2018 (2) TMI 461 - AT - Central Excise

Clandestine removal - demand raised on the basis of these loose slips found - Held that - the Revenue was not required to ascertain the fact whether the details of buyers mentioned in loose slips have been received the goods or not? The buyer s name mentioned in the SCN may be fake, therefore, no investigation is required at the end of the Revenue, as the same has not been objected by the appellant - the charge of clandestine removal of the goods stand proved and duty is rightly demanded. Demand of interest - Held that - as the duty has been paid by the appellant on the same date, when the shortage of finished goods were found, therefore, in the absence of the date of clearance of those goods, the demand of interest is not sustainable. Penalty on Director - Held that - director has accepted that they have cleared the goods clandestinely - penalty on the Director is rightly imposed - however, the penalty of ₹ 5,00,000/-, in comparison to the duty of ₹ 8,00,000/-, is excessively high, therefore, the penalty on the Director of the company is reduced to ₹ 1,00,000/-. Appeal allowed in part.

Summary

Issues:
Appeal against confirmed demand of clandestine removal, interest, and penalties.

Analysis:
The case involved the appellants appealing against confirmed orders demanding duty for clandestine removal, along with interest and penalties. The search conducted revealed shortages of goods and loose slips, leading to allegations of clandestine activities. Show cause notices were issued based on these findings, resulting in confirmed duty demands, interest, and penalties. The appellants contested the demands, arguing that no investigation was conducted on the buyers of the goods allegedly purchased clandestinely. They also sought a reduction in penalties, citing partial payment already made. On the other hand, the Revenue argued that the loose slips indicated clandestine removal, justifying the confirmed duty, interest, and penalties. The Tribunal found that the loose slips provided sufficient evidence of clandestine activities, negating the need to verify the buyers' details. The duty payment made on the same date as the shortage was found rendered the interest demand unsustainable, following a precedent set in a previous case. The penalties imposed were also reviewed, with the main appellant's penalty reduced to 25% of the duty paid and the director's penalty reduced from ?5,00,000 to ?1,00,000 due to excessive comparison with the duty amount. Ultimately, the appeals were disposed of based on these considerations.