2010 (3) TMI 65 - HC - Central Excise

Clandestine removal penalty held that - A perusal of the order passed by the Commissioner (Appeals) as well as the Tribunal shows that the clearances covered by the 62 invoices relate to clandestine removal by the Appellant firm. The Commissioner has passed a very detailed order upholding the allegation of clandestine removal of ERW pipes during the period from 31.8.2000 to 18.10.2000 and the demand of Rs.17,79,094.00 along with interest and equal amount of penalty under Section 11AC of the Central Excise Act has been confirmed. - In view of the findings of fact recorded by the authorities under the Central Excise Act, the penalty under Section 11AC has rightly been imposed

Summary

Issues Involved:
1. Penalty under Section 11AC without specific finding of fraud or suppression of facts.
2. Confirmation of duty demand based on documents from third party without corroborative evidence.
3. Confirmation of duty demand based on assumptions without evidence to rebut the claim.

Analysis:
1. The appellant challenged the order of the Tribunal, questioning the sustainability of the penalty under Section 11AC without a specific finding of fraud, suppression of facts, or misstatement of facts with intent to evade duty. The Tribunal dismissed the appeal, upholding the penalty. The High Court affirmed the Tribunal's decision, stating that ample evidence supported the penalty imposition. The Court emphasized that the findings were factual, and no substantial legal question arose for intervention.

2. The appellant contested the confirmation of duty demand solely based on documents obtained from a third party, the ICCs of the Punjab Govt., without corroborative evidence. The Tribunal found that invoices recovered from the ICC and those generated by the appellant were identical, indicating clandestine removal of goods. The High Court noted that the Commissioner upheld the allegation of clandestine removal, leading to the confirmation of duty demand. The Court upheld this decision, emphasizing the detailed order passed by the Commissioner and the factual findings supporting the duty demand confirmation.

3. The appellant raised concerns about confirming duty demand based on assumptions without evidence to rebut the claim that their unit operated in a single shift and could not have produced the alleged quantity of goods. The Tribunal found discrepancies in the invoices and rejected the appellant's explanations. The High Court observed that the authorities under the Central Excise Act made factual findings supporting the duty demand confirmation. As a result, the Court upheld the Tribunal's decision, stating that no substantial legal question warranted interference.

In conclusion, the High Court dismissed the appeal and upheld the orders passed by the Tribunal, affirming the penalty under Section 11AC and the duty demand confirmation based on the factual findings and evidence presented.