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2014 (2) TMI 1290

Head Note:
Search - Seizure of the documents and records - Mis-declaration - Evasion of the duty - Interest - Penalty - time limitation - Held that: - noticee number 1 while admitting and accepting their duty liability against such clandestine removals of finished goods, noticee number 1 deposited ₹ 30 lakhs through e-payment, they deliberately suppressed material facts relating to clandestine removal of finished goods without accountal and without payment of duty and maintained details relating to such clandestine removals in their private records with intent to evade duty.

That noticee number 1 (applicant) by way of their deliberate acts or omission appears to have wilfully perpetuated fraud and suppressed material facts to gain unlawful monetary benefits by evading Central Excise duty payable to the Government - Hence extended period of limitation appears to be invocable as noticee number 1 (the applicant) had wilfully suppressed the actual quantity of finished excisable goods cleared by them clandestinely in their books of account with intent to evade payment of duty of excise leviable thereon.

The Charge against the co-applicant - At para 10.2 of the show cause notice is that he “definitely’ had prior knowledge relating to such evasion of Central Excise duty by way of clandestine removals, etc., by ‘notice No. 1‘ and that such unlawful act would have never taken place without his consent. .. therefore, appears to have had knowledge or reason to believe that the goods thus removed in contravention of the provisions of law were liable for confiscation…. therefore, appears to have rendered himself liable for penalty in terms of Rule 26 of the said Central Excise Rules, 2002.” The DGCEI submissions on the co-applicant’s application for settlement confirm this allegation.

We agree with the finding that there was clandestine evasion of excise duty and that, therefore, full immunity from penalty cannot be granted to the applicant (Nos. 1 and 2) and also that immunity from prosecution granted to them should be subject to terms and conditions imposed regarding payment of duty, penalty and interest.

The rest of the findings of the learned Member are in consonance with our view that there was clandestine clearance and evasion of duty by the applicant-company, where, the co-applicant has admitted that he looked after the business. Accordingly, we hold that he (the co-applicant) does not deserve full immunity from penalty.

The allegation in the SCN against Shri Prabhu Narayan Singh, Director, is that he had prior knowledge relating to evasion of Excise Duty and such unlawful acts would never have taken place without his consent, these facts are also admitted by him in his voluntary statement. It was, therefore, proposed to impose a penalty under Rule 26 of the Central Excise Rules, 2002, which relates to “any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or two thousand rupees, whichever is greater - Decided against the assessee.


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