Custom, Excise & Service Tax Tribunal
(I) M/S. M. M. Cylinders (P) Ltd. & Others vs Commissioner Of Central Excise on 20 July, 2011
IN THE ,CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH, FKCCI COMPLEX, K.G. ROAD,
BANGALORE 56009.
DATE OF HEARING : 20/7/2011
DATE OF DECISION : .
Central Excise Appeal Nos. (i) 885 to 890, 876 & 877 of 2008
(ii) 878 to 884 of 2008
[Arising out of Adjudication Order Nos. (i) 9, 10 & 11/2008 dated 28.8.2008 (ii) 12, 13 & 14/2008 dated 28.8.2008, both
passed by the Commissioner of Central Excise,
Customs & Service Tax, Tirupathi)
For approval and signature:
Honble Shri S. S. Kang, Vice President
Honble Shri M. Veeraiyan, 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 ? Yes
3. Whether Their Lordships wish to see the fair copy of the Order? Seen
4. Whether Order is to be circulated to the Departmental authorities? Yes
(i) M/s. M. M. Cylinders (P) Ltd. & others .. Appellants
(ii) M/s GDR Cylinders (P) Ltd. & others
Versus
Commissioner of Central Excise, .. Respondent
Tirupathi.
Present for the Appellant : S/Shri B. V. Kumar and B. Venugopal,
Advocates
Present for the Respondent : Shri Ganesh Havnur, SDR
CORAM : Honble Shri S.S. Kang, Vice President
Honble Shri M. Veeraiyan, Member (Technical)
ORDER No..Dated ./2011
Per M. Veeraiyan
The eight (08) appeals listed in S. No. 1.1 to 1.8 arise out of common order of the Commissioner of Central Excise, Customs & Service Tax, Tirupathi Adjudication Order No. 9, 10 & 11/2008 dated 28.8.2008 by which Commissioner confirmed demand of duty along with interest against M/s M. M. Cylinders (P) Ltd. and imposed penalties on M.M. Cylinders (P) Ltd. and others as detailed below :
Sl. No. Appeal No. Partys name Period Duty Penalty (Rs.) 1.1 885/2008 M. M. Cylinder (P) Ltd. 27.8.01 to 12/2006 61,14,269 + Interest 61,14,269 1.2 886/2008 M. Ramanathan, Despatch In-charge, MM Cylinders (P) Ltd. 25,000 1.3 887/2008 M.P. Krishnamachari, G.M., MM Cylinders (P) Ltd. 25,000 1.4 888/2008 M. Muruganandam, MD, MM Cylinders 6,00,000 1.5 889/2008 R. Ravi Verma, Director, M.M. Cylinders (P) Ltd. 1,00,000 1.6 890/2008 K. Subramaniam, C.A. 10,000 1.7 876/2008 Sri Mehala Transport 4,00,000 1.8 877/2008 M. Muthuramalingam, Partner, Sri Mehala Transport 50,000 2.0 The seven (07) appeals listed in S. No. 2.1 to 2.7 arise out of common order of the Commissioner of Central Excise, Customs & Service Tax, Tirupathi Adjudication Order No. 12,13 & 14/2008 dated 28.8.2008 by which Commissioner confirmed demand of duty along with interest against M/s GDR Cylinders (P) Ltd. and imposed penalties on GDR Cylinders (P) Ltd. and others as detailed below :
Sl. No. Appeal No. Partys name Period Duty Penalty (Rs.)
2.1 878/2008 GDR Cylinders P. Ltd. 17.9.01 to 12/2006 70,77,117 + Interest 7077,117 2.2 879/2008 R. Ravi Verma, Dir, GDR Cylinders P. Ltd. 1,00,000 2.3 880/2008 M. Muruganandam, MD, GDR Cylinders P. Ltd. 6,00,000 2.4 881/2008 M. Ramanathan, Despatch In-charge, GDR Cylinders P. Ltd. 25,000 2.5 882/2008 M.P. Krishnamachari, G.M., GDR Cylinders P. Ltd. 25,000 2.6. 883/2008 Sri Mehala Transport. 4,00,000 2.7 884/2008 M. Muthuramalingam, Partner, Sri Mehala Transport 50,000
3. Heard both sides extensively. The facts and issues involved in both sets of appeals are identical. All the appellants in the case involving demand on M/s GDR Cylinders (P) Ltd. are also appellants in the case involving demand on M/s M.M. Cylinders (P) Ltd. In the later case, there is one more appellant, Shri K. Subramaniam, C.A. on whom a penalty of Rs. 10,000/- stands imposed. Therefore they are being dealt with by this common order.
4. The relevant facts in brief are as follows :
(a) The appellant-companies are manufacturers of new and empty LPG Cylinders for the oil marketing companies namely, Indian Oil Corporation Ltd., Bharath Petroleum Corporation Ltd. and Hindustan Petroleum Corporation Ltd. They entered into agreements with the aforesaid companies for supply of LPG Cylinders.
(b) Prior to August 2001, the purchasing oil companies were paying freight charges equal to the standard Railway freight rate per cylinder, irrespective of the amount of actual freight involved in the transportation.
(c) From August 2001, the price per cylinder was fixed on Gross Delivery Price (GDP) / Net Delivery Price (NDP) inclusive of all taxes and freight.
(d) As per investigation conducted by the department, the appellant companies were found to have used a front organization, M/s Sri Mehala Transport, for the purpose of inflating the freight amount and to reduce the assessable value with intention to evade excise duty. The other appellants were found to have abetted in the above modus operandi in evading excise duty. Accordingly, show cause notices, three in each case were to the appellant companies proposing demand of duty and proposing penalties on the appellant companies and other parties / persons who are the appellants before us.
(e) In pursuance of the show cause notices, Commissioner issued the impugned orders demanding duties and imposing penalties as mentioned above.
5. The learned Advocate assailed the orders of Commissioner on the following grounds :
(a) Sri Mehala Transport (SMT for short) though a partner ship concern consisting of the Directors and their relatives and employees of appellant companies as partners is an independent concern and is neither a dummy unit of the appellant companies nor a front of the appellant companies. SMT consists of 15 partners each of whom contributed Rs. 1,00,000/- towards capital and the firm came into existence as per partnership deal dated 1.4.2001. They are Income Tax assessees. The partnership deal could not be produced at the time of investigation as the same was not readily available. The hiring of vehicles by SMT, from the Directors cannot lead to a conclusion that the said firm is not independent.
(b) The financial transactions between the appellant-companies and SMT are at arms length and in the normal course of business. The appellant-companies were meeting the fuel expenses and other expenses for running the vehicle at the time of booking itself and the balance amounts to be paid on receipt of payments from oil companies. The fact that substantial amounts were pending payment from the appellant-companies cannot lead to doubting the transaction between the appellant-companies and SMT.
(c) The vehicles at the disposal of SMT were exclusively meant for use by the appellant-companies and they were specially designed for transport of cylinders. The return journeys of the vehicles at the disposal of SMT were empty without any cargo and therefore, the freight amounts charged were on the higher side compared to vehicles which were taken on hire from other parties.
(d) The freight charges were separately indicated on the invoices raised by the appellant-companies on the oil companies. If any part of the freight amount was to be included in the assessable value, the enhanced duty that would have been paid was available as credit to the oil companies and therefore it is revenue neutral.
(e) The transportation is a distinct activity unconnected to the sale of goods and any profit earned on transportation is liable to be included in the assessable value of the goods as held in the following decisions :
(i) Baroda Electric Motors Ltd. Vs. CCE [1997 (94) ELT 13 (S.C.)]
(ii) CCE Vs. Inox Air Products [2002 (147) ELT 621 (Tri.- Chennai)]
(iii) Apollo Tyres Ltd. Vs. CCE [2003 (160) ELT 836 (Tri.-Bang.)]
(iv) PSL Ltd. Vs. CCE [2005 (185) ELT 59 (Tri.)]
(f) The appellant-companies have indicated the transportation charges separately in the invoices and the same were accounted in the books of accounts also properly. The appellant-companies were subject to audit by the audit team of Central Excise Offices. The department was aware of the entire facts. Therefore, invocation of extended period of limitation was not justified. Further, once a show cause notice has been issued invoking extended period of limitation, subsequent notices invoking extended period of limitation on the same set of facts were clearly not permissible as held by various decisions of the Honble Supreme Court and the Tribunal.
6. The learned SDR, on the other hand, strongly supported the orders of the Commissioner and made the following submissions :
(a)As per Rule 5 of the Central Excise Valuation (Determination of Price of Excisable Goods), Rules, 2000 read with Section 4 (1) (a) of the Central Excise Act, 1944, the value of excisable goods shall be deemed to be the transaction value, excluding the cost of transportation from the place of removal up to the place of delivery of such excisable goods. Thus the freight / transportation charges are eligible for deduction in determining the assessable value if the actual charges has been shown in the invoice separately in terms of Boards Circular M.F. (DR) F. No. 354/81/2000-TRU dated 30.6.2000.
(b) With the change in the pricing pattern from August 2001, the employees of appellant-companies including the Managing Director and the Director adopted a modus operandi of starting a transport company under the name of M/s Sri Mehala Transports (SMT) and engaging the same for the transportation of cylinders for delivery to the oil companies. The freight charges were inflated abnormally and were claimed as deduction from Gross Delivery Price fixed by the purchasing oil companies and thereby reducing the assessable value of the cylinders for discharging duty.
(c) SMT was floated by Director of the appellant-companies; lorries owned by the M.D. and another Director were leased out to SMT; almost all consignments were transported only through the lorries of SMT; even when the lorries of other transporters were used, the transactions were routed through SMT. The freight charges claimed as deduction based on freight said to have been paid to SMT were 300 to 400% more than the actual freight incurred.
(d) The assessable values of the cylinders of other manufacturers were higher compared to that of the appellant-companies and further the assessable value of appellant manufacturers was reduced year after year.
(e) While the cost of HR sheets, the main raw material was on the increase, the cost of the cylinder which was three times the value of HR sheets consumed got reduced to 114% of the cost of the raw material in the year 2004.
(f) In the case of M.M. Cylinders (P) Ltd., the Chartered Accountant admitted to have prepared two sets of Balance Sheets as per the directions of the Directors of appellant-company and it was also stated that the figures could have been manipulated by the Directors of the company. The matter was referred to Joint Director (Cost), Hyderabad who has opined that excess freight charges have been claimed for deduction.
(g) There are three show cause notices in each covering different periods. The first two notices are invoking the extended period of limitation. The contention of the appellants that once extended period has been invoked in the first show cause notice, the ground of suppression could not have been invoked in the second show cause notice is not acceptable in the facts of the present case. The learned DR submits that investigation continued even after the issue of first show cause notice, and additional evidences in the form of documents like Balance Sheets, purchase orders of oil companies placed on other manufacturers, statements and reports of enquires with the other transporters and Transport association were relied upon in the second set of show cause notices. The third set of show cause notices were issued within the normal limitation period prescribed under Section 11A.
7.1 We have carefully considered the submissions of both sides and perused the records. It would be appropriate to discuss the merits of the case before taking the issue of limitation.
7.2 It is not in dispute that the value of excisable goods shall be deemed to be transaction value, excluding the cost of transportation from the place of removal to the place of delivery of such excisable goods in terms of Section 4 (1) (a) of Central Excise Act, 1944 read with Rule 5 of the Central Excise Valuation (Determination of Price of Goods), Rules 2000.
7.3 However, the above legal position does not permit an assessee to deliberately suppress the assessable value by inflating the cost of transportation.
7.4 In the light of the above legal position, the facts of the present cases require to be analyzed to see whether the findings of the Commissioner that the two appellant-companies have deliberately reduced the assessable value by inflating the cost of transportation are correct or not.
8. The following are relevant -
(a) The appellant-companies are supplying to the oil companies the empty LPG cylinders. For the period prior to August 2001, the oil companies were paying the appellant-companies towards freight amounts limited to transportation charges by rail irrespective of the freight amounts incurred by the suppliers like the appellant-companies. From August 2001, the mode of pricing was changed to GDP prices which were inclusive of all elements. In other words, as far as the oil companies were concerned, they had fixed a consolidated price and, therefore, the break up of price and freight became irrelevant so long as the composite price payable by them was as per the contracted value.
(b) The appellant-companies claimed deduction of varying amounts of freight charges per cylinder for the same destination over the period. For example, in respect of clearances from the factory to Cudappa, the rates of deduction towards freight claimed were Rs. 23.24, 45.74, 91.03, 148.61, 27.08 respectively during the years 2001-02, 200203, 2003-04, 2004-05 and 2006-07 respectively. Similarly for transport to Gummidipoondi, the deductions of freight charges claimed were Rs. 36.23, 40.22, 90.48, 106.61, 115.96, 24.46 and 25.77 for the period 2001-02, 200203, 2003-04, 2004-05, April 2005 to June 2005, July 2005 to March 2006 and 2006-07 respectively. Similarly in respect of transport to Cochin, the deductions of freight charges claimed per cylinder were Rs. 21.24, 76.29, 116.62, 167.40, 167.96, 64.35 during the period 2001-02, 200203, 2003-04, 2004-05, April 2005 to June 2005 and 2006-07 respectively. Similarly deductions were for other destinations as recorded in para 13 of the impugned order.
In other words, the freight charges claimed as deduction steadily increased from the year 200102 to June 2005 and thereafter, there was sudden drop in the amounts of deduction claimed apparently after the commencement of the investigations.
(c) While the deductions of freight charges were increasing the assessable value started decreasing. The assessable value of the LPG cylinder was Rs. 505 during June 2001, Rs 468 in December 2001, Rs. 365 in October 2002, Rs. 410 in February 2003, Rs. 350 in August 2003 and Rs. 470 in April 2004 and later, in July2005, it increased to Rs. 625 as detailed in para 15.2 of the impugned order.
(d) The decrease in assessable value as mentioned above was effected even though cost of HR sheet, the main raw material, used for cylinder appears to have increased from Rs. 163 in November 2001 to 301 in Jan 2003 to 327 in November 2003, Rs. 439 in Jun 2004, etc. as detailed in para 40 of the impugned order.
(e) In other words, the cost of the main raw material was increasing and the composite sale price remained the same and the assessable value was getting reduced and the deduction towards freight charges claimed was getting inflated clearly with an intention to evade duties.
(f) The fact that the recipient companies may be eligible for CENVAT credit cannot absolve them of the consequences of manipulations by the appellant-companies with the intention to evade duty.
9.1 It is the case of the department that the appellant-companies used the transport firm SMT to suit their convenience to inflate the claims towards freight charges and reduce the assessable value within the overall composite price paid by the oil companies. On the other hand, the case of the appellant-companies is that the firm SMT though a partnership firm with the Directors, relatives and employees of the appellant-companies as partners, the same was independent. The vehicles used by SMT were specially designed and were dedicated to work only for the appellant-companies and they remained idle when there was no work given by the appellant-companies and the vehicles returned empty after delivering the empty cylinders and the financial transactions between the appellant-companies and SMT were in the normal course of business. Therefore, the findings of the Commissioner that SMT is a dummy unit or a front company used to inflate the claim for freight charges is incorrect.
9.2 For considering the dispute involved, it is not necessary to go into the controversy as to whether SMT is a front company or a dummy unit or an independent legal entity. Undisputedly, substantial control of SMT was with the management of the appellant-companies. If the reasons given for charging higher rate by SMT for transport of the cylinders are to be taken as valid, no explanation is forthcoming for sudden dropping of the freight amount from July 2005 onwards. If the transaction between SMT and the appellant-companies were in the normal course of business, there is no justification forthcoming for reducing the freight amount for transport to Gummidipoondi from Rs. 115.96 during April 2005 to Rs. 24.46 during July 2005 to March 2006; similarly there is no explanation forthcoming for reducing the freight charges from Rs. 148.61 in 2004-05 to 27.08 during 2006-07. Similarly no explanation is forthcoming for such sudden variation in respect of other destination.
9.3 It is also noticed that the appellant-companies have utilized the services of other transport companies on many occasions. In all these occasions, the transport has been arranged only through SMT. However, the charges paid to SMT for using third party transport and the actual charges paid by SMT to such third party transport have interesting revelations. For transport of 560 cylinders to 24 Paraganas of West Bengal in January 2005, the freight charges claimed as deduction in invoice to the oil company was Rs. 1,17,403/- as against an amount of Rs. 33000/- only paid to the actual transporter and thus an increase of more than 250%. Similarly, in respect of despatch of 298 Nos. cylinders to Jharkand the freight claimed was Rs. 62,774/- whereas the payment paid to the actual transporter was Rs. 21,000/- only. Thus nearly a 200% increase. Several such instances have been discussed in para 10.8 of the impugned order.
It does not make sense that the appellant-companies who were claiming their business transactions with SMT as if in the normal course of business, could afford to pay amounts of freight in excess ranging from 69% to 258% as detailed in para 10.8. It would have been advisable that they have used third party transporter and saved lots of money if they were to do business in the normal course! 9.4 Without going to the controversy as to whether SMT is a dummy or front unit, it is clear that the appellant-companies have clearly used SMT to claim inflated freight charges and consequently to reduce the assessable value and the same have happened in spite of substantial increase in prices of major inputs, namely HR sheets as already discussed. In such a scenario, the case laws relied by them have no application to the facts of their cases.
Limitation 10.1 The appellant-companies are challenging the demand raised invoking the extended period of limitation. It is submitted that, in both cases, show cause notices dated 1.9.2006 were issued demanding duties relating to the period July 2001 to January 2002 and, therefore, subsequent show cause notices dated 27.2.2007 and 8.5.2007, in both cases, for demanding duty on subsequent periods were clearly hit by time bar. In this regard, they relied on the following decisions :
(i) Nizam Sugar factory Vs. CCE [2006 (197) ELT 465 (S.C.)]
(ii) ECE Industries Ltd. Vs. CCE [2004 (164) ELT 236 (SC)]
(iii) CCE Vs. Gautami Textile Industries & Sales Corporation [2006 (197) ELT 87 9Tri.-Bang.)]
(iv) Frick India Ltd. Vs. CCE [2006 (203) ELT 82 (Tri. Del)]
(v) Tuni Textile Mills Ltd. Vs. CCE [2004 (174) ELT 51 (Tri.-Mum.)]
(vi) Swathy Chemicals Ltd. Vs. [1999 (114) ELT 531 (Tri.-Chennai)]
(vii) S. S. Pharmaceuticals (P) Ltd. Vs. CCE [1999 (111) ELT 55 (Tri.-Del.)] 10.2 It would be appropriate to analyse the above decisions relied up on, on behalf of the appellant-companies challenging the invoking of extended period of limitation.
(a) Nizam Sugar Factory In the said case, Honble Supreme Court considered invocation of extended period in show cause notice dated 16.7.87 demanding duty relating to the assessment years 1982-83 1986-87 and demand raised by another show cause notice dated 12.9.88 for a period of 16.3.88 to 27.6.88. The issue involved in the said show-cause notices was the marketability or otherwise of impure carbon dioxide emanating during the process of fermentation of molasses After taking note of the fact that, on identical issue, an earlier show cause notice dated 28.2.84 demanding duty for the period Feb 78 to Sep 82 on identical facts has been issued, Honble Supreme Court held that Allegation of suppression of facts against the appellant cannot be sustained. When the first SCN was issued all the relevant facts were in the knowledge of the authorities. Later on, while issuing the second and third show cause notices the same/similar facts could not be taken as suppression of facts on the part of the assessee as these facts were already in the knowledge of the authorities.
(b) ECE Industries Ltd.
In the said case, after issue of show cause notices dated 28.5.93 and 4.11.93 proposing demand of duty and imposition of penalty, for having not reversed the Modvat credit in respect of parts required for repair and replacement, a third show cause notice dated 27.5.94 was issued. In view of the above facts, it was held that As earlier proceedings in respect of same subject matter was pending adjudication it could be said that there was any suppression and the extended period under section 11A was not available.
(c) Gautami Textile Industries & Sales Corporation In the said case, the issue involved was whether the processing of cotton fabrics was with the aid of power or not. After appreciating the facts that the very same issue was there in earlier proceedings it was held that As the department had full knowledge of the activities of the Respondents in view of the earlier proceedings against them, we agree with the contention of the learned Advocate that there is no justification for invoking the extended period.
(d) Frick India Ltd.
In the said case, considering the facts of the case, it has been held that on same set of facts demand cannot be raised alleging suppression of facts when earlier show cause notice has been issued on same issue and on same set of facts.
(e) Tuni Textile Mills Ltd.
In the said case, it was held that invoking extended period of limitation in the second notice when the same was issued on the basis of same documents based on the same operation was irregular.
(f) Swathy Chemicals Ltd.
In the said case, after adjudicating the dispute of classification and claim for exemption in pursuance of show cause notice dated 15.5.90 by issue of order dated 16.8.90, by denying the exemption, issue of a subsequent show cause notice dated 11.4.91 alleging suppression of facts has been held not permissible.
(g) S.S. Pharmaceuticals In the said case, a show cause notice dated 18.5.90 for the period from Sep 88 to Jan 89 invoking extended period of time after issue of a show cause notice dated 11.1.90 on same set of facts was held not permissible.
10.3 The facts of the present cases are totally different from the facts of the above cases relied upon by the appellant-companies. In all these cases, the subsequent show-cause notices have been issued invoking extended period of limitation, when the facts and evidences remained the same. In the present cases, the dispute involved related to manipulations with a view to inflate the value of freight claimed using a transport firm whose partners are Directors, their relatives and employees of the appellant-companies and consequently suppressing the assessable value with a view to evade excise duty. The first set of show cause notices were issued to both the companies on 1.9.2006 relying on just seven documents/records/registers as listed in para 27 of the show cause notice. Undisputedly, further detailed investigations were undertaken and lot of fresh evidences have been gathered and many documents/records/registers etc. were relied upon in the subsequent show-cause notices for example, 38 documents as duly noted in para 34 of the said show cause notice dated 27.2.2009 issued to M. M. Cylinders and as many as 29 documents relied upon in the show cause notice dated 5.2.07 issued to GDR Cylinders (P) Ltd. Under these circumstances, subsequent show cause notices issued to the appellant-companies cannot be treated as based on identical facts or on identical evidences as in the case of first set of show cause notices.
10.4 As already noted, these are cases whereas the appellant-companies have shown drastically reduced assessable values even when there was steep increases in the cost of HR sheets, the main raw material. While retaining the composite sale price fixed, they have systematically and steeply enhanced the amount of freight charges so that the assessable values were reduced. The department has undertaken painstaking investigation even after the issue of first set of show-cause notices, to unearth the various dimensions of the manipulations undertaken by the appellant-companies. Therefore, extended period of limitation have rightly been invoked in the subsequent set of show cause notices issued to the appellant-companies.
10.5 In the case of MM. Cylinders (P) Ltd, it has been claimed that audit has taken place during July-August 2004 and a letter was issued by Superintendent of Central Excise, vide O.C. No. 425 of 2004 dated 6.8.2004. When investigations were going on till December 2006, no claim has been made on behalf of the appellant, that any such communication has been issued by the jurisdiction Supdt. Even in the reply to the show-cause notice, it has not been claimed that such a communication has been received from the Superintendent of Central Excise and that the appellant-company has given any reply to the said communication. Under these circumstances, the claim before the Tribunal that there was such a communication by the Superintendent to contend that the department was aware of the fact that appellant was using the services of SMT for transportation of goods and the freight charges paid to SMT were claimed as abatement cannot be appreciated. Even otherwise, it is not the case of the appellant company that the department was made aware of the facts like disproportionately inflating the freight, reducing the assessable value even when the cost of inputs have gone up steeply. The mere fact that the jurisdictional Superintendent of Central Excise might be aware that the SMT has been used for transport of goods and freight was claimed as abatement may not lead to any conclusion to say that the department was aware of intricate manipulation by the appellant company.
Penalties 11.1 The appellant-companies have clearly indulged in deliberately inflating the freight charges using SMT, the transporter, and consequently reducing the assessable value with intention to evade payment of duty. Therefore penalties under section 11AC on them are justified 11.2 As correctly held by the Commissioner, Shri M Murgaanandam, Managing Director and Shri R. Ravi Verma, Director have played direct roles in using the transport concern, SMT, for inflating the freight charges and reducing the assessable value of goods sold by the appellant-companies and, therefore, liable to penalties under Rule 26 of the Central Excise Rules, 2002. However, taking the entire facts and circumstances of the cases into account, we are of the view that some leniency can be shown on quantum of penalties imposed on them.
11.3 SMT has knowingly involved in abetting the appellant-companies to inflate the freight charges (and substantial amounts of freight charges were not even received) and thus helped the appellant-companies to reduce the assessable value. In view of above, we are of the view that the charges of abetment by SMT is proved that they are also rightly held liable for penalty. However, taking the entire facts and circumstances of the case into account some leniency can be shown on the quantum of penalty imposed on them.
11.4 However, there is no specific and significant role warranting penalties on Shri M.P Krishnamachari, General manager, Shri M Ramanathan, Despatch In-charge and Shri K. Subramaniam, Chartered Accountant. They deserve to be set aside.
11.5 The penalties imposed on Shri Muthuramalingam, partner of SMT also deserve to be set aside in view of penalties being sustained on SMT, the partnership firm. The facts and circumstances of the case, in our view, do not justify separate penalties on the partner in addition to penalties on the firm.
12. In view of the above,
(a) Appeal of M.M. Cylinders (P) Ltd. (E/885/2008) and appeal of GDR Cylinders (P) Ltd. (E/878/2008) are rejected.
(b) Appeals of Sri Mehala Transport (E/876/2008 & E/883/2008) are partly allowed by reducing the penalties of Rs. 4,00,000/- in each case to Rs. 1,00,000/- in each case.
(c) Appeals of Shri M. Muruganandam, Managing Director of M.M. Cylinders (P) Ltd. and GDR Cylinders (P) Ltd. (E/888/2008 & E/880/2008) are partly allowed by reducing the penalty of Rs. 6,00,000/- in each case to Rs. 1,00,000/- in each case.
(d) Appeals of Shri Ravi Verma, Director of M.M. Cylinders (P) Ltd. and GDR Cylinders (P) Ltd. (E/889/2008 & E/879/2008) are partly allowed by reducing the penalty of from Rs. 1,00,000/- in each case to Rs. 50,000/- in each case.
(e) Appeals of Shri Ramanathan, Despatch In-charge of M.M. Cylinders (P) Ltd. and GDR Cylinders (P) Ltd. (E/886/2008 & E/881/2008); appeals of Shri Krishnamachari, General Manager of M.M. Cylinders (P) Ltd and GDR Cylinders (P) Ltd. (E/887/2008 & E/882/2008); appeals of Shri Muthuramlingam, Partner of Sri Mehala Transport (E/877/2008 & E/884/2008); and appeal of Shri K. Subramaniam (E/890/2008) are allowed.
(Pronounced in the open court on ..) (S. S. Kang) Vice President (M. Veeraiyan) Member (Technical) /vc/