2015 (1) TMI 665 - AT - Central Excise

Clandestine removal of goods - Imposition of penalty - Held that - It is admitted fact that investigation into the case of Kailash Agarwal, Commission agent and Shree Bajrang transport resulted in recovery of incriminating evidence against the appellant company. None of the documents recovered imputing them to the charge in the adjudication order and allegation in Show Cause Notice could be disowned by any of the parties. The appellant Company failed to lead evidence in its defence and materials recovered could not be discarded. Kailash Agarwal and Shree Bajrang Transport provided cogent and credible evidence against the appellant company. All the parties were intimately connected with each other and proved removal of goods by appellant company from its factory without payment of duty. The seized register from Shree Bajrang Transport successfully proved date wise clearance of goods without payment of duty. That revealed questionable modus operandi of these appellants and link of the directors surfaced. - Considering the quantum of demand of duty of ₹ 1,08,98,297/- and equal amount of penalty, followed by interest against duty demand on the appellant company, we direct the appellant M/s. Shree Nakoda Ispat Ltd. to deposit ₹ 70 lakhs ( adjusting any amount if paid prior to this order) within six week. So far as the appellant Sri Anant Dave, Director of appellant company is concerned, he has faced penalty of ₹ 20 lakhs. We do appreciate that without human intervention a corporate solo does not function. Directors are regulator of business of the company. For breach of law and evasion, they are answerable to law. Therefore Sri Anant Dave is to make deposit ₹ 10 lakhs within six weeks So far as appellant Sri Sanjay Goel, Director is concerned, he has faced penalty of ₹ 20 lakhs. Prima facie, nothing has been brought to our notice about active involvement by this appellant. So this director is not directed to make any pre-deposit of penalty at this stage. So far as appellant Sri Kailash Agarwal, agent is concerned, we have already passed an order against this appellant appreciating his role in evasion. Keeping that in view and maintaining consistency, we are of the view that this appellant being contributory to the loss of Revenue, he is directed to deposit ₹ 1 lakh within six weeks - Decided partly in favour of appellants.

Summary

Issues:
Challenging adjudication order related to duty demand, penalty, and interest for the period 2005-08. Allegations of clandestine removal of goods against the company, directors, and commission agent. Cross-examination rights, reliance on evidence from third-party records, and fairness of adjudication process.

Analysis:
1. The appellant contested the duty demand, penalty, and interest imposed for the period 2005-08. The investigation revealed alleged clandestine removal of goods involving the company, directors, and commission agent. The appellant argued no direct evidence linked them to the evasion, emphasizing the lack of goods seizure or incriminating statements during investigation.

2. The appellant disputed the evidence from third-party records, specifically entries related to transportation by Shree Bajrang Transport. They highlighted discrepancies in the invoices and asserted no duty evasion occurred. The appellant criticized the adjudicating authority's reliance on confessional statements and lack of concrete proof of their involvement.

3. The appellant emphasized the denial of cross-examination rights for Shree Bajrang Transport, citing legal precedent supporting the importance of cross-examination to verify evidence. They challenged the validity of the allegations based on evidence gathered from third parties without direct proof of their involvement.

4. The Revenue supported the adjudication, asserting substantial evidence from the commission agent and transporter against the appellant. They contended that the appellant, transporter, and commission agent colluded in clandestine clearances, causing revenue loss. The Revenue defended the denial of cross-examination due to the transporter's non-appearance.

5. After hearing both sides and reviewing the evidence, the Tribunal found incriminating evidence against the appellant company. The seized register from the transporter revealed clearances without duty payment, indicating collusion among the parties. The Tribunal noted the failure of the appellant to disown the evidence presented against them.

6. The Tribunal observed a lack of defense evidence from the appellant and deemed the materials recovered during the investigation credible. The interconnectedness of the parties and the proven evasion of duty strengthened the case against the appellant. The Tribunal directed the appellant to deposit a specified amount within a set timeframe to stay further penalties.

7. The Tribunal differentiated the penalties imposed on the directors based on their roles and involvement in the evasion scheme. While one director was directed to make a deposit, another was not required to pre-deposit at that stage. The Tribunal considered the financial status of the company and the nature of the clandestine activities in its decision-making process.