Custom, Excise & Service Tax Tribunal
Kedia Castle Dellon Industries Ltd vs Cce, Meerut on 23 November, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
DIVISION BENCH
Court No.III
Appeal No.E/2197 & 2619/2006-EX(DB)
(Arising out of OIA No.39/Commr(ADJ)/RPR/2006 dt.31.3.06 passed by the CCE(Appeals), Raipur)
Date of Hearing: 21.10.2015
Date of Order: 23.11.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
Honble Mr.B.Ravichandran, Member (Technical)
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2.
Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
No
3.
Whether their Lordships wish to see the fair copy of the order?
seen
4.
Whether order is to be circulated to the Department Authorities?
yes
Kedia Castle Dellon Industries Ltd. Appellant
Shri Satish Kumar Batra
Vs.
CCE, Meerut-1 Respondent
Appearance:
Present for the Appellant: Shri B.L.Narsimhan, Advocate Present for the Respondent: Shri S.Nunthuk, JCDR Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Honble Mr.B.Ravichandran, Member (Technical) Final Order No.53503-53504/2015 Per: B.Ravichandran These two appeals are against Order-in-Original dated 31.3.2006 of Commissioner (Adj.), Raiipur, imposing penalties on the appellants under Rule 209A of Central Excise Rules, 1944.
2. Briefly stated, the facts of the case are that after certain investigations conducted by the officers, proceedings were initiated against M/s.Kedia Distilleries to demand Central Excise duty and to impose penalties on them and various other co-noticees. Two appellants in the present appeals were also issued with notice. After due adjudication the impugned order came to be issued. The order confirmed a demand of Rs.8,46,99,581/- on the main noticee (M/s.Kedia Distilleries) and imposed various penalties on all the noticees. The main finding is that that M/s.Kedia assembled and manufactured various machineries, plant and equipments, apparatus and similar mechanical and electrical contrivances, structurals, shapes, sections, profiles etc. for captive use and for clandestine clearances without payment of duty. They have created various dummy/benami firms and obtained hire purchase finance from various finance companies fraudulently. Various machinery were shown received in their ledger book, shown as captively used for commissioning and installation. On physical verification most of these accounted machinery etc. were not found in the premises of the factory. The learned Commissioner confirmed the demand only on the ground that huge quantity of machinery, structurals etc. were shown accounted for in the books which were not available with M/s.Kedia Distilleries.
3. While considering these two appeals, we noticed that the parties in appeal are contesting imposition of penalty. It is noticed that Tribunal vide Miscellaneous Order No.782/2006-Ex dated 14.9.2006 observed that both these appeals are to be taken together with all the cognate matters arising from the impugned order. The Registry informed on 18.9.2006 that as per records no other appeal appears to be filed against the impugned order.
4. Hence here we are faced with peculiar situation that there is no appeal on record on the main demand, but only the validity of penalty on two co-noticees is under appeal. We are accordingly restricting own finding to the penalty only though the sustainability of main demand will also have a bearing on the penal proceedings against the present appellants.
5. The learned Counsel for the appellants submitted that the whole proceedings resulting in the impugned order are not legally sustainable. The method adopted by the main party in the case, to raise finance creating dummy companies has been confirmed by Income Tax authorities. The modus operandi has also been discussed in the impugned order. There is no manufacture, clearance or movement of any machinery or goods and the transactions are only book entries to avail finance. The learned Counsel drew our attention to this Tribunals Final Order No.A/52438-52440/2015-EX (DB) dated 27.7.2015 in respect of one of the appellant. In that case this appellant (Kedia Castle Dellon Industries Ltd.) is the main party against whom the demand was confirmed. On a similar set of facts the Tribunal held that there is no case for confirmation of demand of duty and allowed the appeals.
6. The learned Counsel contended that the penalties under Rule 209A are not imposable on the appellants as there is no case of duty evasion and there is no penal liability on the appellants.
7. Leaned AR reiterated the findings in the impugned order.
8. We find that the admitted facts of the case indicate a financial fraud by the main party with the association of various other persons. The scheme devised is to obtain finance from financing companies by creating dummy firms, showing purchase of large quantities of machinery and other materials through book entries only. Further, whatever machinery fabricated inside the factory premises are done by job workers. As such the persons engaged in manufacturing activity/contractors are liable to central excise duty, if any.
9. With the above position, in the background, we may examine the liability of the appellants for penalty under Rule 209A. Appellant (Shru S.K.Batra) is one of the person alleged to be involved in scheming the financial fraud by acting as a proprietor of one of the dummy units which purported to have supplied machinery to the main party. Since, the financial fraud is admitted fact, other than this, the role of appellant in excise duty evasion is not explained in the impugned order. When companies are dummy and transactions are only book entries the penalty under excise rules cannot be justified.
10. Similarly for second appellant (Kedia Castle Dellon Industries) also , the allegation of their involvement in any excise duty evasion has not been explained with evidence in the impugned order. As discussed earlier, we are dealing with mainly non-exiting machinery, created by book entries as part of financial fraud and some manufacture done by contractors. The role of appellant in the excise duty evasion has to be indicated and evidenced independently. In the absence of coherent evidence to this effect the penalties imposed on appellants are not sustainable. Accordingly, we allow the appeals.
(pronounced in open court on 23.11.2015) (B.Ravichandran) (Sulekha Beevi C.S) Member (Technical) Member (Judicial) mk 5