2018 (7) TMI 840 – CESTAT CHENNAI – TMI – Clandestine removal – shortages of scrap – closure of factory – evidences to prove clandestine activity – Penalty u/r 26 – Held that:- The demand is solely based upon the shortages detected by the officers during the course of their visits Admittedly, there is no other evidence indicating procurement of raw materials, clandestine manufacture of the goods, their transportation or identification of the buyers etc., so as to lead to the inevitable conclusion of clandestine removal – It is well settled law that the allegations of clandestine removal, cannot be upheld merely on the basis of shortages in stock – demand set aside.
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Penalty on the individuals – Held that:- Inasmuch as, there is no dispute about the fact of settlement of dispute by the main noticee M/s. Ashok Magnetics Pvt. Ltd., before the Settlement Commission, penalty proceedings against the other co-noticees i.e., Director and the employees, are not sustainable – penalty set a
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td., availed the Cenvat credit of duty based upon the invoices issued by the assessee without the corresponding supply of the materials. 3. In view of the foregoing, proceedings were initiated against the main appellant proposing confirmation of demand of duty in respect of shortages of scrap detected at the time of visit of the officers along with imposition of penalties on the company. The notice also proposed recovery proceedings against M/s. Ashok Magnetics Pvt. Ltd., alleging that they received only the invoices and have availed credit on the basis of these invoices, without actually receiving the scrap from the present appellant. Accordingly, penalties were proposed to be imposed upon the other two appellants also in terms of the provisions of Rule 26 of Central Excise Rules. 4. The appellant during the course of adjudication took a categorical stand that the Revenue's case is self-contradictory in respect of clearances – on the one hand, they allege shortage of scraps and on
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the present assessee should have been dropped. The original adjudicating authority did not find favour with the above submissions of the appellant and confirmed demand of ₹ 1,54,146/- along with imposition of identical penalty on the manufacturing Unit. In addition, identical penalties were imposed on the other two appellants in terms of Rule 26. The said order was upheld by Commissioner (Appeals) but penalties on the individual appellants were reduced to ₹ 1,00,000/- and ₹ 50,000/- respectively. The said order of Commissioner (Appeals) is impugned before Tribunal. 5. As regards the demand of ₹ 1,54,146/- on the finding of clandestine removal, I note that the same is solely based upon the shortages detected by the officers during the course of their visits Admittedly, there is no other evidence indicating procurement of raw materials, clandestine manufacture of the goods, their transportation or identification of the buyers etc., so as to lead to the inevitable
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In which case, the penalty proceedings against the other co-noticees cannot continue. I find that the said issue is also no more res integra in view of the decision of the Mumbai Bench of the Tribunal in the case of S.K. Colombowala Vs Commissioner of Customs (Import), Mumbai reported in 2007 (220) E.L.T.492 (Tri. -Mumbai). It was held that in case of settlement by the main noticee, the penalty proceedings against co-noticees would also get dropped and cannot continue. The said decision stand followed in the case of (i) M/s. Kinship Agency Pvt Ltd Vs Commissioner of Customs (I), Nhava Sheva reported in 2016 (334) E.L.T.695 (Tri. -Mumbai); (ii) M/s. Windoors (India) Vs Commissioner of Central Excise, Mumbai-II reported in 2009 (246) E.L.T.345 (Tri.-Mumbai) and (iii) M/s. Pearl Polymers Ltd Vs Commissioner of Central Excise, Raigad reported in 2008 (226) E.L.T.566 (Tri. -Mumbai). In fact, the list is unending and reference cannot be made to all precedent decisions and it is sufficient t
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