CESTAT upholds order related to clandestine removal of machines to escape duties

CLR Editorial Notes: This case refers to clandestine removal of machines manufactured without paying duties and consequent demand of duty. It was seen that the appellant was caught red handed in clearing two winch machines. Further, the statement of Managing Director was very clear, disclosing the name of the purchaser of clandestinely removed goods. The inquiries made at the end of buyer also supported the Revenue department’s case. The credit memos in the name of the appellants clearly reveal that they have received the payment of clandestinely removed goods from the buyers. As such, it was found that there is sufficient material on record, corroborating each and every act, to uphold the finding of clandestine removal and consequent confirmation of demand.

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2013-ITS-73-CESTAT-M/s. Bachan Singh & Sons (P) Ltd -Vs- Commissioner of Central Excise, New Delhi II , Date of decision: 22 /01/2013

IN THE CUSTOMS, EXCISE AND SERVICE TAX

APPELLATE TRIBUNAL, NEW DELHI

PRINCIPAL BENCH, COURT NO. III

Excise Appeal No. 2718 of 2008-SM

Date of Hearing : 30/11/2012

Date of decision: 22 /01/2013

[Arising out of Order-in-Appeal No. 80/CE/DLH/2008 dated 30.9.2008 passed by the Commissioner (Appeals), Central Excise, New Delhi II ]

For approval and signature: Hon’ble Ms. Archana Wadhwa, Member (Judicial)

M/s. Bachan Singh & Sons (P) Ltd. Appellant

Vs

Commissioner of Central Excise, New Delhi II Respondent

Present for the Appellant : Ms. Sukriti Das, Advocate

Present for the Respondent : Ms. Shweta Bector, DR

ORDER No.A/FO/55336/2013-Ex(Br)

Per Archana Wadhwa :

The impugned order stand passed by Commissioner (Appeals) in denovo proceedings confirming demand of duty of Rs.2,88,597/- and of Rs.70,435/- and imposition of penalty of Rs.2,88,597/-. The said demand stand confirmed on the allegation and findings of clandestine removal.

2. It is seen after hearing both sides that the appellants is engaged in the manufacture of construction equipment like lift, hoist, crane, winch etc. Their factory was visited by officers on 19.3.07 and it was found that two cranes loaded with winch machines were standing at a distance from the factory gate. The same were seized by the officers on the reasonable belief that same stand cleared by the appellants without payment of duty. Shri Chattur Singh, Managing Director of the appellant in his statement admitted having cleared the above machines without payment of duty. Shri Chattur Singh also admitted that they had cleared their final product to one M/s. Nagaruna Construction Company Ltd. Hyderabad without payment of duty.

3. As a result of disclosure of the appellant, investigations were conducted at the end of said buyer and it was found that M/s. Nagarjuna Construction Company Ltd. had purchased the goods from the appellant without payment of duty. The credit notes issued by such buyers were recovered.

4. On the above basis, proceedings were initiated and after making rounds of litigations before various authorities were again confirmed by the original adjudicating authorities. The said order was upheld by Commissioner (Appeals). Hence, the present appeal.

5. On going through the order of Commissioner (Appeals), I find that finding stand arrived at on the ground of clearance of two winches machines found outside the factory gate, statement of Managing Director read with recovery of credit notes. The appellate authority has observed that Managing Director has not retracted his statement till date and they also not disputed the credit memos showing excisable goods collectively charged at Rs. 28,85,967/- cleared by the appellants. Inasmuch as there is no invoices issued in respect of such credit memos, conclusion arrived at by the authorities that goods were cleared without payment and without recording in statutory documents stand upheld.

6. In the appeal memorandum, the appellant has again reiterated their stand that no inquiry report stand given to them in terms of earlier order of the Tribunal. It is seen that original adjudicating authority has observed that there was no formal inquiry and no formal report was made at the end of M/s. Nagarjuna Construction Company. Only investigations were conducted and inquiries were made by the said buyers and it was found that they have received the material from the appellant. In support of the above, M/s. Nagarjuna Construction Co. had placed on record Xerox copy of ledger account, purchase orders and delivery challans pertaining to the appellant. Inasmuch as only Xerox copy of the same were procured from M/s. Nagarjuna Construction and there was no inquiry / investigation report prepared by the officer, the appellants insistence on providing the same cannot be favoured.

7. As such, I find no justification in the appellants stand of providing the inquiry report. As regards allegation of clandestine removal, it is seen that the appellant was caught red handed in clearing two winch machines. Further, the statement of Managing Director is very clear, disclosing the name of the purchaser of clandestinely removed goods. The inquiries made at the end of buyer also supported the Revenue s case. The credit memos in the name of the appellants clearly reveal that they have received the payment of clandestinely removed goods from the buyers. As such, I find that there is sufficient material on record, corroborating each and every act, to uphold the finding of clandestine removal and consequent confirmation of demand.

8. Further the demand of Rs.70,435/- stand confirmed on the ground that the appellant have recovered more duty from their buyer and have paid less to the exchequer. The above finding are based on the invoices issued by the appellants. The said allegation was also not disputed by the appellant and as such, I find that the confirmation of demand on the above ground is in accordance with the law.

9. In the nutshell, the impugned orders are upheld and appeal is rejected.