2016 (2) TMI 251 - AT - Central Excise

Demand of duty on the goods clandestinely removed from the factory premises - Held that - There is enough evidence to indicate that the goods were cleared clandestinely without payment of duty by appellant No.1 to various purchasers. On that account there is no case; imposition of penalty on Shri Champsi M. Shah, find that appellant has no case and it has to be held that the first appellate authority as well as the adjudicating authority are correct in coming to such conclusion. At this juncture, the prayer of the learned Counsel needs to be addressed as to consider the amount indicated as cum-duty value. The said plea of the learned Counsel is strongly supported by the judgement of Amit Agro Industries Ltd. (2007 (3) TMI 14 - SUPREME COURT OF INDIA ). As also in the case of CCE v. Maruti Udyog Ltd. (2002 (2) TMI 101 - Supreme Court) wherein the ratio has been that any amount collected on which duty is demanded needs to be considered as cum-duty value. Respectfully following the same, the value indicated in the show-cause notice has to be considered as cum-duty and duty liability needs to be quantified working back on appellant No.1 accordingly. Appellant having discharged the entire duty liability and the interest thereof, considering the amount collected as cum-duty value is to be accepted. The penalty imposed under Section 11AC should be the equivalent amount of duty as re-quantified and to be discharged by appellant No.1. As regards the penalty on Shri Champshi M. Shah, it has been correctly imposed under the provisions of Rule 26 of the Central Excise Rules, 2002.In short, except for the modification of holding that the value as cum-duty value and reworking of demand of duty, appeals are rejected.

Summary

Issues Involved:
Demand of duty on goods clandestinely removed from factory premises by Appellant No.1 during a specific period.

Analysis:

Issue: Demand of duty on clandestinely removed goods
- The case involved an appeal against an Order-in-Appeal regarding the demand of duty on goods clandestinely removed from the factory premises by the Appellant No.1, MITC Rolling Mills Pvt. Ltd., during a specific period.
- The investigation by the Directorate General of Central Excise Intelligence revealed that the Appellant No.1 had cleared various iron and steel products without proper accounting, as indicated by statements of the personnel. The duty liability and interest were paid by the Appellant before the issuance of the show-cause notice.
- The lower authorities confirmed the duty liability, interest, and imposed a penalty on the Director, Shri Champsi M. Shah, for his role in the clandestine removal of goods.
- The Appellant's Counsel argued for setting aside the penalty, citing the payment of duty liability and interest before the show-cause notice. He also contested the personal penalty imposed on Shri Champsi M. Shah, stating that as a Director, he should not be penalized.
- The Departmental Representative argued against considering the value as cum-duty, emphasizing that the goods were clandestinely removed, justifying the duty liability calculation based on the clandestine clearance.
- The Tribunal, after reviewing the evidence, concluded that there was sufficient proof of clandestine clearance by the Appellant without payment of duty. The Tribunal upheld the penalty on Shri Champsi M. Shah, stating that the lower authorities were correct in their findings.
- The Tribunal addressed the Counsel's plea to consider the amount as cum-duty value, citing relevant judgments like Amit Agro Industries Ltd. and CCE v. Maruti Udyog Ltd., which supported the consideration of amounts collected as cum-duty value. Accordingly, the duty liability was recalculated based on the cum-duty value, which the Appellant had already discharged.
- The penalty imposed under Section 11AC was equated to the re-quantified duty amount, to be paid by Appellant No.1. The penalty on Shri Champsi M. Shah was deemed correct under Rule 26 of the Central Excise Rules, 2002.
- The appeals were rejected, with the only modification being the reworking of the duty demand based on the cum-duty value.

This detailed analysis covers the key issues and the Tribunal's findings in the legal judgment regarding the demand of duty on goods clandestinely removed from the factory premises by the Appellant No.1.