Custom, Excise & Service Tax Tribunal
Cce, Hyderabad vs M/S. Kanta Rubber Pvt. Ltd on 22 April, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench SMB
Court I
Date of Hearing: 19/02/2010
Date of decision:..
Appeal No.E/70/09
(Arising out of Order-in-Appeal No.66/2008(H-IV)CE & 111/2008(H-IV)(D)CE dt. 31/10/2008 passed by Commissioner(Appeals), Hyderabad )
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordship wish to see the fair copy of the Order?
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
Yes
CCE, Hyderabad
..Appellant(s)
Vs.
M/s. Kanta Rubber Pvt. Ltd.
Respondent(s)
Appearance Mr.M.Vivekanandan, SDR for the Revenue.
None for the respondent.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is filed by the Revenue against the Order-in-Appeal No.66/2008(H-IV)CE & 111/2008(H-IV)(D)CE dt. 31/10/2008.
2. The facts, in brief, are that the respondents in this case are manufacturers of rubber products viz. rubber pads, rubber sheets and rubber hoses falling under chapter 40 of Central Excise Tariff Act, 1985 chargeable to duty. The respondents sell most of the production of rubber goods to certain trading firms, one of them was M/s. Kanta Enterprises. On gathering intelligence that the respondent is clandestinely removing the goods, the various locations in the premises were searched and goods were detained in the godown of M/s. Kanta Enterprises as they could not produce any documents which indicated payment of duty on the said goods. The goods lying in the godown of M/s. Kanta Enterprises were seized and show cause notice dt. 13/7/2006 was issued to the respondent and M/s. Kanta Enterprises proposing to confiscate the rubber products and also for imposition of penalties. The said show cause notice was proceeded by another show cause notice dt. 12/1/2007 to respondent for demand of duty on the clandestinely removed goods. The respondent approached the Settlement Commission for settling the duty liability which was demanded under show cause notice dt. 12/1/2007 and succeeded in their application. The adjudicating authority vide Order-in-Original dt. 31/3/2008 adjudicated the show cause notice dt. 13/7/2006 and held that the goods which were seized are liable for confiscation, he did so and gave an option to the respondent to redeem the same on payment of redemption fine of Rs.1 lakh. He imposed penalty under Rule 26 on M/s. Kanta Enterprises. Aggrieved by such an order, M/s. Kanta Rubber Pvt. Ltd., the respondent in this appeal filed an appeal before ld. Commissioner(Appeals). Nothing is on record that M/s. Kanta Enterprises had filed an appeal against the Order-in-Original . Revenue also filed an appeal against the said Order-in-Original to the ld. Commissioner(Appeals) on the ground that he has failed to impose penalty on the present respondent. Ld. Commissioner(Appeals) took both the appeals for disposal and held that the order of Settlement Commission settling the issue in favour of M/s. Kanta Rubber Pvt. Ltd. in respect of show cause notice dt. 12/1/2007 will also apply in this case and coming to such conclusion, he set aside the order of confiscation. Revenue is aggrieved of such an order and is in appeal before us.
3. Ld. DR would submit that both the matters are different i.e. the show cause notice dt. 13/7/2006 was never settled by the said M/s. Kanta Rubber Pvt. Ltd. M/s. Kanta Rubber Pvt. Ltd. settled the issue only in respect of the show cause notice 12/1/2007. He would submit that the show cause notice dt. 13/7/2006 is only for the confiscation of the goods and hence cannot be held as settled by the order of the Settlement Commission. It is his submission that the Commissioner(Appeals) should have imposed penalty on M/s. Kanta Rubber Pvt. Ltd.
4. None appeared on behalf of the respondent but vide their written submissions dt. 19/12/2010, they submitted as under:-
a. A Show Cause Notice was issued by DGCEI, Hyderabad Regional Unit vide F.No.DBCEI/HYRU/12-03/2006, O.R.No.2/2006, S.C.N.No. 12/2006, dt. 13.07.2006, (hereinafter referred to as the First Notice) to M/s Kanta Rubber Private Limited seeking its explanation as to why rubber products valued at Rs.5,78,407/- seized under Panchanama dated 10.07.2006 at the shop and godown of M/s.Kanta Enterprises be not confiscated under Rule 25 and Section 120 of the Customs Act, 1962 as some goods were allegedly manufactured and cleared from the factory of M/s Kanta Rubber Private Limited, without payment of duty and the remaining goods were allegedly mixed with the goods cleared without payment of duty. The First Notice also sought to impose penalty under Rule 25 for alleged contraventions. There was never any demand of Central Excise duty on M/s Kanta Rubber Private Limited or M/s Kanta Enterprises in the said First Notice. In other words, the First Notice is mainly for confiscation. Paragraph 9 of the First Notice states clearly that this show cause notice proposes only confiscation of the impugned goods.
b. After the issue of the said First Notice, another Show Cause Notice in F.No.DGCE/HYRU/12-03/2006/O.R.No.02/2006/SCN No.02.2007, dt. 12.01.2007 (hereinafter called the Second Notice) was issued by the Additional Director, Directorate General of Central Excise Intelligence, Hyderabad Regional Unit, Hyderabad seeking to demand from M/s Kanta Rubber Private Limited, Central Excise duty of Rs.10,64,042/- (Rupees Ten Lakhs Sixty Four Thousand and Forty Two only) and Education Cess of Rs.14,856/- (Rupees Fourteen Thousand Eight Hundred and Fifty Six only), totaling to Rs. 10,78,898/- (Rupees Ten Lakhs Seventy Eight Thousand Eight Hundred and Ninety Eight only) for the period from 06.04.2002 to 10.01.2006. The fact of issue of First Notice, which is directly connected with the Second Notice, is taken on record and reference is made to the same in paragraph 3 of the Second Notice. In other words, both the First Notice and Second Notice are dependent on each other and co-terminous. One cannot exist or survive without the other. There is no demand of duty against M/s Kanta Enterprises in the Second Notice and the duty demand is only against M/s. Kanta Rubber Private Limited.
c. It is respectfully submitted that in respect of the Second Notice, M/s Kanta Rubber Private Limited has already approached the Customs & Central Excise Settlement Commission (hereinafter called the Settlement Commission), who vide Final Order No.67/2007-CEX, dt.07.12.2007 in Settlement Application No. S.A.(E) Nos. 122 & 123/2007 in File Nos.C.Nos.V/15/122 & 123/2007-SC finally settled the application on the terms and conditions mentioned therein; A copy of the said Final Order of the Settlement Commission has already been placed as ANNEXURE 1 to the main written submissions. Consequent to the above said order of the Settlement Commission, M/s Kanta Rubber Private Limited has already made remittance of the duty amount totaling to Rs.7,54,225/- (Rupees Seven Lakhs Fifty Four Thousand Two Hundred and Twenty Five only), along with applicable interest. Paragraph 2 of the Final Order also mentions that the brief facts of the case had already been dealt with extensively in the Admission Order No.26/2007-Cex, dt.28.08.2007. It would become clear from the facts of the case that the entire fads of the case have been clearly brought on record, including the proposals regarding confiscation and penalty under the First Notice. The Settlement Commission directed M/s Kanta Rubber Private Limited and also the Revenue to soft out the matter with regard to the amount in dispute and arrive at the exact duty liability. Accordingly, the issue was sorted out and the final duty amount was thereafter, determined by the Settlement Commission. As the disputes have already been settled, it is respectfully submitted that nothing survives for consideration and all connected matters have to necessarily have consequential effect. The Settlement Commission vide Paragraph 14 (iii) of the Final Order has also granted to M/s Kanta Rubber Private Limited, immunity from penalty and prosecution under the Central Excise Act, 1944 and any other Central Acts. In other words, the respondent has already been granted waiver of penalties by the Settlement Commission in respect of the Notices and, therefore, the penalties under the First Notice are also not sustainable. When immunities have been granted by the Settlement Commission from penalties and prosecution under the Central Excise Act and any other Central Acts, judicial discipline demands that the same have to be followed and implemented, unless varied by a higher forum. It is also submitted that as the seized goods are not available, they cannot be confiscated and no penalty can be levied in this regard. The impugned order of the Commissioner (Appeals) setting aside the confiscation and redemption fine is, therefore, correct, proper and legal.
d. In view of the above, it is respectfully submitted that all proceedings in respect of both the First Notice and Second Notice should be treated as closed. The original order of the Additional Commissioner, in so far as it held that there is immunity from penalty to M/s Kanta Rubber Products Private Limited and Shri Navratan Jain, Director is, therefore, sustainable.
e. The Commissioner (Appeals) has rightly concluded in paragraph 9 of the impugned order that the two show cause notices issued to M/s Kanta Rubber Private Limited and Kanta Enterprises are inter related as is evident from paragraph 3 of the Second Notice.
f. The Commissioner (Appeals) has also rightly observed in paragraph 9 of the Order that the duty amount mentioned in the Second Notice also includes the duty payable in respect of goods cleared from the factory of M/s Kanta Rubber Private Limited and seized in the godown of Kanta Enterprsies and M/s Kanta Rubber Private Limited had approached the Settlement Commission in respect of the Second Notice leading to the issue of Final Order No.67/2007-CEX, dt.07.12.2007, wherein the duty amount was settled and since, the amounts, along with interest were paid up, immunity from penalty and prosecution was granted to M/s Kanta Rubber Private Limited and also to the co-applicant Mr.Navratan Jain, the Director of M/s Kanta Rubber Private Limited.
g. The Commissioner (Appeals) has also rightly observed in paragraph 10 of the Order that the goods are not physically available for confiscation as the same were allowed provisional release. In such a situation, the adjudicating authority erred in ordering confiscation and imposing redemption fine also. The final order of the Settlement Commission is undoubtedly applicable and M/s Kanta Rubber Private Limited is right in claiming immunity from confiscation and any consequential penalties. In fact, this point comes out unwittingly in paragraph 9 (iv) of the Revenues appeal where it is clearly mentioned that M/s Kanta Rubber Private Limited are right in claiming immunity from confiscation and any consequent penalties.
h. The impugned Order of the Commissioner (Appeals) is therefore correct, proper and legal. It is respectfully submitted that there is no need to set aside the same.
5. I have considered the submissions made by the ld. DR and written submissions by the respondent. On perusal of the records, I find that the issue in this case is regarding the setting aside the redemption fine imposed by the adjudicating authority on the goods which were seized in the godown of M/s. Kanta Enterprises. It is undisputed that these goods were cleared from the factory premises of M/s. Kanta Rubber Pvt. Ltd. without payment of duty. It is also undisputed that the duty liability on these goods was also included in the demand, which was raised in show cause notice dt. 12/1/2007. Honble Settlement Commission vide their Final Order No.67/2007-CEX dt. 7/12/2007 has settled the duty liability which was raised under show cause notice dt. 12/1/2007.
6. On perusal of the entire show cause notice dt. 12/1/2007, I find that though the duty liability on the seized goods which were included in the show cause notice, there was no proposition in the said show cause notice for the confiscation of the goods. The proposition in the show cause notice dt. 13/7/2006 is for confiscation of the goods which were seized. I find from the order of the Settlement Commission that the Settlement Commission has settled the issue by ordering as under:-
14. Accordingly, the case is finally settled in terms of sub-section (7) of Section 32F of the Central Excise Act, 1944, on the following terms and conditions:
i) The duty amount is settled at Rs.7,54,225/-. An amount of Rs.5,22,246 has already been paid by the applicant. Therefore, the applicants are directed to pay the balance duty amount, of Rs.2,31,979/- within 30 days from the date of receipt of this order.
ii) The applicant shall pay simple interest @ 10% p.a. for the period when the duty became due till the date of its actual payment.
Revenue shall calculate the interest payable accordingly and communicate to the applicant within 15 days from the date of receipt of this order and thereafter, the applicant shall pay the same within 15 days and report compliance to this Commission and the Revenue.
iii) Immunity from penalty and prosecution is granted to the applicant under the Central Excise Act, 1944 and any other central acts.
iv) Similar immunity from penalty and prosecution is granted to the co-applicant, Shri Navratan Jain also.
7. It can be seen from the above reproduced order portion of the Settlement Commission that they have settled the duty liability and has directed the applicant i.e. M/s. Kanta Rubber Pvt. Ltd. to pay interest and had granted them immunity from penalty and prosecution. It is to be noted that the Settlement Commissioner has the power to grant immunity from fine, penalty and prosecution. In this case, Settlement Commission has only granted immunity from penalty and prosecution and not from fine.
8. I find that the adjudicating authority has proceeded for the confiscation of the seized goods as per the proposals in the show cause notice dt. 13/7/2006. The reasonings given by the ld. Commissioner(Appeals) that the goods are not released provisionally and hence not available for confiscation is an incorrect reasoning as the said goods were released provisionally on an execution of bond and bank guarantee. Honble Supreme Court in the case of Weston Components Ltd. Vs. Commissioner [2000(115) ELT 278(SC)] has clearly held that when there is provisional release of the seized goods, the plea of goods being not available for confiscation cannot be entertained. In view of this, I find that the ld. Commissioner(Appeals) reasonings given for setting aside the confiscation and the redemption fine imposed are incorrect.
9. In view of this, the impugned order to the extent it sets aside the Order-in-Original as regards the confiscation and redemption fine is set aside. In the facts and circumstances of the case, the Settlement Commissioner having settled the issue raised by the respondent. In view of the facts and circumstances and in my view, interest of justice will be met, if redemption fine is reduced to Rs.25,000/- from Rs.1 lakh as imposed by the adjudicating authority. Accordingly, the appeal is disposed off as indicated herein above.
(Pronounced in court on.) (M.V.Ravindran) Member (Judicial) Nr 10