2018 (11) TMI 72 - AT - Central Excise

Imposition of personal penalty - demand on the basis of invoices - Held that - The finding by the Original Authority in respect of 231 invoices and 52 invoices is not sustainable and revenue has not put-forth any ground to deal with the findings of Original Authority. The grounds of the appeal by revenue are general in nature and therefore, we dismiss the appeal filed by revenue. Appeal filed by manufacturer-appellant - Held that - Since the appellant has accepted at some point of time the liability of ₹ 56 lakhs, therefore, he confirmed the same We find such confirmation of demand is not sustainable. The Original Authority should have confirmed the demand on the basis of evidence admissible to law. We do not find any such evidence relied upon by the Original Authority - The manufacturer-appellant s appeal is allowed by us by setting aside that part of the Order-in-Original through which a demand of ₹ 56 lakhs confirmed. Penalty imposed is set aside - decided in favor of assessee.

Summary

Issues: Allegations of duty evasion, parallel sets of invoices, under valuation, clandestine removal, admissibility of Cenvat credit, Area Based Exemption, admissibility of evidence, confirmation of demand, penalty imposition.

Detailed Analysis:

1. Allegations of Duty Evasion:
The appeals arose from an Order-in-Original alleging duty evasion by the manufacturer-appellant. The allegations included the preparation of parallel sets of invoices and under-valuation of goods, leading to duty evasion. The manufacturer-appellant accepted certain duty demands, while contesting others.

2. Admissibility of Cenvat Credit:
Revenue alleged that goods cleared by the manufacturer-appellant to another entity were not eligible for Cenvat credit. The manufacturer-appellant accepted the under-valuation allegations related to these transactions.

3. Clandestine Removal Allegations:
The issue of clandestine removal was raised concerning certain invoices. The Original Authority dropped the demand related to these invoices, leading to an appeal by the revenue.

4. Area Based Exemption:
Allegations were made regarding goods sent to a sister concern enjoying Area Based Exemption. The manufacturer-appellant contended that the demand was based on LRs from a trading unit, not the manufactured goods, and that sales tax returns were filed.

5. Admissibility of Evidence:
The Original Authority relied on a statement without allowing cross-examination, leading to a challenge on the admissibility of evidence. The manufacturer-appellant argued that the demand confirmation lacked sustainable evidence.

6. Confirmation of Demand:
The Original Authority confirmed a demand of ?56 lakhs without sufficient admissible evidence. The Tribunal found the confirmation unsustainable and allowed the manufacturer-appellant's appeal, setting aside the demand and penalties imposed.

7. Penalty Imposition:
The Tribunal set aside the penalties imposed on both the manufacturer-appellant and the partner, finding the confirmation of demand lacking in admissible evidence and rejecting the revenue's appeal.

In conclusion, the Tribunal dismissed the revenue's appeal and allowed the appeals filed by the manufacturer-appellant and the partner, setting aside the demand confirmation and penalties imposed.