2014 (12) TMI 196 - AT - Central Excise

Waiver of predeposit of duty - Penalty u/s 11AC - clandestine manufacture and clearance of goods - Held that - Demand has been confirmed against the Applicants, M/s Sen Ferro Alloys Pvt. Ltd., on the ground that during the period from 2006 to 2009, they had manufactured and cleared 29671.282 MT of sponge iron from their factory without recording its manufacture and clearance in the statutory records and without payment of duty. Prima-facie, we find that a chit regarding such clandestine manufacture and clearance, has been retrieved from the factory premises which shows around 2000 MT of finished goods had been cleared without payment of duty. We find that the records and evidences relating to the clearance for the earlier period, had been retrieved from other s premises. Prima-facie, we find that the ld. Commissioner has recorded the evidences and discussed in detail about its relevancy to the facts alleged in the Show Cause Notice. In other words, the entire issue rests on appreciation of evidences, produced by both sides. Hence, to arrive at a conclusion whether a total quantity of 29671 MT of finished goods, were removed clandestinely, and about the role of other Applicants, it is necessary that the evidences produced by both sides, are to be analysed. - Partial stay granted.

Summary

Issues Involved:
Waiver of predeposit of duty and penalty under the Central Excise Act, 1944.

Analysis:
The judgment concerns applications seeking waiver of predeposit of duty amounting to Rs. 5.46 Crores and penalties imposed under the Central Excise Act. The Applicants, engaged in manufacturing excisable goods, were alleged to have clandestinely manufactured and cleared sponge iron without paying duty. The demand was based on recovered private documents indicating unauthorized clearances. The Applicants contested the allegations, arguing discrepancies in the evidence and financial hardship due to industry conditions and accumulated losses. The Department supported the findings of the Adjudicating Authority, citing shortages of raw materials and other evidence of clandestine activities.

The Applicants refuted the discrepancies during stock verification and offered to deposit Rs. 65.00 lakhs as a compromise. After considering both sides and examining the evidence, the Tribunal found prima facie evidence of clandestine clearances. A chit retrieved from the factory premises indicated unauthorized removal of finished goods without duty payment. The Commissioner's analysis of the evidence was deemed relevant to the allegations. The Tribunal emphasized the need for a detailed analysis of the evidence to determine the quantity of goods removed clandestinely and the involvement of the Applicants. Consequently, the Tribunal directed M/s Sen Ferro Alloys Pvt. Ltd. to deposit Rs. 65.00 lakhs within eight weeks, with waiver of the balance dues and stay on recovery for other Applicants during the appeals. Failure to comply would result in dismissal of all appeals without further notice.

In conclusion, the judgment addresses the complex issues of duty predeposit and penalties under the Central Excise Act, emphasizing the importance of analyzing evidence to establish the alleged clandestine activities. The Tribunal's decision to allow a partial deposit by the Applicant reflects a balanced approach considering the circumstances and evidentiary aspects of the case.