2014 (8) TMI 776 - AT - Central Excise

Clearance of industrial oxygen without issue of invoice and without payment of excise duty - Interest u/s 11AB - Penalty u/s 11AC - Held that - SCN dated 23.06.2005 had clearly brought out the total quantity of 4879 cubic metre of industrial oxygen removed without invoices and without payment of duty during the material period. From the documents and the computer data retrieved from the CPU seized from the appellant company and the statements recorded from the Managing Director and from the Manager (Sales), proved beyond doubt that the appellants had cleared the goods without payment of excise duty. It is also admitted by the appellants that the sale value of the impugned goods was received in the guise of transport charges. It is also noticed that the adjudicating authority has duly allowed the SSI exemption benefit under Notification No. 8/2003 and also cum-duty benefit while confirming the demand. The suppression of facts and malafide intention of the appellants to evade payment of duty is established beyond doubt, therefore, I do not find any reason to interfere with the Commissioner (Appeals) order in so far as confirming the duty of ₹ 1,98,830/- and imposition of equivalent penalty on M/s. Senthil Oxygen Pvt. Ltd. and the impugned order is liable to be upeld to this extent. As regards penalty imposed on Directors of Company - Held that - department has not issued any notice to them alleging involvement and contravention of provisions for imposition of penalty. I find that the Commissioner (Appeals) in his impugned order while rejecting the appeals of both the appellants has not brought out any findings for imposition of penalty. It is well settled law that before imposing any penalty on any person, issue of show cause notice is mandatory and he should be given opportunity to explain his case and in the present case the principle of natural justice has not been complied nor the adjudicating authority has given any hearing to the individuals before adjudication. Therefore, the penalty imposed on both of them are liable to be set aside - Decided partly in favour of assessee.

Summary

Issues involved:
- Central excise duty demand on clearance of industrial oxygen without invoice and payment
- Imposition of penalties on company officials without issuing show cause notice
- Allegations of suppression of production and evasion of duty

Analysis:

Central excise duty demand:
The case involved a central excise duty demand on the clearance of industrial oxygen without issuing invoices and payment of duty. The appellant, a manufacturer of industrial oxygen, medical oxygen gases, and liquid nitrogen, was issued a Show Cause Notice for duty demand of &8377; 1,98,830 along with penalties and interest. The adjudicating authority confirmed the duty demand and penalties, which was upheld by the Commissioner (Appeals). The Tribunal, after considering the arguments, upheld the duty demand and equivalent penalty on the company, citing suppression of facts and malafide intentions to evade duty. The Tribunal found evidence through statements, computer data, and admission by the appellants, leading to the confirmation of duty and penalties.

Imposition of penalties without show cause notice:
Regarding the imposition of penalties on the Managing Director and Manager (Sales) of the company, the Tribunal found that no show cause notice had been issued to them, alleging contravention or involvement for penalty imposition. The Tribunal emphasized the mandatory requirement of issuing show cause notice before imposing penalties on individuals. It noted that the principle of natural justice was not followed, as the concerned individuals were not given an opportunity to explain their case. As a result, the penalties imposed on the individuals were set aside by the Tribunal.

Allegations of suppression of production and evasion of duty:
The Revenue contended that the appellants had cleared industrial oxygen without proper invoices and payment of duty. They relied on statements from the Managing Director and Manager (Sales), computer data, and documents to establish the evasion of duty. The Tribunal, after examining the evidence and arguments from both sides, found that the appellants had indeed cleared goods without payment of excise duty. It noted the admission by the appellants regarding the receipt of sale value under the guise of transport charges. The Tribunal concluded that the suppression of facts and intention to evade duty were established, upholding the duty demand and equivalent penalty on the company.

In conclusion, the Tribunal rejected the appeal filed by the company, upholding the duty demand and penalties. However, it allowed the appeals filed by the Managing Director and Manager (Sales), setting aside the penalties imposed on them due to the lack of show cause notice and non-compliance with the principles of natural justice.