2016 (7) TMI 300 - AT - Central Excise

Clandestine removal of goods - manufacturing of CTD bars - modus operandi of the racket and loss of public Revenue - Appellant neither led any cogent evidence to controvert allegations of clandestine clearance of 269.712 MTs of CTD bars valued at ₹ 34,22,342/- involving duty evasion of ₹ 5,13,351/- alleged in the para 34 of SCN in respect of the periods involved in 1995-96 and 1996-97 nor discarded the evidence gathered by investigation against it. Nothing could be demonstrated by the appellant company to establish that it had no unaccounted clearances. The only prayer of the appellant was to take a lenient view when the appellant disclosed unaccounted finished goods. Held that - When investigation has discovered the truth and the bill traders as well as the purchasers of clandestinely removed goods demonstrated the questionable modus operandi of the appellant proving that goods of the appellant were dealt by them resulting in evasion of duty and their evidence remained uncontroverted, the appellant is answerable to law for the evasion of duty it has caused. Beginning from the show cause notice all the authorities have erroneously held that the appellant is entitled to cum-duty benefit. It is shocking to know that how such a concession can be given to an evader who did not maintain authentic record recognized by law to demonstrate cum duty clearness. Appellant resorted to clandestine removal and no records were maintained in respect of such clearance. Therefore the duty evaded transactions which have never seen the light of the day deserve no concession of cum duty benefit at all. The tainted deals should be banned by coercive measures of law to prevent recurrence thereof as were as to discourage evasion. - If such benefit is granted, that shall legalise illegalities. Demand of duty confirmed with penalty - Decided against the assessee

Issues Involved:
1. Allegations of clandestine clearance and evasion of excise duty.
2. Examination of evidence and findings by the Commissioner (Appeals).
3. Investigation findings and statements from involved parties.
4. Appellant's defense and arguments.
5. Revenue's counterarguments.
6. Tribunal's analysis and conclusions.
7. Re-computation of duty liability and penalties.

Issue-wise Detailed Analysis:

1. Allegations of Clandestine Clearance and Evasion of Excise Duty:
The appellants were accused of clandestinely clearing 269.712 MTs of CTD bars valued at ?39,35,694/-, resulting in evasion of excise duty amounting to ?5,13,351/-. The Show Cause Notice dated 3rd/6th October 2000 initiated the proceedings, which were initially dropped by the adjudicating authority due to lack of evidence. However, the Commissioner (Appeals) later upheld the allegations, demanding duty, interest, and penalties.

2. Examination of Evidence and Findings by the Commissioner (Appeals):
The Commissioner (Appeals) thoroughly examined allegations, evidence, and pleadings, concluding that there was sufficient evidence of premeditated design involving the appellant-company and its Director. The Commissioner noted the involvement of bill traders and brokers in the clandestine clearance of goods and granted cum-duty price benefit without supporting evidence.

3. Investigation Findings and Statements from Involved Parties:
The investigation dated 7.8.1996 revealed the involvement of multiple individuals in the clandestine clearance, including brokers and bill traders. Statements from the Director of the appellant company and other individuals admitted to the receipt and use of unaccounted raw materials and the subsequent clandestine clearance of finished goods. Various documents and writing pads recovered during the investigation corroborated these findings.

4. Appellant's Defense and Arguments:
The appellant contended that the investigation lacked a basis and that the adjudicating authority rightly dropped the proceedings due to insufficient evidence. They argued that the Commissioner (Appeals) superficially determined liability and demanded duty without concrete evidence of clandestine removal. The appellant also sought leniency and exoneration from penalties, arguing the Director's non-involvement.

5. Revenue's Counterarguments:
Revenue argued that the adjudicating authority failed to appreciate the cogent evidence demonstrating the appellant's evasion of duty. They highlighted the Director's confession and the systematic modus operandi of the racket involving brokers and bill traders. Revenue asserted that the Commissioner (Appeals) rightly upheld the allegations and imposed appropriate penalties.

6. Tribunal's Analysis and Conclusions:
The Tribunal found that the appellant failed to provide credible evidence to counter the allegations of clandestine clearance. The investigation's findings, including statements and recovered documents, remained unchallenged. The Tribunal concluded that the appellant's deliberate breach of law and collusion with brokers and bill traders were evident. The Tribunal determined that the appellant was liable for duty on 449.712 MTs (180 MTs + 269.712 MTs) of clandestinely removed goods.

7. Re-computation of Duty Liability and Penalties:
The Tribunal directed the adjudicating authority to re-compute the duty liability for 449.712 MTs without granting cum-duty benefit. Penalties were to be imposed under Rule 173Q(1) of Central Excise Rules, 1944, equal to the amount of duty evaded, and a penalty of ?2,000/- under Rule 9(2). The Director's involvement in the clandestine removal was confirmed, and his appeal for exoneration from penalties was dismissed.

Conclusion:
The appeals were dismissed, and the adjudicating authority was instructed to re-compute the liability and impose penalties as directed, without granting cum-duty benefit. The Tribunal emphasized the need to prevent recurrence of such evasion and discouraged granting any concessions to the appellants.

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