the case of the appellants. The duty was never paid voluntarily. It was paid when they were caught by the Deptt. having evaded the duty. The evasion of the duty by them was also a deliberate act. Thus, to say that no penalty was leviable on the appellants, would not be justifiable in law and would only render the very provisions of Section 11AC and Rule 173Q redundant and non-operational. Therefore, in my view penalty under both these provisions has been rightly imposed on the appellants. However, the appellants had deposited the duty after the raid, the penalty amount deserves to be reduced. The penalty under Rule 173Q read with Section 11AC imposed equal to the amount of duty, is, therefore, reduced to Rs. one lakh. Except for modification in the penalty amount, the impugned order is upheld and the appeal of the appellants accordingly stands disposed of.

Summary

Issues involved:
The issues involved in the judgment are the search conducted by Central Excise officers at the factory premises, confirmation of duty evasion, imposition of penalty, and the legality of reducing the penalty amount.

Search Conducted at Factory Premises:
The appellant contended that the search was not conducted in accordance with Rules 198 to 208 as no Panchnama was prepared and no independent witness was associated. However, the proprietor of the firm admitted to the evasion of duty during the search and did not retract his statement later. The Tribunal held that the admission made during the search was a substantial piece of evidence, and the absence of a Panchnama and independent witnesses did not affect the case.

Confirmation of Duty Evasion:
The appellant argued that the duty was deposited before the issuance of Show Cause Notice (SCN), and therefore, no penalty could be imposed. The Tribunal referred to a previous judgment and stated that penalty can be levied even if duty is paid before the SCN is issued. The Tribunal upheld the duty evasion and confirmed the penalty under Section 11AC and Rule 173Q.

Imposition of Penalty:
The Tribunal rejected the appellant's argument that penalty should not be imposed since duty was deposited before the SCN. It emphasized that penalty under Section 11AC and Rule 173Q was rightly imposed due to deliberate evasion of duty by the appellants. However, considering the circumstances, the penalty amount was reduced to Rs. one lakh from the original amount equal to the duty evaded.

Conclusion:
The Tribunal upheld the impugned order confirming duty evasion and imposing a reduced penalty of Rs. one lakh on the appellants. The appeal was disposed of with modifications only in the penalty amount.