2009 (7) TMI 671 - AT - Central Excise

SSI exemption misuse clearance in the name of another person penalty - castings of the lift winding machines Held that - that the machines were in fact being manufactured in the factory of M/s. Varsha Industries but were being cleared in the name of M/s. Cama Gears so as to remain within the exemption limit. The said statements do not stand retracted. - the demand of duty made against M/s. Varsha Industries is confirmed along with confirmation of interest and penalty of identical amount in terms of Section 11AC of the Act. - As regards the appeal of Shri K.P. Panchal, it is seen that he manipulated the records of his unit so as to enable M/s. Varsha Industries to clear the goods in the name of his unit. Penalty of Rs. 25,000/- imposed upon him is justified

Summary

Issues:
1. Alleged evasion of duty through manipulation of records and clearance of goods in the name of another unit.
2. Confirmation of duty demand, interest, and penalties against the involved parties.
3. Consideration of statements of proprietors and evidence from factory premises search.
4. Applicability of penalty provisions under Section 11AC and extension of the option to pay 25% of penalty.
5. Justification of penalties imposed on the individuals involved in the evasion scheme.

Analysis:
1. The case involved the investigation of alleged duty evasion by M/s. Varsha Industries through manipulation of records and clearance of goods under the SSI exemption scheme. The officers discovered that the manufacturing process was carried out at Varsha Industries but goods were cleared in the name of M/s. Cama Gears to avoid duty payment.

2. The Assistant Commissioner confirmed the duty demand of Rs. 1,85,327/- along with interest and penalties on Varsha Industries. The Commissioner (Appeals) upheld the duty and interest, but modified the penalties. The appellate tribunal found sufficient evidence to uphold the duty demand and penalties under Section 11AC of the Act.

3. The statements of the proprietors of Varsha Industries and Cama Gears, along with the search of factory premises, supported the findings of duty evasion. Both proprietors admitted to the scheme, with no retraction of their statements. The lack of evidence to prove Cama Gears' capacity to manufacture the goods further strengthened the case against Varsha Industries.

4. Regarding penalties, the tribunal noted that the option to pay 25% of the penalty within 30 days was not provided by the adjudicating authority. Citing precedent, the tribunal restricted the penalty to 25% of the duty amount, considering the deposit made before the Commissioner (Appeals) order.

5. The penalty imposed on Shri K.P. Panchal for manipulating records to facilitate the evasion scheme was deemed justified. His appeal was rejected, and the penalties on Varsha Industries and other individuals were upheld based on the evidence and admissions presented during the proceedings.

This detailed analysis highlights the key aspects of the judgment, including the findings of duty evasion, confirmation of penalties, consideration of statements and evidence, and the application of penalty provisions under Section 11AC.