Custom, Excise & Service Tax Tribunal
M/S. Itc Ltd vs Commissioner Of Central Excise & ... on 11 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/291/2011 (Arising out of Order-in-Appeal No.PKS/427/BEL/2010 dt. 26.11.2010 passed by the Commissioner (Appeals) Central Excise, Mumbai-III ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. ITC Ltd.
:
Appellant
VS
Commissioner of Central Excise & Customs, Belapur
:
Respondent
Appearance
Shri B. Venugopal, Advocate for Appellant
Shri N.N. Prabhudesai, Supdt. (A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 11/03/2016
Date of decision: 11/03/2016
ORDER NO.
The appeal is directed against the Order-in-Appeal No. PKS/427/BEL/2010 dt.26.11.2010 passed by the Commissioner of Central Excise (Appeals) Mumbai-II, whereby the Ld. Commissioner upheld the Order-in-Original No. Belapur/Bel.IV/R-I/05/SGD/ADC/2010-11 dt.30.6.2010 and rejected the appeal filed by the appellant.
2. The fact of the case is that M/s. ITC Ltd. Food Division had given machineries on hire to M/s. MR Brown Bakers (I) Pvt. Ltd. (MRBBIPL) to manufacture Biscuits namely Sunfeast Biscuits for them. On termination of contract and as per the direction of the appellant, the capital goods were dispatched to M/s. Utsav Food Products and M/s. Disha Foods Pvt. Ltd. While clearing the capital goods from M/s. MRBBIPL excise duty was not paid/modvat was not reversed even the appellant had paid entire duty amount to M/s. MRBBIPL. Therefore the said capital goods were seized from the premises of M/s. Utsav Food Products and M/s. Disha Food Products Pvt. Ltd. Thereafter M/s. MRBBIPL have paid entire duty along with interest on 12.12.2007. After investigation, a show cause notice dt. 8.4.2009 was issued to M/s. MRBBIPL and appellant. The adjudicating authority ordered for confiscation of the capital goods, confirmed the demand and order for appropriation of amount of duty and interest already paid by M/s. MRBBIPL. However, the adjudicating authority has allowed the redemption of confiscated capital goods on payment of redemption fine of Rs. 13,00,000/- under Section 34 of the Central Excise Act, 1944. Being aggrieved by the Order-in-Original dt. 30.6.2010, the appellant M/s. ITC Ltd. filed appeal before the Commissioner (Appeals), who vide impugned order upheld the Order-in-Original and rejected the appeal. Therefore the appellant is before me.
3. Shri B. Venugopal Ld. Counsel appearing for the appellant, submits that M/s. MRBBIPL did not pay duty at the time of clearance of the goods but on pointing out by the department, the entire duty amount along with interest was paid by them on 12.12.2007 i.e. almost within three months from the clearance of the goods. He submits that M/s. MRBBIPL have cleared the goods under the cover of invoice issued under Rule 11 of Central Excise Rules, 2002. Therefore there was no intention to evade the payment of duty as the invoice was issued and recorded the same in books of accounts of the M/s. MRBBIPL. It is only a case of non payment of duty in time. Since the duty was paid immediately after pointing out by the department the case is squarely covered under Section 11A(2B) of Central Excise Act, 1944. According to him, the show cause notice should not have been issued, therefore in the absence of any show cause notice confiscation of goods and redemption fine does not arise. He further submits that the appellant M/s. ITC Ltd. being owner of the goods, have clearly shown their bona fide before removal of the goods from M/s. MRBBIPL. They have made a payment towards the excess duty to M/s. MRBBIPL. Therefore in the absence of any malafide intention, suppression of facts, misstatement, fraud, collusion etc. can not be alleged in the facts of the present case. Therefore the appellant deserves for the waiver of redemption fine in view of Section 11A(2B) of Central Excise Act, 1944.
4. On the other hand, Shri N.N. Prabhudesai Ld. Supdt. (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that even though there is bona fide on the part of the buyer of the goods, but if the clearance of goods made without payment of duty the goods are liable for confiscation in terms of Rule 25 of the Central Excise Rules 2002. Therefore on the ground that the buyer is a bona fide buyer and the appellant though paid duty to M/s. MRBBIPL but the facts remain that the goods were cleared without payment of duty, therefore the goods are liable for confiscation. He placed reliance on the Tribunal decision in the case of Omega Enterprises Vs. Collector of Customs, Bombay 2001 (137) ELT 1120 (Tri.-Del.)
5. I have carefully considered the submissions made by both the sides. The issue to be decided by me is whether in the facts and circumstances of the case that M/s. MRBBIPL has paid duty and interest within three months from the date of clearance of the goods though on pointing out by the department whether the show cause notice could have been issued and consequently goods could have been confiscated. I find that though M/s. MRBBIPL cleared the goods and duty was not paid in time but the goods were covered under valid invoice. Therefore, at the end of the recipient when the goods were received under the cover of legitimate invoice, the goods cannot be confiscated. As per the facts of the case though duty was not paid in time but the goods were cleared under valid invoice and on pointing out by the department, M/s. MRBBIPL has discharged the entire duty along with interest, before issuance of show cause notice. Since the M/s. MRBBIPL has issued the invoice and there is no case of the department that it is a fake invoice, suppression of facts, misstatement, collusion, fraud etc. is not exist, therefore in terms of Section 11A (2B) the show cause notice should not have been issued. Section 11A (2B) reads as under:
Section 11A(2B) Where any duty or excise has not been levied or paid or has been short-levied or short-paid or erroneously refunded, the person, chargeable with the duty, may pay the amount of duty 71[on the basis of his own ascertainment of such duty or on the basis of duty ascertained by a Central Excise Officer] before service of notice on him under sub-section (1) in respect of the duty, and inform the Central Excise Officer of such payment in writing, who, on receipt of such information shall not serve any notice under sub-section (1) in respect of the duty so paid:
Provided that the Central Excise Officer may determine the amount of short payment of duty, if any, which in his opinion has not been paid by such person and then, the Central Excise Officer shall proceed to recover such amount in the manner specified in this section, and the period of one year referred to in sub- section (1) shall be counted from the date of receipt of such information of payment.
Explanation 1. Nothing contained in this sub-section shall apply in a case where the duty was not levied or was not paid or was short-levied or was short-paid or was erroneously refunded by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty.
Explanation 2. For the removal of doubts, it is hereby declared that the interest under section 11AB shall be payable on the amount paid by the person under this sub-section and also on the amount of short-payment of duty, if any, as may be determined by the Central Excise Officer, but for this sub-section.] From the above provision of sub-section (2B), it is clear that when there is no suppression of fact on the part of the assessee and the duty along with interest is admittedly paid without contest, the show cause notice should not have been issued. The only exception, is provided that if the duty is not paid by reason of suppression of fact, mis-declaration, fraud, collusion etc. with intent to evade payment of duty, immunity provided under sub-section (2B) is not available to the assessee. In the present case, though the non payment was pointed out by the department but no suppression of fact, mis-declaration, collusion, fraud etc. exist in the case for the reason that M/s. MRBBIPL have issued valid invoice for removal of capital goods. Therefore neither show cause should have been issued nor any charges of the show cause notice should have been confirmed. As per above discussion and the clear legal provision under sub-section (2B) of Section 11A, the confiscation of the goods is not legal and correct. Therefore the impugned order is set aside and appeal is allowed with consequential relief if any in accordance with law.
(Pronounced & Dictated in court ) (Ramesh Nair) Member (Judicial) SM.7
Appeal No. E/291/2011