2024 (11) TMI 200 - AT - Central Excise

Clandestine removal - Recovery of central excise duty with interest and penalty - demand was confirmed, basically relying on the admissions made by the authorized signatory of the appellant company regarding shortage of finished goods and the raw materials - invocation of Extended period of limitation - penalty - HELD THAT - While considering the issue of clandestine removal, the statement dated 17.01.2015 of Shri Shikhar Agarwal recorded under Section 14 of the Central Excise Act, 1944 is relevant to be taken note of, where he accepted that he was part of panchnama proceedings and was present throughout. From the above contents of his statement, it is evident that Shri Shikhar Agarwal had admitted the shortage of the finished goods and the raw materials and also the removal of the goods without payment of duty and without accounting thereof in the records. Further, he agreed with the verification of records with physical stock by the officers and accepted the lapse of the stock found short. Coupled with the admissions made by Shri Shikar Agarwal, the modus operandi of the appellant of not maintaining any kind of Daily Stock at the factory premises, not making entry of final products in the daily production register, not issuing any invoices in respect of excisable goods cleared and neither declared the production and clearance of excisable goods so manufactured and cleared in the ER-1 Returns only reflects that shortage of the finished goods and the raw materials during the physical verification at the time of preventive check is evident of the fact of clandestine removal with intent to evade payment of duty. The objection raised by the appellant that search was without search warrant is not sustainable as per the records made available and considered in the impugned order. The Revenue has placed on record the authorization dated 15.01.2015 by the Additional Commissioner (Preventive) to the Superintendent (Preventive) authorizing him to search the premises, etc. of the appellant. From the impugned order, it is found that the Commissioner (Appeals) had categorically noted that the panchnama makes it clear that the search warrant was shown to Shri Ram Avtar Agarwal, Director of the appellant and he had signed the search warrant - the notices for personal hearing issued on various dates sent by speed post were not returned or un-delivered. The contention of the appellant stands duly dis-proved by the documentary evidence placed on record by the Revenue. Invocation of Extended period of Limitation - Penalty - HELD THAT - The invocation of extended period of 5 years under Section 11 A (4) of the Act is correct and this being a case of deliberate suppression of facts regarding production and removal of goods, the penalty has been rightly invoked under Section 11AC(1)(c) of the Act. The demand of duty along with interest and penalty is confirmed - there are no infirmity in the impugned order and hence, the same is affirmed - appeal dismissed.

Summary

Issues:
Challenge to order confirming central excise duty demand, interest, and penalty based on shortage of stocks and alleged clandestine removal.

Analysis:
The appellant, a sponge iron manufacturer, challenged a demand for central excise duty, interest, and penalty following preventive checks revealing shortages in stocks of raw materials and finished goods. The appellant alleged unsustainable proceedings due to lack of search warrant during checks, unserved show cause notice, and absence of specific period for alleged clandestine removal. The appellant disputed penalty imposition, arguing lack of conclusive evidence of clandestine removal. The authorized signatory's admissions formed the basis of the demand confirmation. The appellant's appeal was dismissed, leading to the current appeal before the Tribunal.

The key issue was whether the Revenue proved clandestine removal by the appellant. The authorized signatory's statement admitting shortages and removal of goods without payment supported the Revenue's case. The Tribunal cited legal precedents stating that what is admitted need not be proved, and the charge of clandestine removal was conclusively proved by the signatory's admissions. The Tribunal affirmed the Commissioner's conclusion that the appellant failed to provide a reasonable explanation, supporting the Revenue's case.

The Tribunal considered the legality of the search warrant, show cause notice service, and personal hearing notices. Documentary evidence disproved the appellant's claims of unserved notices. The Tribunal addressed an additional ground raised by the appellant regarding the show cause notice discrepancy, clarifying that the subject matter of dispute was correctly identified in the orders.

The Tribunal upheld the invocation of the extended period and penalty imposition due to deliberate suppression of facts. The demand for duty, interest, and penalty was confirmed, finding no infirmity in the impugned order. Consequently, the appeal was dismissed, affirming the decision of the lower authorities.

The judgment was pronounced on 27th August 2024 by the Appellate Tribunal CESTAT NEW DELHI, with detailed analysis of the issues raised by the appellant regarding the central excise duty demand, alleged clandestine removal, and procedural aspects of the case.