2017 (4) TMI 1162 - AT - Central Excise

Clandestine removal - It is the contention of the department that with the help of M/s R.M., the appellant has sold clandestinely excisable goods without making any payment - case of assessee is that For the distribution of the trade products, the territorial jurisdictions were earmarked among themselves. All the entities were partnership firms where family members i.e wife and sons were partners and no outsider was involved in any business entity - Held that - It is on record that the incriminating documents were recovered under the proper panchnama signed by the independent witnesses and the entries in the documents were explained by the buyer of the excisable goods in his voluntary admittal/statements recorded on different dates - present appellants have no defence against the case made out against them. It is made clear that the mere voluntary deposition of duty may not be the sole basis for arriving at the conclusion against the assessee. When there are enough evidences corroborating the fact that the appellant M/s RM was an active partner along with Shri Suresh Kumar Garg, who is authorized signatory of M/s R.M. in evasion of duty of Central Excise by the assessee M/s PZFC along with assessee s partner (Shri P.K. Arya) and Manager (Shri K.N. Mehrotra), there cannot be two opinion that the penalties imposed on both of them namely M/s R.M. and Shri Suresh Kumar Garg deserve to be sustained - the charges and penalties imposed by the impugned order against the appellants, M/s R.M. and Shri Suresh Kumar Garg stand sustained. Appeal dismissed - decided against appellant.

Issues Involved:
1. Allegation of clandestine removal of excisable goods without payment of duty.
2. Validity of statements recorded under Section 14 of the Central Excise Act, 1944.
3. Imposition of penalties on firms and individuals.
4. Retraction of statements and its evidentiary value.
5. Sufficiency of evidence for proving clandestine removal.

Detailed Analysis:

1. Allegation of Clandestine Removal of Excisable Goods Without Payment of Duty:
The department conducted a search at the premises of M/s Rudraksha Marketing (RM) and found raw materials and final products related to the manufacture of chewing tobacco. Statements from key individuals, including Shri Suresh Kumar Garg and Shri Pawan Kumar Garg, were recorded, leading to the seizure of goods. The main appellant, M/s Prabhat Zarda Factory Co. (PZFC), was accused of selling excisable goods clandestinely with the help of RM without making any duty payments. The department raised a demand for duty and imposed penalties based on these statements.

2. Validity of Statements Recorded Under Section 14 of the Central Excise Act, 1944:
The statements made by Shri Purushottam Kumar Arya and Shri K.N. Mehrotra were recorded on different dates and corroborated the statements of Shri Suresh Kumar Garg. The Tribunal found that these statements were recorded voluntarily and were consistent over multiple dates. The statements detailed the pricing policy, discount structure, and the modus operandi for the clandestine removal of goods. The Tribunal noted that the statements were not retracted immediately, indicating their voluntary nature.

3. Imposition of Penalties on Firms and Individuals:
The Tribunal upheld the penalties imposed on M/s RM and Shri Suresh Kumar Garg, stating that a firm can be held liable for contraventions unless it is proven that the contravention occurred without their knowledge. The Tribunal referenced the Supreme Court's decision in Agarwal Trading Corporation, which held that a firm or association of individuals can be liable for contraventions. The Tribunal also cited the Larger Bench decision in Gopal Industries Ltd., which stated that a firm name is a convenient collective description and does not create a distinct legal personality.

4. Retraction of Statements and Its Evidentiary Value:
The appellants argued that their statements were obtained under threat and duress and retracted them later. However, the Tribunal found no evidence to support these claims. The retractions were made after a considerable time, suggesting an afterthought. The Tribunal referenced several Supreme Court cases, including K.I. Pavunny, which held that retracted confessions must be corroborated by independent evidence. The Tribunal found that the statements were corroborated by other evidence, including incriminating documents and ledger accounts.

5. Sufficiency of Evidence for Proving Clandestine Removal:
The Tribunal found sufficient evidence to prove the clandestine removal of goods. The records resumed during the search corroborated the statements made by the individuals involved. The Tribunal noted that the seized documents, statements of accounts, and the voluntary admissions by the individuals provided enough evidence to sustain the charges. The Tribunal referenced the case of Tanna Electronics, where voluntary deposit of duty and corroborative evidence were sufficient to prove clandestine activities.

Conclusion:
The Tribunal dismissed the appeals, upholding the impugned order and the penalties imposed on the appellants. The Tribunal found that the evidence on record, including the voluntary statements and seized documents, sufficiently proved the charges of clandestine removal of excisable goods without payment of duty. The retractions made by the appellants were considered an afterthought and lacked substantiation. The penalties imposed on M/s RM and Shri Suresh Kumar Garg were sustained, and the appeals were dismissed as without merit.

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