2004 (12) TMI 236 - AT - Central Excise

Demand - Clandestine removal - retracted statements - manufacture of satellite and cable TV equipments and accessories - book showing cash transactions and other incriminating documents - Penalty - HELD THAT - It is seen that there is enough evidence on record to sustain the charge of clandestine removal against the appellants. The precedent decisions referred to by the ld. Advocate do not advance the appellant's case inasmuch as in the case of clandestine removal, the appreciation of the evidence available on records of that particular case leads to the findings. It is the cumulative effect of the entire evidence, which is made the basis for arriving at the finding of the clandestine removal. In the instant case, we are satisfied that there exists sufficient evidence to sustain the said finding against the appellants. It is also seen that the appellants had voluntarily deposited duty amount immediately after the search and seizure which also reflects upon the fact of acceptance of clandestine activities on the part of the appellants, though strictly speaking same cannot be made the sole basis for arriving at a conclusion against the appellants. However, the appellants have contended that in the case of determination of duty against them, they should have been granted the benefit of Modvat credit of duty paid on the inputs as also the benefit of cum duty realization. We agree with the above contention of the ld. Advocate. The Modvat credit is required to be extended subject to production of evidence by the appellants. Similarly, the entire realization has to be treated, as cum duty price and the benefit of duty reduction has to be extended to them. For the said limited purposes, we remand the matter to the original adjudicating authority for quantifying the duty against the appellants. As the penalty amount has already been reduced by the Commissioner (Appeals) to Rs. 10,000/-, the same does not call for any interference from us. The appeal is disposed of in above terms.

Summary

Issues involved: Alleged clandestine activities, duty demand, penalty imposition, retraction of statement, corroborative evidence, Modvat credit, cum duty realization.

Alleged Clandestine Activities:
The appellants, engaged in manufacturing satellite and cable TV equipment, were searched by Central Excise Officers resulting in the recovery of duplicate chits and incriminating documents, indicating possible clandestine activities. Statements of company partners and distributors confirmed the use of duplicate chits for clandestine deliveries and excess clearances during certain financial years.

Retraction of Statement and Corroborative Evidence:
The main contention of the appellants was the retraction of statements by one partner, arguing lack of independent corroboration and evidence such as procurement records or buyer statements. However, the Tribunal found merit in the evidence provided, including the recovery of duplicate chits, distributor statements, and consistent disclosures by the partners, concluding there was enough evidence to support the charge of clandestine removal.

Modvat Credit and Cum Duty Realization:
The appellants sought the benefit of Modvat credit on duty paid inputs and cum duty realization for duty determination. The Tribunal agreed with this contention, remanding the matter to the adjudicating authority for quantifying the duty against the appellants while upholding the reduced penalty amount imposed by the Commissioner (Appeals).

Conclusion:
The Tribunal disposed of the appeal by remanding the duty quantification issue, acknowledging the benefit of Modvat credit and cum duty realization for the appellants. The penalty amount remained unchanged at Rs. 10,000 as per the decision of the Commissioner (Appeals). The judgment was pronounced on 31-12-2004.