CESTAT dismisses Mittal Corp’s appeal despite CIRP Proceedings, upholds Excise Duty and Penalty for Clandestine Removal of Goods [Read Order]

The New Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has dismissed the appeal filed by Mittal Corp Limited, upholding the confirmation of Central Excise duty amounting to ₹1,56,65,763, interest, and equal penalty under Section 11AC of the Central Excise Act.

The case arose from the investigations carried out by Central Excise officers conducted searches at the appellant’s factory. The records were seized under a panchnama, and physical stock verification revealed excess goods compared to those recorded in the statutory production register.

The documents, such as private registers, showed higher production compared to what was recorded as production and unrecorded clearance of SS Billets and SS Flats. The statements recorded from company personnel, including the excise clerk and senior officials, confirmed that the recovered documents were related to the company's internal production and dispatch tracking.

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The show cause notice alleged that the appellant had clandestinely removed 768.770 MT and 170.839 MT, evading excise duty totalling ₹1,51,34,999.

Mittal Corp contended that the department failed to establish clandestine removal with positive and corroborative evidence, such as transport records or third-party confirmations. It also challenged the invocation of the extended period of limitation and the imposition of a penalty under Section 11AC.

The Bench comprising Dr. Rachna Gupta (Judicial Member) and P.V. Subba Rao (Technical Member) held that “Clandestine removal, by its very nature, is secretive. It can be established through indirect evidence. The appellant neither disowns the records nor explains the discrepancies. The statements by its staff were never retracted.”

The Tribunal held that the evidence from private records and consumption logs indicated suppression of production and confirmed clandestine clearance of excisable goods. The tribunal noted that Section 11A(4) was held to be rightly invoked due to suppression of facts, and the interest and penalty provisions under Sections 11AA and 11AC were applicable.

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The Tribunal received a letter from Shyam Sel and Power Limited, the resolution applicant under the Corporate Insolvency Resolution Process (CIRP), asserting that claims before the effective date stood discharged under the approved resolution plan. The Tribunal rejected the request to close the matter,

The Tribunal concluded that the department had furnished sufficient evidence of clandestine removal of goods, and the appeal could not be quashed merely due to pending Corporate CIRP proceedings.

Bhagwat Dayal represented the department, while no one represented the appellant.

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