Order date – 08 August 2022

Facts – 

• The Appellant, M/s. Scan Sponge Iron Limited, were issued a Show Cause Notice after a search and seizure on October 8, 2009 alleging that the Company had clandestinely removed finished goods being 7541.420 MTs of MS Rods and 508.900 MTs of MS Angles in contravention of several provisions of the Act and the Rules and wherein Central Excise duty totaling to Rs.2,72,39,036/- together with interest and equivalent penalty was payable. 
• Also confirmed the imposition of personal penalties against Sri Sanjay Gadodia (Director of the Company), Authorised Representative of the Company and Despatch clerk of the Company.
• Aggrieved the Appellant filed an appeal.

Issue – 

• Whether the central excise duty on the grounds of clandestine removal and personal penalties imposed on the appellant is sustainable? 

Order – 

• The Tribunal stated that they don’t understand as to how the charge of clandestine removal could have been confirmed by the adjudicating authority as there was no seizure of offending goods sought to be cleared in a clandestine manner, no tangible evidence by way of any statement, no follow-up investigation had been conducted and no statement had been taken from Company’s staff who generally used to look after loading and weighment of vehicles. The same view was taken in Commissioner v. Anand Founders and Engineers
• The Tribunal also held that the adjudicating authority could not have straightaway relied on the purported incriminating statements of Sri Sanjib Mahapatra and others (assuming that the subsequent retractions were invalid) without legitimately invoking Section 9D(1)(a) of the Act. All the said purported statements, thus, have to be eschewed from consideration. The same view was taken in Jindal Drugs v. Union of India (P&H) and HiTech Abrasives Ltd. v. Commissioner, Chhattisgarh.
• Therefore the principal demands against the Company had failed so the imposition of personal penalties against Sri Sanjay Gadodia and others cannot be sustained.