2014 (8) TMI 659 - AT - Central Excise

Clandestine manufacture and clearance of goods - removal of pan masla/gutka - Held that - appellants could not made different stands at different print of time. We note that this is a case of clandestine manufacture and clearance and therefore no adjustments could be considered. We note that the matter pertains to two raids and for two different manufacturing premises of which only one was registered with the Revenue for payment of Excise duty. Intent to evade duty has clearly been manifested. Further the appellants never produced relevant purchase / sale records clearly indicating that most of the activities were undertaken with fraudulent intent to evade duty. Appellants have failed to show that intent to evade was not there. We do not find any ground to interfere and accordingly uphold the demand. Invocation of extended period of limitation - Held that - Appellant contention that the extended period was not invokable as no case of clandestine removal was made has no force. As noted above, this is a case of clandestine manufacturing and clearance where gutka was being cleared without bills/ invoices and one unit of the appellants in the same name and style was not even registered with the Central Excise department. Mens rea was clearly manifested indicating intent to evade and to defraud governmental revenues. Penalty - it has clearly come up that M/s Narendra products have indulged in clandestine manufacture and clearance of Gutka. There were having one declared unit and they have been running a additional unit in the same name and style and that too without registration with Central Excise department. Clandestine production and clearance from unregistered unit clearly proved their intentions to defraud government revenue. Once fraud is committed, it vitiates everything. Above discussions have clearly brought out facts relating to clandestine manufacture and clearance. In view of above, extended period was also rightly invoked. Accordingly, this is fit case for imposition of penalty under Section 11AC - Decided against assessee.

Issues Involved:
1. Jurisdiction of the Additional Commissioner.
2. Demand for Rs. 5,08,118.95.
3. Demand for Rs. 4,07,566.65.
4. Demand for Rs. 15,253.60.
5. Limitation period for issuing the Show Cause Notice (SCN).
6. Imposition of penalty under Section 11AC.

Detailed Analysis:

Jurisdiction of the Additional Commissioner:
The Tribunal previously remanded the case back to the Commissioner for de-novo adjudication, citing that the Additional Commissioner's Order in Original dated 30.09.1997 was without jurisdiction as the SCN was issued by the Commissioner. The Allahabad High Court, referencing the Supreme Court decision in Pahwa Chemicals Pvt Ltd vs. CCE New Delhi and its own decision in CCE vs. Su Beverages, held that the issue of jurisdiction was no longer res-integra and remanded the matter back to the Tribunal for a decision on merits.

Demand for Rs. 5,08,118.95:
The demand was based on the recovery of empty containers of tobacco. The appellant argued that the demand was incorrect and should only be Rs. 21,500/-. The DR contended that the demand was justified as it was based on the statement of Sh. Kailash Chand, who admitted to mixing unbranded tobacco with branded tobacco. The Tribunal upheld the demand, noting that the appellant failed to produce relevant purchase/sale records and demonstrated intent to evade duty.

Demand for Rs. 4,07,566.65:
This demand was based on the statement of Sh. Narendra Kumar, who admitted that the factory produced 375 kg per day but only recorded 20 kg per day. The appellant argued that the demand was based on imaginary calculations without corroborative evidence. The Tribunal agreed with the DR, noting the shortage of stocks and presence of empty containers as evidence of clandestine manufacture and clearance. The demand was upheld.

Demand for Rs. 15,253.60:
This demand pertained to the appellant's unit in Adarsh Nagar for the period 14.12.92 to 17.12.92. The appellant argued that the demand was based solely on statements without corroboration. The DR pointed out the statements of various individuals and the seizure of unaccounted Shankar gutka. The Tribunal found the statements and evidence reliable and upheld the demand.

Limitation Period for Issuing the SCN:
The appellant argued that the SCN was time-barred as it was issued on 21.3.1995, while the investigations were completed by 27.12.93. The Tribunal, referencing the Supreme Court decision in CC Vs. Candid Enterprises and the Gujarat High Court decision in CCE Surat-I vs. Neminath Febrics, held that the extended period of 5 years was applicable in cases of fraud, collusion, or suppression of facts. The Tribunal found that the appellant's actions demonstrated intent to evade duty and upheld the invocation of the extended period.

Imposition of Penalty Under Section 11AC:
The Tribunal noted that the appellants indulged in clandestine manufacture and clearance of gutka, operated an unregistered unit, and demonstrated intent to defraud government revenue. The Tribunal found that the extended period was rightly invoked and imposed a penalty under Section 11AC.

Conclusion:
The Tribunal upheld all the demands of Rs. 5,08,118.95, Rs. 4,07,566.65, and Rs. 15,253.60 along with interest and imposed a penalty under Section 11AC. The appeals were dismissed.

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