CESTAT sets aside Demand of Penalty and Interest on unsustained Excise Duty Demand [Read Order]

The Kolkata Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside the demand of penalty and interest raised against an unsustainable excise duty demand.

Based on intelligence, the officers of DGCEI, Rourkela Regional Unit had conducted simultaneous searches at the factory and Registered office of the Appellant and other premises.

During the course of search, documents related to procurement of unaccounted raw materials, suppression of production, clandestine removal of finished goods, receipt of sale proceeds from such clandestine clearances, invoices with under valuation, parallel invoices etc. were recovered from individuals who were in charge of the office.

On the basis of the data recovered during investigation, a show cause notice dated 23.05.2008 was issued to the Appellant demanding central excise duty of Rs. 9,27,69,569/- including Education Cess, along with interest and penalty. The Notice was adjudicated by the Commissioner vide Order-in-Original dated 26.02.2010, wherein the duty demanded in the Notice was confirmed along with interest and equal amount of duty was also imposed as penalty under Section 11AC of the Central Excise Act.

The instant Appeals were filed against the Order-in-Original dated 26-02-2010 passed by Commissioner, Central Excise, Bhubaneswar I Commissionerate. By the said Order, the Commissioner had confirmed Central Excise duty of Rs.9,27,69,569/- on the clandestinely removed M.S.Rods without payment of duty.

Further, the Commissioner imposed a penalty Rs.9,27,69,569/- under Section 11AC of the Central Excise Act, on the Appellant Company and directors.

Aggrieved against the impugned order, all the four Appellants-company and directors filed the present appeals.

Concerning the original issue of imposition of demand, the tribunal bench of Ashok Jindal, Member (Judicial) and K. Anpazhakan, Member (Technical) observed that, “In the instant case we find that the investigation has not brought in any corroborative evidence to substantiate the allegation of clandestine removal.”

In view of the above findings, it was held that the investigation has failed to establish the alleged

clandestine clearance of goods by the Appellants and hence the demands confirmed in the impugned order were not sustainable.

The demand of duty confirmed in the impugned order was held liable to be set aside. When the duty demand itself is not sustained, the question of demanding interest and imposing penalty does not arise, the CESTAT Bench observed.

To Read the full text of the Order CLICK HERE

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