The Allahabad Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) upheld the penalty under Rule 26 of the Central Excise Rules, 2002 in the act of evading excuse duty by making clandestine clearances of goods.
M/s Mamta Steel India Pvt. Ltd. is a manufacturing unit and Appellant-II Shri Lal Padmakar Singh is director of the said unit. Appellants were engaged in manufacture of MS Ingots, falling under Tariff Item No.72061090 of schedule to Central Excise Tariff Act, 1985. Appellants’ unit was visited by Central Excise Officers and verification of the stock was done under a proper panchnama.
During the course of scrutiny of records it was observed that appellants have been clearing the goods against the same invoice, number of times to various customers and thus was evading central excise duty.
The appellant-II was asked to show cause as to why penalty should not be imposed upon him under Rule 26 of the said Rules for his acts of knowingly, deliberately and actively engaging in concealing/ selling & purchasing/ dealing with transactions in aforementioned clandestine removal of excisable finished goods by the Appellant No.I and of preparing duplicate/forged Invoices.
The counsel for the appellant submitted that in the present case the demand made in respect of shortages of stock is without any merits as the stock was determined on the basis of eye estimation and not by actual weighment. It has been held by the Tribunal in series of decisions that such demands made on the basis of eve estimation cannot be sustained.
The counsel for the revenue submitted that the charge of clandestine clearance against the appellant by using invoice of same number for clandestine clearance to the goods is well founded and the appellant-I is liable for appropriate penal action in terms of Section 11AC and appellant-II is liable for penalty under Rule 26 of Central Excise Rules, 2002.
A Single Member Bench comprising Sanjiv Srivastava, Technical Member observed that “The Appellant-II was actually involved in the act of evading the duty by making clandestine clearances of the goods for Appellant-I. The penalty imposed upon him under Rule 26 is justified and upheld.”
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