1998 (1) TMI 339 - AT - Central Excise

Summary

Issues: Allegations of fraudulent documentation and imposition of penalty under Rule 173Q (bbb); Cancellation of dealership license under Rule 174 of the Central Excise Rules, 1944

In this case, the appellant firm, engaged in trading iron and steel products, was raided, and incriminating evidence was found, including exercise books and a significant amount of Indian currency. The allegations were based on discrepancies between the entries in the private exercise books and the statutory records maintained by the appellants. It was alleged that the appellants engaged in a fraudulent scheme involving selling goods to buyers not reflected in their official records. Consequently, a penalty of Rs. 40,000 was imposed under Rule 173Q (bbb) for contravention of Rule 57GG. Additionally, the dealership license of the appellants was ordered to be canceled under Rule 174 of the Central Excise Rules, 1944.

The appellant contended that the private exercise books were not statutory records and should not be relied upon. They argued that the entries in these books were part of normal trade practices and were used to determine selling prices based on information provided by brokers. However, the Department maintained that the entries in the exercise books did not match the statutory records, indicating fraudulent practices. The statements of key individuals involved in the firm corroborated the allegations of fraudulent documentation and artificial sales to different buyers.

The adjudicating authority imposed the penalty based on the evidence presented, rejecting the appellant's arguments. The Tribunal upheld the penalty, citing previous decisions that retraction of statements without evidence of coercion does not diminish their evidentiary value. However, regarding the cancellation of the dealership license, the Tribunal referred to previous cases and ruled that a breach of Rule 57GG did not warrant revocation of the license under Rule 174. The revocation of the license was quashed, and the impugned order was modified accordingly, disposing of the appeal in part.

In conclusion, the Tribunal upheld the penalty imposed under Rule 173Q (bbb) but quashed the cancellation of the dealership license under Rule 174, based on the interpretation of relevant legal provisions and precedents.