The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), upheld the penalty under the Rule 26 of the Central Excise Rules, 2002 and observed that illegal manufacture and clearance of unmanufactured tobacco.
The impugned order was the result of the proceedings initiated by the department against the Appellant Shri Krishna Kumar (Appellant1) and Shri Suresh Prasad Sah (Appellant 2) alleging inter alia that the appellant No.1 in connivance with appellant No.2 have evaded Central Excise duty to the tune of Rs.1.38 crores by means of clandestine manufacture and clearance of excisable goods namely unmanufactured tobacco without obtaining Central Excise Registration and without following the provisions of Central Excise law.
Accordingly Show Cause Notice was issued to the Appellants which was adjudicated vide the impugned order dated 13.08.2014, wherein the demand amounting to Rs.14,75,833/- has been confirmed and the remaining demand of Rs.1,23,24,167/- has been dropped. A penalty of Rs.14,75,833/- was also imposed under the provisions of Rule 26 of the Central Excise Rules, 2002. Aggrieved against the impugned order, both the Appellants preferred appeal before this Tribunal.
The Authorized Representative submitted that Shri Krishna Kumar is the owner of the premises where the illegal manufacturing of unmanufactured tobacco was undertaken. Shri Mahesh Prasad, in whose name the lease agreement was taken was a non-existent person. Shri Suresh Prasad has no means for purchasing these 8 machines, as claimed by him. Accordingly, he stated that Shri Krishna Kumar is the actual manufacturer of the said goods. Hence, the duty has been rightly demanded from him in the impugned order. Accordingly, he supported the impugned order.
A Two-Member Bench comprising R Muralidhar, Judicial Member and K Anpazhakan, Technical Member observed that “Suresh Prasad Sah, Appellant 2 has admitted that he is involved in the illegal manufacture and clearance of unmanufactured tobacco. Since he has changed his statement so many times, we observe that his statement has no evidentiary value. However, we find that there is no demand in the notice against Shri Suresh Prasad Sah.”
“We observe that his involvement in the clandestine manufacture and clearance is very well established by his own admission. He is also involved in introducing a non-existence person Shri Mahesh Prasad before the Notary for executing the lease agreement. Accordingly, we hold that he is liable for penalty under section 26 of the Central Excise Rules 2002. Accordingly, we uphold the penalty imposed on Shri Suresh Prasad Sah” the Tribunal noted.
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