2017 (10) TMI 14 - AT - Central Excise

Clandestine manufacture and removal - copper tube - Penalty - Held that - appellant Shri Dilip Kothari, Shri Sudhir Kothari and Shri Ajay Vyas who are the proprietors of their respective proprietorship firms have in their statement recorded by the lower authorities categorically admitted that they had issued blank challans/invoices to M/s SMTPL. The said blank challans/invoices were used by the said SMTPL for clandestine removal of the manufactured goods under the guise of trading activity - there is element of collusion by these three trading firms with SMTPL with intent to evade duty - The appellants having confessed to handing over of the challans and also to the fact that they were in fact aware of the clandestine removal of the goods by the said SMTPL, we have to uphold the findings that all the three appellants herein are aware of the act that M/s SMTPL is going to remove the excisable goods clandestinely - all the three appellants are liable for imposition of penalty under Rule 26 of the Central Excise Rules 2002, the quantum of penalty reduced to ₹ 5,00,000/- each. As regards penalty imposed on Dhiran Transport Corporation, there is no rebuttal to the adjudicating authority s findings that the said Dhiran Transport Corporation had not issued any LRs for the transport of the goods clandestinely removed from SMTPL premises but have issued unauthorised unsigned slips, due to which it could not be said that the said Dhiran Transport Corporation was not aware of the unauthorised removal of the goods from SMTPL s premises - penalty upheld - quantum of penalty reduced to ₹ 2,00,000/-. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Appeal against order-in-original regarding duty liability, CENVAT credit, and penalties.

Analysis:
The appeals were filed against the order-in-original related to duty liability, CENVAT credit, and penalties imposed on various parties involved in clandestine clearance of goods. The investigation revealed that a company manufactured and cleared copper tubes without accounting or paying central excise duty, with other parties colluding in the scheme. The adjudicating authority held the company liable for duty, interest, and penalty, along with penalties on individuals involved. The appellants contested the show-cause notice, leading to the appeals.

Regarding the appeal by Shri Venkateshwara Rao and the company, they were unrepresented in the Tribunal, seeking repeated adjournments, indicating lack of seriousness in prosecuting the appeals, leading to dismissal for non-prosecution.

The counsel for other appellants argued against the penalties imposed under Rule 26 of the Central Excise Rules 2002, citing misinterpretation by the adjudicating authority. They referred to precedents where penalties were set aside under similar circumstances, urging for a similar outcome in this case.

The Tribunal considered the admissions made by the proprietors of trading firms involved in providing blank challans/invoices for clandestine removal of goods by the manufacturing company. The Tribunal found collusion and intent to evade duty, upholding penalties under Rule 26, albeit reducing the amounts imposed to meet the ends of justice.

In the case of Dhiran Transport Corporation, the Tribunal upheld the penalty imposed under Rule 26, but reduced the amount considering the circumstances. The penalties on all appellants were modified and reduced to ensure justice.

The Tribunal disposed of all appeals, affirming penalties on some appellants while reducing the amounts imposed, based on the evidence and circumstances presented during the proceedings.