2017 (10) TMI 1226 - AT - Central Excise

Clandestine removal - clearance of processed MMF under the cover of 139 challans - Held that - In view of the fact that the Director has not specifically admitted that the goods were removed clandestinely from the factory and in view of the fact that the challans contained the name of the consignee as self , it can be concluded that the charges of clandestine removal cannot be levelled against the appellant with regard to the goods covered under 139 challans - demand set aside. Removal of the goods under the cover of 22 challans - Held that - In view of the fact that the Director of the Company has admitted that the goods were removed without payment of Central Excise duty, the Central Excise duty demand confirmed in respect of clearance of disputed goods in respect of 22 challans is proper and justified and the impugned order cannot be interfered with at this juncture. Penalty - Held that - Since the adjudicating authority has not given the option to the appellant to deposit the reduced amount of penalty of 25%, such option should be available to the appellant. Accordingly, the adjudicating authority is directed to quantify the amount of reduced penalty, which is required to be paid by the appellant. Personal penalty on the Director of the appellant company - Held that - the department has not specifically brought on any evidence, showing his involvement in clandestine removal of goods - provisions of Rule 26 of Central Excise Rules, 2002 cannot be invoked for imposition of personal penalty - penalty set aside. Appeal allowed in part and part matter on remand.

Summary

Issues: Central Excise duty demand on processed Man Made Fabric (MMF) under 22 and 139 challans, imposition of penalty on the appellant and the Director, and reduction of penalty amount.

The judgment by the Appellate Tribunal CESTAT NEW DELHI pertains to appeals against an order passed by the Commissioner of Central Excise, Jaipur. The appellant, engaged in manufacturing MMF, was alleged to have removed goods without payment of Central Excise duty. The impugned order confirmed a duty demand of ?22,32,781/- and imposed penalties. The ld. Commissioner (Appeals) upheld the demand, leading to the filing of appeals before the Tribunal.

The appellant argued that goods under 139 challans were transferred within the factory premises and not removed clandestinely. The Director's statement supported this, stating the goods were consigned to 'self'. Regarding goods under 22 challans, the department failed to provide evidence of clandestine removal. The appellant contended that duty demand on this ground should not be confirmed.

The respondent reiterated the findings, emphasizing the Director's admission of goods being removed without payment of duty. The Tribunal observed that for goods under 139 challans, as the Director did not admit clandestine removal and the challans indicated consignment to 'self', charges could not be sustained. However, for goods under 22 challans, since the Director admitted removal without duty payment, the duty demand was upheld.

The impugned order was partially set aside, with duty demand and penalty on goods covered under 139 challans being overturned in favor of the appellant. However, duty, interest, and penalty for goods under 22 challans were upheld. The Tribunal directed the quantification of reduced penalty, considering the appellant's previous deposits. Personal penalty on the Director was set aside due to lack of evidence of his involvement in clandestine removal.

In conclusion, the duty demand and penalty were adjusted based on the findings for goods under 139 and 22 challans. The personal penalty on the Director was revoked, and the appeal was disposed of accordingly.