Custom, Excise & Service Tax Tribunal
M/S. Colour Chem Limited vs Commissioner Of Central Excise, ... on 7 July, 2010
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI APPEAL NOS. E/1512 to 1517/05 (Arising out of Order-in-Appeal No. BR/16 to 21/Th-I/2005 dated 28.2.2005 passed by the Commissioner (Appeals) Central Excise, Mumbai-I For approval and signature: Honble Shri Ashok Jindal, 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 :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Yes
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. Colour Chem Limited
:
Appellants
VS
Commissioner of Central Excise, Thane-I
Respondents
Appearance
Shri J.H. Motwani, Advocate for Appellants
Shri S.M. Vaidya, JDR Authorized Representative
CORAM:
Shri Ashok Jindal, Member (Judicial)
Date of decision : 07/07/2010
ORDER NO.
Per : Ashok Jindal, Member (Judicial)
By these appeals the appellant is challenging the penalties imposed on them under Rule 173Q read with Rule 25 of the Central Excise Rule.
2. In Appeal No. E/1514/05 the penalty is confirmed under Rule 26 of the Central Excise Rules, 2001 and Under Rule 13 of the Cenvat credit Rules 2001. Earlier vide Order No. A/252-257/WZB/06/C-IV SMC this Tribunal allowed the appeals on the premise that the appellant have reversed the credit on finding out the mistake and following the decision in the case of CCE Vs. Machino Montell (I) Ltd. reported in 2004 (168) ELT 466 (Tri.LB) wherein it was held that if the duty has been paid before the issuance of the show cause notice no penalty is warranted under Section 11AC. The said order was challenged by the department before the Honble High court of Bombay in Central Excise Appeal No.E/191/2006 on the ground that the decision of Machino Montell (I) Ltd. (supra) has been reversed by the Panjab & Hariyana High Court.
3. The Honble High court of Bombay after considering the submissions made by both the sides passed the following order.
In the light of that and without answering the questions of law as framed by the Appellants herein we set aside the impugned order dated 1st September,2005 and remand the matter back to the Tribunal for reconsideration according to law. We make it clear that we have not decided any issue on merits and leave all questions raised here or otherwise available for consideration by the Tribunal. Appeal disposed of accordingly. No order as to costs.
4. On remand, the matter came before this Tribunal for fresh hearing. Accordingly, these appeals are taken up for final hearing on toady.
5. The learned Advocate appearing on behalf of the appellant submits in these cases the period involved in prior to 2000 and the show cause notice has been issued on 10.2.2004 except the Appeal No. E/1514/05. In the show cause notice there is no allegation of suppression, fraud, collusion, willful mis-statement or contravention of law with an intention to evade payment of duty. Hence the extended period is not invokable and the penalty under Rule 173Q of the Central Excise Rules, 1944 read with rule 25 of the Central Excise Rules, 2000 cannot be imposed. To support his contention he placed reliance on Kaur & Singh Vs. Collector of Central Excise, New Delhi reported in 1997 (94) ELT289 (SC), Ashok Leyland Vs. Commissioner of Central Excise, Mumbai reported in 2008 (232) E.L.T. 111 (Tri.Chennai) and Mita Fasteners Pvt. Ltd. Vs. Commissioner of Central Excise reported in 2009 (242) E.L.T.460 (Tri.Mumbai) wherein it was held that show cause notice not mentioning any of such ingredients i.e. collusion, fraud, willful mis-statement of facts, suppression of facts etc.- Department necessarily to allege fraud, collusion in SCN for recovery beyond normal period. Demand is time barred.
6. The learned Advocate further submitted that although the appellants paid the duty and are not contested the duty, but he is arguing the matter only for the waiver of the penalty and in the absence of any allegation of collusion, fraud, willful mis-statement of facts or suppression etc. the extended period is not invokable and no penalty can be levied..
7. In Appeal No. E/1514/05 the learned Advocate submitted that the composite penalty has been imposed on the appellants under Rule 26 of the Central Excise Rules, 2001 and under Rule 13 of the Cenvat credit Rules 2001 which is not permissible in the law. To support this contention he placed reliance on Commissioner of Central Excise Vs. Precot Mills Limited reported in 2007 (212) E.L.T. 483 (Tri.-Chennai) wherein it was held that composite penalty under different provisions of statute is impermissible.
8. Hence, in all the above matters, no penalty is warranted and appeal be allowed by waiver of penalties.
9. On the other hand the Ld. DR submitted that the appellant has not raised the issue of time barred before the lower authorities and lower authorities is not given any finding on limitation. Hence the matter may be remanded back to the lower authorities.
10. Heard both sides.
11. On careful examination of the show cause notice, I find that in the show cause notice, it is nowhere stated any allegation against the appellant of suppression of facts, collusion, fraud, willful mis-statement with intent to evade duty. It is also a fact that the show cause notice has been issued in the extended period. As held by this Tribunal in the case of Mita Fasteners Pvt. Ltd. (Supra) that the Show Cause Notice in question which has been perused accordingly, does not mention any of these ingredients (collusion, fraud, willful mis-statement of facts, suppression of facts etc.) In other words Department did not invoke the extended period of limitation for recovery of the above such amount from the appellant as rightly pointed by the learned Advocate. In the case of Ashok Leyland (Supra) it was held that Contravention of Rules with intent to evade payment of duty under Rule 57-I(4) ibid alleged in show cause notice - Wrong availment of credit admitted But whether it was done with intent to evade payment of duty Appellants claim that it is not true since they were paying duty of Rs.3129/- lakhs per month and a credit of only Rs.1.40 lakh for 5 years cannot be termed as intent to evade payment duty No mens rea made out against appellants Both penalties vacated Rule 15 of Cenvat Credit Rules, 2004.
12. As the matter has been remanded from the Honble High Court of Bombay to consider all the issues open before me. As admitted by the learned DR that in show cause notice, there is not allegation against the appellant of suppression, fraud, collusion or willful mis-statement with an intent to evade payment of duty. I hold that the extended period is not invokable in this case. It is pertinent to mention here that the appellant is not challenging the duty liability as admitted by the ld. Advocate during the course of argument. Hence this order is in regard of the penalty only. Following the case law cited hereinabove, I am of the opinion in this case also the extended period is not invokable in the absence of any allegation of suppression of facts, fraud, collusion or willful mis-statement with an intention to evade payment of duty. Accordingly, the appeals are allowed qua penalty.
13. With regard to Appeal No. E/1514/05 which has been held by this Tribunal in the case of Precot Mills Ltd. (supra) composite penalty under different provisions of statute is impermissible. Following the same ratio in this case also, the composite penalty under Rule 26 of the Central Excise Rules 2001 and Rule 13 of the Central Excise Rules, 2001 is not sustainable.
14. With these observations all the appeals are allowed with regard to penalties only.
(Pronounced in court) (Ashok Jindal) Member (Judicial) Sm 5