2024 (12) TMI 343 - AT - Central Excise

Clandestine removal - improper accountal of excess stock - Recovery of CENVAT Credit with interest and penalty - HELD THAT - Appellant 1 has through well devised mechanism by way of issuance documents in name of non existent firms namely,- M/s Vishwakarma Trading Company, Noida, M/s Rishabh Trading Company Noida, M/s Pooja Traders, Noida and M's Aamir Enterprises, was clandestinely clearing their finished goods to their customers located across the country in Maharastra, Karnataka etc. Against the goods cleared against invoices made in name of the fictitious companies they were receiving the payment in cash. Where they were clearing the goods on the invoices issued in their name they were receiving the payment by cheque. Undisputedly the searches were conducted at various location including the factory premises of the Appellant 1, and various residential premises owned by them and their Directors i.e. Appellant 2 and Appellant 3. Searches were also conducted at the premises of the agent of transporter booking the consignments of appellant 1 and also at the premises of the transporter namely Ghatg Patil Transport Company. The document issued in the name of fake entity were accompanied with the transport documents prepared by the Ghatge Patil Transport Company, and there were no transport documents in respect of the invoices issued in name of Appellant 1. Investigations revealed that the invoices were issued in the name of appellant were to cover up the transport of the goods to the godown of transporter and were taken back by the booking agent, Appellant 4 and from the transporter godown goods were transported on the documents issued in the name of fake company along with the transport documents prepared by the transporter M/s Ghatge Patil Transport Company. It is evident that the all the threads necessary to establish the case of clandestine clearance have been investigated and interwoven to unearth the scheme of clandestine clearance adopted by the Appellant 1, Appellant 2, Appellant 3, Appellant 4, Appellant 5 and Appellant 6. Each of the appellant was fully aware of the scheme and was playing the role assigned to him. It is also interesting to note that appellant during the period even after search conducted in his premises on 11/12.04.2012, continued with his activity of clandestine clearance. The truck cleared from his premises on 17.04.2013 and intercepted by the officers clearly establishes that Appellants are habitual offenders - Transporter has admitted the factum of transport of the clandestinely cleared goods on the basis invoices of fictitious entities and the Customers of the appellant have admitted to the receipt of the clandestinely cleared goods and fact of making payment in cash against these goods. All these aspects on the basis of the evidences have been appropriately discussed in the impugned order. It is settled position in law that once the facts have been admitted the same need not be proved/ established again. Appellant had asked for the cross examination of the transporter. It is found that no statement of the transporter has been relied upon. Transporter was made co-noticee in the matter and he has specifically asserted in the reply to show cause notice dated 24.03.2015 that even no statement of any of representative is recorded to find out whether involved in the transaction knowingly. The charges of clandestine clearance of the goods resulting into evasion of Central Excise Duty, upheld - Demands in respect of shortages detected at the time of search in the premises of the appellant and admitted by them. Demands in respect of clandestinely cleared goods to various customers and also admitted by the Appellant. Imposition of penalty on the customers of the Appellant 1, transporter and others who have not filed any appeal - HELD THAT - For imposing the penalty Commissioner has in the impugned order discussed the role of each individual separately and have concluded that each was part of conspiracy to evade payment of Central Excise Duty and defraud the exchequer. Appellants being habitual offenders the penalties imposed also do not appear to be on higher side and are upheld. There are no merits in the submissions made by the appellants - appeal dismissed.

Issues Involved:
1. Recovery of CENVAT credit amounting to Rs. 59,225/-
2. Recovery of duty amounting to Rs. 75,153/-
3. Demand of duty amounting to Rs. 2,29,955/- for clandestine clearance
4. Demand of duty amounting to Rs. 1,50,02,965/- for clandestine clearance
5. Appropriation of Rs. 48,26,992/- deposited during investigation
6. Imposition of penalties on various individuals and entities under Rule 26 of the Central Excise Rules, 2002

Issue-wise Analysis:

1. Recovery of CENVAT credit amounting to Rs. 59,225/-:
The tribunal examined whether the CENVAT credit on raw materials (flavors and saffrons) found short during physical stock verification was recoverable. The appellant admitted to the shortage and agreed to reverse the credit. The tribunal upheld the recovery of the CENVAT credit under Rule 14 of the CENVAT Credit Rules, 2004, along with applicable interest and penalties.

2. Recovery of duty amounting to Rs. 75,153/-:
The tribunal considered the recovery of duty on Scented Patti found short during stock verification. The appellant's argument that the goods were in an intermediary stage of production was rejected. The tribunal upheld the demand for duty along with interest and penalties, asserting that Scented Patti is a finished excisable good and should be recorded in the RG-1 register.

3. Demand of duty amounting to Rs. 2,29,955/- for clandestine clearance:
This issue involved the clandestine clearance of goods based on GRs recovered from the appellant's residential premises. The tribunal noted that the appellant admitted to the clandestine clearance of goods, and the statements of involved parties corroborated this. The tribunal upheld the demand for duty, interest, and penalties, rejecting the appellant's request for cross-examination of transporters and consignees.

4. Demand of duty amounting to Rs. 1,50,02,965/- for clandestine clearance:
The tribunal examined the clandestine removal of goods during December 2012 to April 2013, using invoices from non-existent firms. The tribunal found that the appellants admitted to the clandestine clearance and the receipt of payments in cash. The tribunal upheld the demand for duty, interest, and penalties, emphasizing the preponderance of evidence and admissions by the appellants and their customers.

5. Appropriation of Rs. 48,26,992/- deposited during investigation:
The tribunal considered the appropriation of amounts deposited by the appellant during the investigation against their duty liabilities. The tribunal upheld the appropriation, finding that the deposits were made in acknowledgment of the duty liability.

6. Imposition of penalties on various individuals and entities under Rule 26 of the Central Excise Rules, 2002:
The tribunal assessed penalties on directors, authorized signatories, transporters, and customers involved in the clandestine activities. Each individual's role was scrutinized, and penalties were imposed for their involvement in evading duty. The tribunal found that all parties were aware of the clandestine nature of the transactions and upheld the penalties as appropriate.

Conclusion:
The tribunal dismissed the appeals, affirming the findings and penalties imposed by the Commissioner. The tribunal emphasized the appellants' admission of clandestine activities and the corroborative evidence presented. The tribunal found no merit in the appellants' arguments and upheld the charges of clandestine clearance and evasion of Central Excise Duty.

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