2009 (9) TMI 307 - HC - Central Excise

Removal of goods without payment of duty- The assessee company was engaged in the manufacture of excisable goods. The Anti-Evasion Bench of Central Excise Commissionerate on receiving information that the assessee was removing it goods clandestinely and was evading Central Excise Duty, conducted a search upon the assessee and gathered certain material. The adjudicating authority in view of admission made by assessee that it had indulged in removal of goods without payment of duty held that the assessee had cleared the goods with a collective intention to evade payment of duty. He also held that there was no merit in the plea of to evade payment of duty, thus confirm the demand. Commissioner (Appeals) upheld the order of the adjudicating authority. Held that- once it is admitted that the petitioner had indulged in removal of goods without payment of duty, the obligation to remedy that defaults arise immediately, thus the writ petition, accordingly fails and dismissed.

Summary

Issues:
1. Tribunal's order for waiver of pre-deposit in a Central Excise duty case.
2. Allegations of clandestine removal and evasion of Central Excise duty by the petitioner company.
3. Adjudication process and penalties imposed by the authorities.
4. Appeal against the Tribunal's order and plea for reduction of duty payable.
5. Argument of financial hardship and plea for waiver of dues by the petitioner company.

Issue 1: Tribunal's order for waiver of pre-deposit
The Tribunal ordered the petitioner company to pay Rs.10 lakhs towards duty and Rs.10 lakhs towards penalty within eight weeks and waived off the pre-deposit of the balance amount till the disposal of the appeals. The Tribunal considered the submissions made by the petitioner's counsel, acknowledging instances of clandestine removal of goods and rejecting the claim of duplication of demands. The Tribunal emphasized that the petitioner failed to establish a prima facie case for the waiver of the entire dues, leading to the direction for partial payment and waiver of the balance amount.

Issue 2: Allegations of clandestine removal and evasion of Central Excise duty
The petitioner company, engaged in manufacturing plywood and related products, was accused of evading Central Excise duty through clandestine removal of goods. Search operations revealed discrepancies in stock and entries in the Shipra Book, leading to a show-cause notice for payment of Rs.15,44,883 as Central Excise duty. The adjudicating authority confirmed the demand, which was upheld by the Commissioner (Appeals), stating that the petitioner had collectively evaded duty. The petitioner contested the allegations of duplication of demands, arguing that the duty payable should be limited to Rs.6 lakhs.

Issue 3: Adjudication process and penalties imposed
The adjudicating authority imposed Central Excise duty of Rs.15,44,883 along with penalties on the petitioner company and two individuals under relevant sections of the Central Excise Act and Rules. The Commissioner (Appeals) upheld the order, emphasizing the collective intention of the appellants to evade duty. The Tribunal's order for partial payment and waiver of the balance amount was based on the amount already deposited during the investigation.

Issue 4: Appeal against the Tribunal's order and plea for reduction of duty payable
The petitioner filed a writ petition against the Tribunal's order, challenging the amount of duty payable and seeking a reduction to Rs.3,43,285 with a refund. The petitioner argued for a lower duty amount due to alleged duplication of demands related to clandestine removal. However, the Tribunal rejected these contentions, leading to the petitioner's appeal and subsequent dismissal of the writ petition.

Issue 5: Argument of financial hardship and plea for waiver of dues
During the proceedings, the petitioner claimed financial hardship due to industry challenges and recession, citing judgments supporting waiver of dues in similar circumstances. The petitioner's counsel argued for leniency based on the company's small scale and financial constraints. However, the Court found the petitioner's claims unsubstantiated, especially considering admissions of clandestine removal and lack of evidence supporting the plea of financial hardship. The Court dismissed the writ petition, emphasizing the obligation to rectify duty defaults despite financial challenges.

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