Custom, Excise & Service Tax Tribunal
M/S.Clutch Auto Ltd vs Cce, Faridabad on 10 April, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066. DIVISION BENCH Court No.3 Appeal No.E/3892-3895/2004-EX (Arising out of OIO No.06/RH/Adj./2004 dt.30.4.2004 passedby the CCE, Faridabad, Delhi-IV) Date of Hearing/Decision: 10.04.2015 For approval and signature: HonbleMr.Rakesh Kumar, Member (Technical) HonbleMr.S.K.Mohanty, 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? 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 of the Order? 4 Whether Order is to be circulated to the Departmental authorities? M/s.Clutch Auto Ltd. Appellant Shri V.K.Mehta, Vice Chairman Shri Suresh Garg, Finance Manager Shri K.P. Chitrasenan, Excise Assistant Vs CCE, Faridabad Respondent
Present for the Appellant: None Present for the Respondent: Shri Ranjan Khanna, AR Coram: HonbleMr.Rakesh Kumar, Member (Technical) HonbleMr.S.K.Mohanty, Member (Judicial) FINAL ORDER NO.51556-51559/2015 PER: RAKESH KUMAR The facts leading to filing of these appeals are, in brief, as under:-
1.1 M/s.Clutch Auto Ltd. having their factory at Faridabad manufacture automobile components. Shri V.K.Mehta, is the Vice Chairman and Managing Director of the Company, while Shri Suresh Garg, is the Finance Manager and Shri K.P.Chitrasenan, is the Excise Assistant. The period of dispute in this case is from January, 1995 to November, 1996.
1.2 On 27.11.96, the factory of the appellant company at Faridabad was visited by the jurisdictional Central Excise Officers, and in the course of search of the factory premises, a number of invoices were found which appeared to be parallel invoices. The investigating officer studied the documents taken over by them and made enquiry with the Managing director and employees of the company. There are four allegations against the appellant company involving duty evasion:-
(1) On study of the invoices, it was found that, during the period of dispute, the appellant supplied automobile components to the various automobile manufacturers (OEMs) and also to traders (non OEMs). During the period of dispute, total 1467 consignments had been sold to OEMs. In respect of each such consignments, there were two invoices bearing the same invoice number but issued on different dates. Each invoice also mentioned a particular PLA debit entry in case of payment of duty through PLA or RG-23A Part I debit entry in case of payment through cenvat credit account and in each case, it was found that one of the entries was bogus. In respect of each sale, the invoice of earlier date was found to be containing bogus duty payment details and on the basis of that invoice, the customers had taken credit. Similarly, during the same period, total 409 sales were made to non OEM customers. In respect of each sale, two invoices of the same number were issued on different dates, the invoice on the earlier date was containing bogus duty payment details. The investigating officers were of the view that the goods covered second invoice had been illicitly removed without payment of duty, as while two invoices bearing the same number had been issued in the name of the same customer but on different dates, but the duty had been paid only once. The duty demand of Rs.2,05,53,961/- is on this basis.
(2) In the course of enquiry, it was found that in some cases, where the goods had initially been cleared on payment of duty but the customers on finding the goods defective had returned the same for repairs. The appellant after clearing the goods after repair/reconditioning had issued cenvatable invoices showing payment of duty through cenvat credit account but debit entry was found to be bogus and as such no duty had been paid either through cenvat credit account or through PLA. The appellant while receiving defective goods, had not taken credit of the duty paid on the goods and therefore, under Rule 173H should have returned the goods without payment of duty under challan etc. but instead, they returned the goods under parallel invoice showing payment of duty while no such duty had been paid. The duty demand of Rs.1,75,951/- is in respect of such goods . The department was of the view that when the duty payment has been shown in the invoice but the same has not been paid, this duty would be payable and would be recovered from the assessee.
(3) It was found that during the period of dispute in respect of two consignments sold to Maruti Udyog Ltd. and two consignments sold to TELCO, triplicate and duplicate copies of the invoices had been signed by different persons. The duty demand of Rs.70,128/-
(4) The duty demand of Rs.73,821/- is in respect of certain loose pre-authenticated invoices duly signed by the representative of the assessee and duly incorporating date and time of removal with PLA debit entry number and date. However, debit entry shown in the loose copies of invoices were found to be different from the duty payment shown in the same invoice number which were in the record of central excise department.
1.3 The above matter was adjudicated by the Commissioner vide Order-in-Original dt.30.4.2004, he confirmed the total duty demand of Rs.2,15,68,150/- against the appellant alongwith interest on it under section 11AB and besides this, while imposing penalty of equal amount on them under section 11AC, imposed penalty of Rs.20 lakh, Rs.15 lakh and Rs.5 lakh under Rule 209A on Shri V.k.Mehta, Managing Director, Shri Suresh Garg, Manager Finance and Shri K.P.Chitrasenan, Excise Assistant respectively. Against this order of the Commissioner, these appeals have been filed.
2. None appeared for the appellant, though the notice for hearing had been sent to them well in time. It is seen that on earlier occasion also none represented the appellant. There is letter dated 23.1.2015 of Shri Laximkumaran, Advocate addressed to the Registrar stating that while they were representing the appellant in the case but due to unavoidable circumstances, they are withdrawing from this matter and they have also informed the appellant in this regard, through E-mail. It is seen that earlier this matter had been listed for hearing on 23.1.15 and on 17.2.15 and on both occasions none represented the appellant. In view of the matter, so far as the appellant are concerned, the case is being decided ex-parte.
3. We have heard Shri Ranjan Khanna, ld.DR who defended the Commissioners order by reiterating the findings in the impugned order.
4. We have considered the submissions of ld.DR and have gone through the memo of appeal and written submissions submitted earlier by the appellant.
5. The main duty demand of Rs.2,05,53,961/- against the appellant is based on the allegation that in respect of 1467 consignments of automobile parts had been sold to original equipment manufacturers (OEMs) and 409 consignments of automobile parts sold to non OEM customers, in respect of each such sale, the appellant have issued two invoices bearing the same number and same description of the goods but the date of invoices and duty debit particular are different. Out of two invoices, the invoice of earlier date was found to be containing bogus duty debit particulars. The departments allegation is that the goods cleared under such invoices containing bogus duty debit entry had been cleared without payment of duty. The appellants explanation that this practice had been adopted to facilitate their priority customers is not convincing, as during the same period in respect of other consignments i.e. in respect of 1318 consignments only one invoice has been issued and there was no such irregularity. In view of this, we hold that the impugned order confirming the duty demand of Rs.2,05,53,961/- has to be upheld.
6. As regards, the duty demand of Rs.1,75,951/- in respect of defective goods returned by the customers cleared after repair/reconditioning, there is no dispute that initially the goods had been cleared on payment of duty but subsequently the same were found to be defective, and were returned by the customers and the appellant received those goods under Rule 173H but opted not to avail credit of duty initially paid on the goods. However, the appellant after clearing the goods after repair/reconditioning had issued the cenvatable invoices showing payment of duty through cenvat credit account but debit entries were found to be bogus and as such no duty had been paid either through cenvat credit account or through PLA. Since in this case, there is no dispute that initially the goods had been cleared on payment of duty and on being found defective the same were returned by the customers for repair/reconditioning, and no credit of duty paid on the goods was taken by the appellant, in our view, while returning the goods after repair, no duty is required to be paid. Therefore, in these circumstances, even if the appellant cleared the defective goods under cenvatable invoices by showing duty payment particular which were found to bogus, no duty was demandable from them, as no duty is payable by the appellant in respect of defective goods returned by them to the customers after repair under Rule 173H. In view of this, duty demand of Rs.1,75,951/- is not sustainable.
7. As regard duty demand of Rs.70,128/- is in respect of two consignments sold to Maruti Udyog Ltd. and two consignments sold to TELCO, triplicate and duplicate copies of the invoices had been signed by different persons, since there is no irregularity in respect of such clearance, in our view, the duty of Rs.70,128/- is not justified and the same is set aside.
8. As regards the duty demand of Rs.73,821/- it is in respect of certain loose pre-authenticated invoices duly signed by the representative of the assessee and duly incorporating date and time of removal with PLA debit entry number and date. However, debit entry shown in the loose copies of invoices were found to be different from the duty payment shown in the same invoice number which were available in the records of the central excise authority. Since there is no explanation regarding this discrepancy, we are of the view the duty demand of Rs.73,821/- has to be upheld.
9. In view of this, out of total duty demand of Rs.2,15,68,150/-, duty demand of Rs.2,06,26,961/- is upheld and the remaining duty demand is set aside. As the provisions of section 11AB had been introduced in Central Excise Act with effect from 28.9.96, the interest would be chargeable in respect of clearance during the period from 28.9.96 to November, 1996. No interest on duty confirmed for the period prior to 28.9.96 has been charged. However, penalty under Rule 173Q (1) (d) is upheld.
10. As regards, imposition of penalty under Rule 209A on Shri Suresh Garg, Manager Finance and Shri K.P.Chitrasenan, Excise Assistant, since they were employees of the appellant company, the penalty would not be justified. Moreover, the impugned order does show as to how the provisions of Rule 209A are attracted in the case of Shri Suresh Garg and Shri K.P.Chitrasenan, as we do not find any evidence of these persons dealing with the excisable goods in any manner in respect of which they had reason to believe that the same are liable for confiscation. Therefore, penalty on Shri Suresh Garg and Shri K.P.Chitrasenan is set aside. However, as regards imposition of penalty on Shri V.K.Mehta, Managing Director under Rule 209 is upheld.
11. In view of above discussions, the duty demand of Rs.2,05,53,961/- and Rs.73,821/- is upheld against the appellant company and the remaining duty demand is set aside and interest is chargeable under section 11AB for the period from 28.9.96 to November, 1996. While penalty on the appellant company under Rule 173Q(1) (d) is upheld to the extent of Rs.2,05,53,961/-, penalty under Rule 209A on Shri Suresh Garg and Shri K.P.Chitrasenan is set aside. Penalty on Shri V.K.Mehta, Managing Director under Rule 209 is upheld.
12. The appeal stand disposed of as above.
(Pronounced in the open court)
(S.K.MOHANTY) (RAKESH KUMAR)
MEMBER (JUDICIAL) MEMBER (TECHNICAL)
mk
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