2019 (5) TMI 1286 - AT - Central Excise

Clandestine removal - shortage of 3135 Kgs of writing and printing paper - demand of duty has been confirmed on the basis of documents/ledger recovered during the course of investigation and on the basis of the records recovered from Transport Union Munsi Shri Mohan Singh - cross-examination denied - imposition of penalties - HELD THAT - The appellants sought cross examination of the persons from whom the documents have been recovered and the buyers of the goods whose statements have been relied upon by the Revenue, but no such cross examination has been granted, therefore, there is a gross violation of procedure laid down under Section 9-D of the Central Excise Act, 1944. As it is a matter of 17 years old, therefore, no purpose shall be served by remanding matter back to the adjudicating authority for cross examination as held by this Tribunal in the case of M/S. MANISH VINYLS, SHRI O.P. KHETAN, DIRECTOR VERSUS CCE, FARIDABAD 2019 (4) TMI 434 - CESTAT CHANDIGARH , in that circumstances, as demand is on the basis of the documents which have not been proved by the Revenue with corroborative evidence, the demand of ₹ 33,27,521/- is not sustainable. The said demand is set-aside and remaining demand of duty is confirmed as admitted by the appellant - further as the appellant has paid an amount of ₹ 5,64,611/- alongwith interest and 25% penalty within 30 days of the passing of the order, the said demand is confirmed alongwith interest and penalty is reduced to 25% of ₹ 5,64,611/- against M/s Shreyans Industires Ltd. Penalty imposed on Shri Anil Kumar, Executive Director - HELD THAT - No statement has been able to prove that Shri Anil Kumar was ever having knowledge of clandestine removal of goods, therefore, the penalty on Shri Anil Kumar is not sustainable. Penalty imposed on the other appellants - HELD THAT - As per the statements recorded during the course of investigation and admission by the appellants, therefore, they cannot escape from their liability of penalizing on them who were engaged in clandestine removal of goods, therefore, the penalty is imposable on the appellants, but, a penalty of ₹ 2,00,000/- has been imposed on M/s Gian Chand Krishan Chand, the penalty is on higher size, the same is reduced to ₹ 25,000/-. Penalty imposed on Shri Raman Marwaha - HELD THAT - The penalty is reduced to ₹ 50,000/-, penalty imposed on Shri R. K. Mahajan and Shri Vivek Shirotiya to 20,000/- each and penalty imposed on Shri Puneet Kumar is reduced to ₹ 10,000/-. Appeal allowed in part.

Summary

Issues:
1. Duty demand confirmation against M/s Shreyans Industries Ltd.
2. Imposition of penalties on various individuals and entities.
3. Dispute over duty liability and clandestine clearance of goods.
4. Lack of evidence and cross-examination in confirming the demand.
5. Penalty imposition on different employees and entities.
6. Knowledge and involvement of individuals in clandestine activities.
7. Admissibility of statements and evidence in penalty imposition.
8. Reduction of penalties based on individual roles and responsibilities.

Issue 1: Duty Demand Confirmation
The case involved confirming a duty demand of &8377; 38,93,376/- against M/s Shreyans Industries Ltd. for shortages of goods involving central excise duty. The demand was based on documents recovered during an investigation, and the appellant disputed a portion of the demand related to clandestine clearances. The appellant argued that the Revenue failed to provide sufficient evidence and cross-examination was denied, violating procedural requirements. The Tribunal found the demand of &8377; 33,27,521/- unsustainable due to lack of corroborative evidence and set it aside. However, the admitted demand of &8377; 5,64,611/- was confirmed along with reduced penalties.

Issue 2: Imposition of Penalties
Penalties were imposed on various individuals and entities involved in the case, including the Executive Director, General Manager, Marketing Manager, Accounts General Manager, Assistant Sales Officer, and others. The appellant contested the penalties, arguing lack of personal motive and evidence against them. The Tribunal reduced penalties based on individual roles and responsibilities, acknowledging lack of evidence against some individuals and adjusting penalty amounts accordingly.

Issue 3: Dispute Over Duty Liability
The appellant disputed the duty liability of &8377; 33,27,521/- related to clandestine clearance of goods, citing lack of concrete evidence and denial of cross-examination. The Tribunal found the demand unsustainable due to the absence of corroborative evidence and procedural violations, setting it aside. However, the admitted demand was confirmed, and penalties were adjusted based on individual involvement in the activities.

Issue 4: Lack of Evidence and Cross-Examination
The appellant raised concerns about the lack of evidence regarding unaccounted raw material procurement, power consumption, and other expenses necessary for manufacturing goods. They argued that without such evidence and cross-examination, confirming the demand was unjustified. The Tribunal agreed, highlighting the procedural violations and lack of supporting evidence, leading to the setting aside of the unsustainable demand and adjustments to penalties.

Issue 5: Penalty Imposition on Individuals
Penalties were imposed on various individuals based on their roles in the alleged clandestine activities. The appellant challenged these penalties, claiming lack of personal motive and evidence against them. The Tribunal considered the statements and admissions made during the investigation, adjusting penalties based on individual culpability and reducing amounts where appropriate.

Issue 6: Knowledge and Involvement of Individuals
The involvement and knowledge of individuals in the clandestine removal of goods were scrutinized. The Executive Director was found not to have been aware of the activities, leading to the penalty being deemed unsustainable. Other employees were penalized based on their roles and involvement in the alleged activities, with penalties adjusted accordingly by the Tribunal.

Issue 7: Admissibility of Statements and Evidence
The Tribunal assessed the admissibility of statements and evidence provided by the Revenue to prove clandestine activities. Lack of cross-examination and corroborative evidence led to the unsustainable demand being set aside. Penalties were imposed based on the weight of evidence against each individual, with amounts adjusted to reflect their involvement.

Issue 8: Reduction of Penalties
Penalties imposed on various individuals and entities were reduced by the Tribunal based on individual roles and responsibilities in the alleged activities. The adjustments were made considering the evidence presented and the level of involvement of each party, ensuring a fair and proportionate penalty imposition.

This comprehensive analysis of the judgment highlights the key issues, arguments presented, and the Tribunal's decisions regarding duty demand confirmation, penalty imposition, evidence evaluation, and individual culpability in the case.