2017 (5) TMI 646 - AT - Central Excise

100% EOU - validity of SCN - clandestine removal of the raw materials and finished goods - case of appellant is that that since on the same set of facts SCN were issued earlier therefore the present demand notice for recovery of duty arising out of the same facts is illegal and unsustainable - Held that - From the SCN issued earlier it is found that the same were issued demanding duty against the clearances of goods by M/s Cosmic Textiles Pvt. Ltd. where respective re-warehousing certificates were not produced. Later on production of the certificate/evidences the orders confirming the demands were set aside and the appeals were allowed by the learned Commissioner (Appeals) - The present SCN on the other hand refers to the allegation of illicit removal of the goods from the M/s Cosmic Textiles Pvt. Ltd. unit without payment of duty and resorting into paper transaction to claim various export benefits. Thus the present SCN which was issued after detailed investigation of the persons concerned transporters brokers etc cannot be said to be arising out of the same set of facts - present SCN is held to be legal and valid. Penalty - Held that - the Appellant was fully aware of the fact that the transaction would be going to be a paper transaction and not real transaction itself indicate that culpable mental state of the Appellant - however the quantum of penalty reduced. Appeal allowed - decided partly in favor of appellant.

Summary

Issues:
Appeal against OIO No.06/MP/2007 - recovery of duty, penalty imposition, personal penalty, sustainability of Show Cause Notice, involvement in illicit removal of goods, penalty reduction.

Analysis:
The appeals were filed against OIO No.06/MP/2007 concerning the recovery of duty of Rs. 30,34,958 from an EOU for alleged illicit removal of goods without duty payment and availing export benefits. The demand was confirmed with penalties imposed on the company and individuals under Rule 26 of Central Excise Rules 2002. The appellants argued that earlier Show Cause Notices on the same issue were decided in their favor, making the present notice unsustainable. They cited legal precedents to support their claim.

Regarding the penalty on one of the appellants, it was contended that he had no role in the alleged illicit removal and should not be penalized. The Revenue representative argued that the present Show Cause Notice was based on a separate investigation into the illicit removal of goods, distinct from previous issues. The involvement of an individual in the offense was supported by evidence of his knowledge and participation in paper transactions.

After hearing both sides and examining the records, the Tribunal found that the present Show Cause Notice was not based on the same set of facts as the previous notices, making it valid. The Tribunal rejected the appellants' arguments as they did not challenge the findings on merit. Concerning the individual's involvement, the Tribunal noted contradictory statements by involved parties, indicating a paper transaction diverting duty-free goods to the open market. The individual's awareness of the fraudulent nature of the transaction justified the penalty imposed, although it was reduced considering the circumstances.

In conclusion, the appeals by the company and two individuals were dismissed, while the appeal by the individual regarding penalty reduction was partly allowed. The penalty was reduced to Rs. 50,000. The Tribunal pronounced the decision on 07.04.2017, disposing of the appeals.