Custom, Excise & Service Tax Tribunal
M/S. Abdul Rawoof Khan & Bros vs Cce, Tirupathi on 12 January, 2010
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench Division Bench
Court I
Date of Hearing: 12/01/2010
Date of decision:12/01/2010
Appeal No.E/288/05
(Arising out of Order-in-Appeal No.102/2004(T)CE dt. 28/10/2004 passed by CC&CE(Appeals), Guntur)
For approval and signature:
Honble Mr. M.V.Ravindran, Member(Judicial)
Honble Mr. P.Karthikeyan, Member(Technical)
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
M/s. Abdul Rawoof Khan & Bros.
..Appellant(s)
Vs.
CCE, Tirupathi
..Respondent(s)
Appearance None for the appellant.
Ms.Sudha Koka, SDR for the Revenue.
Coram:
Honble Mr. M.V.Ravindran, Member(Judicial) Honble Mr. P.Karthikeyan, Member(Technical) FINAL ORDER No._______________________2010 Per M.V.Ravindran This appeal is filed by the appellant against the Order-in-Appeal No.102/2004(T)CE dt. 28/10/2004.
2. The relevant facts that arise for consideration are that Anti Evasion officers detained a motor car carrying handmade biris manufactured by the appellant on the ground that the documents available with the vehicle were not indicating any duty payment on the said biris. Subsequent follow up actions undertaken by the officers resulted in shortage of 1600 nos. of Writer brand biris and 57,640 nos. of Vakil brand biris and the duty involved short being Rs.533/-. Further the officers searched the residential premises of the partner of the firm and found unaccounted bags containing 2,44,800 nos. of Writer brand biris and 84 kgs. of tobacco. As the partner could not show any valid document evidencing payment of duty, officers seized the biris. On the conclusion of the investigation, show cause notice was issued to the appellant for confiscation of the seized biris and also for the confirmation of the payment of the duty on the biris found in the residential premises of the partner. Appellant contested the show cause notice on various grounds. The adjudicating authority after considering submissions made by the appellant, came to the conclusion that there is an escapement of duty, he confirmed the confiscation of 2,44,800 nos. of handmade biris and gave an option to redeem the same on payment of redemption fine of Rs.6,630/-, confirmed the payment of duty on such biris and also imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944. He also demanded interest under Section 11AB of the Act. Aggrieved by such an order appellant preferred an appeal to the ld. Commissioner(Appeals). Ld. Commissioner(Appeals) after going through the records and after hearing the partner of the appellant unit upheld the Order-in-Original. Hence this appeal.
3. None appeared on behalf of the appellant. But the appellant has filed a written submission requesting the Bench to consider the same and decide the issue on merits. The gist of the written submission is as under:-
a. The findings arrived at by the appellate authority that the goods have been removed from the factory premises in a clandestine manner with intent to deliver the said goods without paying duty on the said goods is based on presumption and not based on any credible evidence - In this connection, we submit that the biri workers were on strike during the period and the factory was closed. This was also known to the department. The biiri being returned goods could not be brought back to the factory as it was closed and hence stored in the premises of the partner. If the said goods had been brought back to factory, due intimation would have been filed to the Central Excise authorities. This fact was also brought to the notice of the adjudicating authority at the time of hearing, before him. Shri Mansoor Mi Khan, partner of the firm, in whose premises the said goods were kept was a sick person and was not aware of the day to day functioning of the unit. The Officers have chosen to record his statement instead of the partner, Shri Abdul Rahiman Khan who was actually looking after the factory and was present at the factory on the date of occurrence. This can be seen from the Panchnama drawn at the factory. Shri Mansoor Ali Khan admitted the lapse without knowing the facts. Actually Shri Mansoor All Khan died on 5-10- 2003, which proves that he was sick.
b. As regards the Commissioners observation that the goods were not covered by an invoice or any other document, the appellant submits that the Central Excise Rules have prescribed an invoice to be issued when the goods are removed from the factory. No other document has been prescribed for subsequent movement of goods. It is an accepted norm that the market goods are duty paid goods as held by several judicia1 pronouncements, unless proved otherwise.
c. There are several decisions of the Honhle Trjbunal that clandestine manufacture and removal of goods have to be proved with tangible evidence and the initial burden is on the department as held in the following decisions.
1. Punjab Fibres Ltd Vs CCE, New Delhi 2002(141) ELT 219(Trb)
2. Sharma Chemicals Vs CCE Calcutta II 2001 (130) ELT271(Tri)
3. Sundar Silk Mills (P) Ltd. Vs CCE. Hyderabad 2002 (53) RLT 1046 (Cegat-Ban) The department has come to the conclusion that the goods were clandestinely produced and removed without any evidence. Hence demanding duty and its confiscation is unwarranted.
d. The Commissioner(Appeals) erred in holding that penalty under Section. 11AC is imposable relying on the decision of the Tribunal in the case of CCE, Indore Vs. Gehoi Foods Ltd. reported in 2004(168) ELT 479(Tri. Del.). The Tribunal in that case held that the depositing of the duty was not voluntary as the duty was paid after the assessee was caught by the department. In this connection the appellant relied on the decision of the Larger- Bench decision in the case of CCE Delhi III Vs Machino Montell(I) Ltd reported in 2004(168) ELT 466(Tri-LB) clearly held that penalty under Sec. 11 AC is not imposable when the duty is deposited before the issue of the show cause notice. While doing so the Tribunal did not distinguish between cases where seizures are involved and other cases where duty is demanded. Sec. 11 AC did not put any such condition regarding the imposition of penalty. There are several decisions of the Tribunal where penalty under Sec. 11 AC was held to be not imposable even though fraud or suppression s involved in the case. The following decisions are mentioned in this regard.
1. Amritsar Crown Cops- 2002(140) ELT 437 (Tri).
2. Karnal Agricultural industries Ltd 2002(53) RLT 921(C-Dei) Based on the decision of the Larger Bench and other decisions mentioned above, the decision of the Commissioner (Appeals) upholding the penalty under Sec.11AC is not valid and legal and needs to be set aside.
e. Redemption fine, imposed was highly excessive. The duty involved in the case is only Rs 2203/- but the redemption fine imposed was Rs. 6630/- which is about three times of the duty involved and is totally disproportionate
4. Ld. SDR on the other hand would submit that it is an admitted fact that the goods were found in the unregistered premises i.e. residential premises of the partner. If that be so, it was for the appellant to produce evidences regarding discharge of duty on the said goods. She would submit that the Order-in-Original as upheld by the ld. Commissioner(Appeals) is correct and does not required any interference.
5. We have considered the submissions made by ld. SDR and perused the records and also have gone through the written submissions filed by the appellant. On perusal of the records, we find that the issue involved in this case is regarding confiscation of 2,44,800/- handmade biris found in the residential premises of one of the partners of the firm.
6. It is undisputed that these 2,44,800 biris were of Writer brand biris and it is manufactured by the appellant. It is the contention of the appellant before us that these biris which were returned back by the purchasers and they could not take it to the factory as the biri workers were on strike. It is seen from the records that the appellant has not produced any evidence to substantiate the said claim either before the lower authorities or even before us, today. In the absence of any such evidence that these goods were returned by the purchasers and that there was unrest in the factory premises of the appellant and in the absence any evidence that the said biris were of duty paid nature, we concurr with the findings of the ld. Commissioner(Appeals), that the appellant has not discharged the duty liability on the biris which were found in the residential premises of the partner. In view of this, we uphold the impugned order to the extent of upholding of demand of duty, along with interest and also for the penalty.
7. As regards the imposition of redemption fine, we find that the duty involved on the said goods which were seized is around Rs.2203/- while the redemption fine is Rs.6630/- which is, in our view, is disproportionate. In the interest of justice, we reduce the redemption fine to Rs.1000/-.
8. Accordingly, subject to such modification as indicated hereinabove, the appeal is rejected.
(Operative portion of this order pronounced on conclusion of the hearing) (P.KARTHIKEYAN) Member (Technical) (M.V. RAVINDRAN) Member (Judicial) Nr 7