2014 (11) TMI 456 - HC - Central Excise

Clandestine removal of the goods - Evasion of duty - Held that - Dispatch Supervisor as well as one of the Directors of the Company who was responsible for the day to day functioning of the Company had in unequivocal terms admitted the clandestine removal of the goods without payment of excise duty. Matching entires were found in their diaries which did not form part of the final records. Raw material was purchased in cash. Clearances were made without raising bills or invoices. Significantly and admittedly these statements were never retracted. The authorities were, therefore, entitled to rely on such statements. When the adjudicating authority and two appellate authorities found that there was enough evidence of clandestine removal of goods, in our opinion, the appeal does not give rise to any question of law. Question of additional consumption of electricity and procurement of raw material was raised before the lower authorities or that it could have been raised for the first time before the Tribunal. However, such question was not germane at all. When there was overwhelming evidence of unretracted unequivocal confessional statements, mere failure on the part of the Excise authorities to produce additional evidence of extra consumption of electricity or source of procurement of raw material would pale into insignificance. The Tribunal s remarks were merely in the nature of passing thoughts. Vulnerability of such observations would not vitiate the order itself - Decided against assessee.

Summary

Issues:
Challenge to Tribunal's judgment on excise duty evasion based on clandestine removal of goods without payment.

Detailed Analysis:
The appellant, engaged in manufacturing laminate sheets, challenged the Tribunal's dismissal of their appeal regarding alleged evasion of excise duty. Evidence collected during a raid suggested goods were removed without payment of excise duty. Statements of an employee and a director of the company confirmed the clandestine removal. The show cause notice alleged evasion of duty amounting to Rs. 7,57,452. The adjudicating authority partially confirmed the duty with penalty and interest. The appeal was dismissed by the appellate authority and the Tribunal, focusing on the unretracted statements of the employee and director.

The appellant contended that the Tribunal erred in discarding evidence related to extra consumption of electricity and procurement of raw materials for additional manufacturing and clearance of goods. The appellant argued that these contentions were raised at earlier stages, including in the reply to the show cause notice and written arguments. The appellant relied on a Supreme Court decision to support their argument.

The Court found no substantial question of law in the case. The confessional statements of the employee and director clearly admitted to the clandestine removal of goods without payment of excise duty. The statements were never retracted and were found to be reliable by the authorities. The Court emphasized the overwhelming evidence of clandestine removal based on these statements, making the additional contentions regarding electricity consumption and raw material procurement irrelevant. The Tribunal's observations on these points were considered insignificant and did not affect the validity of the order.

Ultimately, the Tax Appeal was dismissed, upholding the Tribunal's judgment on the excise duty evasion case based on the unretracted confessional statements provided by the employee and director of the company.