2005 (8) TMI 148 - AT - Central Excise

Summary

Issues: Duty confirmation against manufacturing unit, imposition of personal penalty, sufficiency of evidence for clandestine removal, penalty imposition despite duty payment before show cause notice

In this case, the appeals were disposed of by a common order as they arose from the same impugned order confirming duty of Rs. 2,08,451 against the manufacturing unit and imposing a personal penalty of the same amount. Additionally, a personal penalty of Rs. 20,000 was imposed on the Director of the factory under Rule 209A of the Central Excise Rules, 1944. The appellant's factory was visited by Central Excise officers, leading to the recovery of a note book containing entries of clearances of texturised yarn without payment of duty or issuance of Excise invoice. The Director admitted to the clearances and payment of duty upon detection. Proceedings were initiated, culminating in the order under appeal. The main contention was the sufficiency of evidence for clandestine removal, with the onus on the revenue to prove it. The recovery of the note book and the Director's statements shifted the onus to the appellants to explain the entries and rebut the statements. The evidence corroborated each other, leading to the confirmation of clandestine removal.

Regarding penalty imposition, the appellants argued that since duty was paid before the show cause notice, no penalty should be imposed. However, it was held that the timing of payment does not absolve the appellants from the charges. The Tribunal and the Allahabad High Court decisions were cited to support this position. While the duty payment before the notice was a mitigating factor for reducing the penalty, it did not eliminate the penalty altogether. Thus, the penalty against the manufacturing unit was reduced from Rs. 2,08,451 to Rs. 50,000, considering the early duty payment. The penalty of Rs. 20,000 imposed on the Director was set aside. The appeals were disposed of accordingly.