2013 (11) TMI 1383 - AT - Central Excise

Mis-declaration of goods Suppression in the value of goods - Goods seized from different premises were proved to be supplied by paragon group of companies including Roxy Electrical and Roxy Cable Company - Appellants failed to rule out their role as consignors of misdeclared goods - Goods seized at various places and consignment of past clearances revealed that description of goods differed in quantity, quality, length and nature of goods and composition as well as characteristics thereof and such difference admitted - Value of goods consigned was also suppressed - Various evidence both oral and documentary revealed a planned evasion by appellants - Suppliers of the goods having been found to be involved were also penalized -persons dealing with such goods were penalised for no proof of their innocence. Quantum of redemption fine Held that - Authority below did not justify levy of such huge redemption fine without examining any other undue gain other than duty element if nay made by that appellant - Making an overall assessment of the situation, redemption fine in the case of Metal and Metal (Elect.) Pvt. Ltd. is reduced which shall be twice the duty element looking to the magnitude of evasion and questionable modus operandi followed Decided partly in favour of Assessee.

Summary

Issues Involved:
1. Alleged large-scale evasion of Central Excise duty by manufacturers of wires and cables.
2. Suppression of actual quantity/value of clearances.
3. Misdeclaration of goods.
4. Clandestine removal of goods.
5. Use of brand name without payment of duty.
6. Imposition of redemption fines and penalties.
7. Validity of the adjudication process.

Detailed Analysis:

1. Alleged Large-Scale Evasion of Central Excise Duty:
The Revenue conducted an enquiry revealing that manufacturers of wires and cables under Chapter heading no.8544.90 were evading Central Excise duty by falsely claiming SSI exemptions. The manufacturers suppressed over 50% of actual clearances by misdescribing sizes and understating weights on invoices and lorry receipts. Searches on 21.02.2002 at various premises, including Paragon Cable Co. and related entities, uncovered incriminating documents and excess unaccounted stock.

2. Suppression of Actual Quantity/Value of Clearances:
Investigations revealed that the Paragon group had suppressed actual clearances by recording lesser quantities on invoices compared to what was dispatched, as evidenced by lorry receipts from Saurashtra Roadways and Prakash Roadlines. This suppression aimed to evade Central Excise duty.

3. Misdeclaration of Goods:
The Paragon group misdeclared goods by showing armoured cables as unarmoured, copper cables as aluminium, and larger cables as smaller ones. Seized goods were valued at Rs. 27,74,596/-, leading to a duty demand of Rs. 1,20,463/- and equal penalties under Section 11AC of the Central Excise Act, 1944.

4. Clandestine Removal of Goods:
Searches at various premises, including Roxy Electricals and Janata Cable Company, revealed unaccounted branded wires and cables, leading to seizures and penalties. The investigation found that these entities were financially supported by Paragon Cable Co. and were manufacturing and clearing goods without Central Excise registration, thereby evading duty.

5. Use of Brand Name Without Payment of Duty:
Rolex Cable Co. and Janata Cable Co. used the 'Paragon' brand without owning it and claimed SSI exemptions they were not eligible for. This resulted in duty demands of Rs. 15,58,069/- and Rs. 14,14,299/- respectively, along with penalties.

6. Imposition of Redemption Fines and Penalties:
The adjudicating authority imposed redemption fines and penalties on various entities and individuals. For instance, M/s Metal and Metal (Elect.) Pvt. Ltd. faced a redemption fine of Rs. 10 lakhs, which was later reduced to Rs. 2.5 lakhs by the tribunal. Similarly, Roxy Electricals faced a redemption fine of Rs. 1 lakh, reduced to Rs. 70,000/-.

7. Validity of the Adjudication Process:
The tribunal found that the adjudicating authority had properly evaluated and appreciated the evidence. The appellants failed to establish their innocence or bona fides. The tribunal upheld the duty demands and penalties, except for reducing the redemption fines as mentioned above.

Tribunal's Findings and Decision:
- The tribunal confirmed that goods seized from different premises were supplied by the Paragon group, including Roxy Electricals and Roxy Cable Company.
- The appellants failed to prove their innocence in the misdeclaration and clandestine removal of goods.
- The tribunal upheld the duty demands and penalties imposed in the adjudication, except for reducing the redemption fines for M/s Metal and Metal (Elect.) Pvt. Ltd. and Roxy Electricals.
- The appeals were dismissed, and the adjudication process was deemed proper and justified.

Conclusion:
The tribunal found substantial evidence of evasion of Central Excise duty by the Paragon group and related entities. The adjudicating authority's decision was largely upheld, with minor reductions in redemption fines. The appellants' arguments were rejected, and the penalties and duty demands were confirmed.