2024 (5) TMI 1192 - HC - Central Excise

Clandestine removal of several metric tons of wire rods - Levy of penalty u/r 26 of the Central Excise Rules, 2002 - corroborative evidences or not - not holding any exercisable goods as confiscable under the Central Excise Act, 1944 or Rules made thereunder - failure to arrive at specific finding about the prior knowledge and/or reasons to believe about confiscable nature of any exercisable goods under the Central Excise Act, 1944 - Failure of the Tribunal to follow its own previous order in a similar case M/s. Jai Balaji Industries Limited v. Commissioner of CGST and CX, Bolpur Commissionerate 2020 (11) TMI 549 - CESTAT KOLKATA - rule of judicial discipline - onus to prove the allegation. HELD THAT - The show-cause notice was issued to the appellant pursuant to investigation being carried out at the premises of SPRML, which has ultimately led to the imposition of penalty which has been confirmed by the appellate authority as well as the Tribunal. In this appeal filed under Section 35G the Court is required to consider as to whether any substantial questions of law arises for consideration. While doing so, the Court will also have to consider as to what would be the effect of the decision of the learned Tribunal in the case of Jai Balaji Industries Limited 2020 (11) TMI 549 - CESTAT KOLKATA on which heavy reliance was placed by the learned Advocate for the appellant and also on the ground that the said order of the Tribunal has attained finality in favour of those assesses and there are other similar orders where the assesses who have alleged to be involved with SPRML were all successful before the Tribunal. Further the appellant furnished the details of brokers and transporters of SPRML through whom such deals were facilitated. There are other voluntary statements recorded from the brokers Narender Agarwal and Surender Kumar Jain. The tribunal after referring to Rule 26 of the Central Excise Rules, 2002 observed that it is an admitted position that the assessee in their statement which has not been retracted, admitted that they had procured wire rods without cover of duty paid invoices from SPRML which was evident and established from the computerized ledgers which were seized by the department. The learned tribunal posed a question to itself as to whether the appellant can be held liable on the basis of the statement tendered by the co-accused - on facts the tribunal held that penalty was imposed on the assessee not solely based upon any statement of the co-accused but along with the statement of the proprietor of the appellant as well as the other records much of which are computerized records where the dates and other details cannot be altered. The appellate authority has re-appreciated the factual position, apart from other things noted that the proprietor of the appellant was confronted with the computerized ledger account maintained for the relevant period and he was asked to produce the relevant purchase invoices as reflected in the computerized ledger however, he failed to produce any invoice for the relevant period. The proprietor had no details of the total quantity of MS wire rods purchased during the relevant period, payment for which has been made in cash in the Kolkata office of the SPRML through brokers. The Commissioner Appeals also considered the plea of retraction raised by the appellant at the appellate stage and, noted that such a plea of retraction made after three years and nine months after the statement was recorded that too in the grounds of appeal filed within the year 2018 cannot in any manner dilute the veracity of the voluntary statement recorded on 11.03.2014 - the alleged retraction in the grounds of appeal filed before the Commissioner after a period of three years and nine months was rightly rejected by the Commissioner of Appeals. In the facts and circumstances, the appellate authority was right in applying the decision of the Hon ble Supreme Court in K.I. Pavunny Versus Assistant Collector (HQ) Central Excise Collectorate, Cochin 1997 (2) TMI 97 - SUPREME COURT wherein it was held that the confessional statement of the accused, if found to be voluntary, can form the sole basis for conviction. Thus, in the absence of any valid retraction, the statement recorded from the proprietor of the appellant was admissible and if that be so, the admitted facts need not be proved. The learned tribunal has also re-appreciated the factual position and has rendered its findings affirming the view taken by the appellate authority and the adjudicating authority. So far as the decision in the case of Jai Balaji Industries and Others the facts of the case were gone into and the learned tribunal concluded that the department has not attempted to investigate in the direction, they ought to have done to prove the alleged clandestine removal - the decision in the case of Jai Balaji Industries Limited is factually distinguishable and cannot be applied to the facts and circumstances of the case on hand. The matter is entirely factual and no question of law much less substantial questions of law arises for consideration in this appeal - Appeal dismissed.

Summary

Issues Involved:
A. Imposability of penalty under Rule 26 of the Central Excise Rules, 2002 without confiscable goods.
B. Requirement of specific findings about prior knowledge or reasons to believe regarding confiscable goods for imposing penalty under Rule 26.
F. Failure of the Tribunal to follow its own previous order in a similar case.
G. Requirement of judicial discipline in following previous orders of the Tribunal.

Detailed Analysis:

Issue A: Imposability of Penalty under Rule 26 without Confiscable Goods

The appellant argued that penalty under Rule 26 of the Central Excise Rules, 2002 cannot be imposed without holding any excisable goods as confiscable. The Court noted that the appellant was involved in the clandestine removal of wire rods manufactured by SPRML, which were transported and sold without Central Excise invoices. The adjudicating authority, appellate authority, and Tribunal all found that the appellant knowingly participated in these activities, thus making the goods liable to confiscation under the Act and Rules. Therefore, the imposition of penalty was justified.

Issue B: Requirement of Specific Findings about Prior Knowledge or Reasons to Believe

The appellant contended that there should be specific findings about their prior knowledge or reasons to believe that the goods were confiscable. The Court observed that the appellant's proprietor admitted in a voluntary statement that they received goods from SPRML without invoices and made payments in cash. This admission, along with corroborative evidence from computerized ledgers and statements from brokers and transporters, established the appellant's knowledge and involvement. The Tribunal held that the penalty was not solely based on the co-accused's statement but also on the appellant's own admissions and other records.

Issue F: Tribunal's Failure to Follow Previous Order

The appellant claimed that the Tribunal failed to follow its own order in the case of M/s. Jai Balaji Industries Limited, where similar allegations were dismissed. The Court noted that the facts of the appellant's case were different, primarily due to the voluntary admission by the appellant's proprietor, which was not present in the Jai Balaji case. The Tribunal's decision in the appellant's case was based on substantial evidence, including computerized records and voluntary statements, which distinguished it from the Jai Balaji case.

Issue G: Judicial Discipline in Following Previous Orders

The appellant argued that judicial discipline required the Tribunal to follow its previous order in the Jai Balaji case. The Court held that the Tribunal's decision was factually distinguishable due to the appellant's voluntary admission and corroborative evidence. The Tribunal had appropriately considered the facts and evidence specific to the appellant's case, and therefore, there was no breach of judicial discipline.

Conclusion:

The Court concluded that the matter was entirely factual and no substantial questions of law arose for consideration. The appeal was dismissed, affirming the decisions of the adjudicating authority, appellate authority, and Tribunal. The Court emphasized that the appellant's voluntary admission and corroborative evidence justified the imposition of penalty under Rule 26 of the Central Excise Rules, 2002.