Custom, Excise & Service Tax Tribunal
M/S.Madhu Tex Industries Ltd vs Commissioner Of Central Excise, ... on 25 March, 2009
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT No.II Appeal No.E/765 and E/766/2003-Mum (Arising out of Order-in-Appeal No.PKA/490-491/Th-I & II.2002 dated 31.12.2002 passed by the Commissioner of Central Excise (Appeals), Mumbai-III) For approval and signature: Honble Mr.A.K.Srivastava, Member (Technical) Honble Mr.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 Yes 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.Madhu Tex Industries Ltd. Appellants
Shri Manohar R.Punjabi
Vs.
Commissioner of Central Excise, Thane-I Respondents
Appearance:
Shri M.H.Patil, Advocate for the Appellants
Shri H.B.Negi, SDR for the Respondents
CORAM:
Honble Mr.A.K.Srivastava, Member (Technical)
Honble Mr.Ashok Jindal, Member (Judicial)
Date of hearing: 25.03.2009
Date of decision: 25.03.2009
O R D E R No:..
Per: A.K.Srivastava, Member (Technical)
These appeals have been filed by the appellants against Order-in-Appeal No.PKA/490-491/TH-I & II.2002 dated 31.12.2002 passed by the Commissioner of Central Excise (Appeals), Mumbai-III.
2. The Joint Commissioner, vide Order-in-Original No.56/MK/2001 dated 27.7.2001, has confirmed the duty of Rs.3,57,277.67 under Section 11A(2) of CEA, 1944 r/w Rule 9(2) of CER, 1944 and imposed equal penalty under Section 11AC of CEA, 1944 and Rule 173Q(1) of CER, 1944 alongwith interest under Section 11AB and also denied the deemed credit of Rs.92,525.22. The said Adjudicating Authority has also imposed penalty of Rs.1 lakh on Shri Manohar Ramchandra Punjabi, Director of the appellants. The said Order-in-Original was upheld by the Commissioner (Appeals) vide the impugned order.
3. The relevant facts that arise for consideration are that the appellants M/s.Madhu Tex Industries Ltd., are the job worker, who were doing processing of cotton and man-made fabrics received from merchant-manufacturers/traders. In observance of Central Excise Rules and Procedures, the appellants had filed price declaration declaring the assessable value of the fabrics processed by them. During the course of investigations, the officers of Central Excise noticed that the value of grey fabrics in the purchase bills of merchant-manufacturers/traders was more than the value of the grey fabrics as declared by the appellants. Hence, show cause notice dated 07.12.2000 was issued to the appellants demanding differential duty for the period 1996-97 and 1997-98 and imposition of penalties. The adjudicating authority confirmed the demand and imposed penalties on the appellants under the provisions of Section 11AC of Central Excise Act, 1944, u/r 209A on the Appellant-Director and on the merchant-manufacturers. The job worker and its director are in appeal and the merchant-manufacturers have not filed the appeals.
4. The appellants main ground is that they were not aware of the correct price and they declared the price as was given by the merchant-manufacturers/traders in the grey bills duly signed by them and declarations prepared based there upon and signed by them. It was the submission of the appellants before the Commissioner (Appeals), that at the most there can be an error, but there cannot be any charge of suppression or misdeclaration. The Lower Authorities have not accepted the contention of the appellants and came to the conclusion that the appellants were aware of the undervaluation of the grey fabrics by the merchant-manufacturers and hence, extended period was rightly invoked.
5. The Advocate appearing for the appellants would submit that the appellants were not at all aware of the undervaluation of grey fabrics done by the merchant-manufacturers, which fact gets revealed from the statements of merchant-manufacturers. He took us through the statements of merchant-manufacturers involved in the case of i.e. M/s.Shree Vishnu Fabrics, M/s.Kamal Synthetics, M/s.Megaji & Sons, M/s.Vinodkumar, M/s.Meghajee Textile Mills, M/s.Shree Dadu Tex, M/s.Dayal Fine Fab, M/s.Rinkesh Corporation, M/s.Malco Synthetics, M/s.Manjula Textiles, M/s.Maklene Synthetics, M/s.Kishanlal & Sons, M/s.Jainco Enterprises, M/s.Mahesh International, M/s.Mehual Fabrics and M/s.Manik Synthetics.
The said merchant-manufacturers in their statements, recorded from time to time, have admitted that they took full responsibility on them for gross undervaluation and resultant short payment of central excise duty. Further, Shri Manohar Ramchandra Punjabi in his statement dated 30.5.98 has stated that the assessable value was determined purely on the basis of grey bills supplied by the merchant-manufacturers, and they had to rely on the grey bills supplied by them. They, being job worker, have no source to verify the genuineness of the grey bills supplied by the merchant-manufacturers. The learned Advocate further submitted that both the Adjudicating Authority and the Appellate Authority have mis-read the statements and hence, the finding that the appellants were aware of the undervaluation and also manipulation of grey bills is factually incorrect.
6. The learned SDR claims that the findings of both the Authorities substantiate that the appellants were aware of the undervaluation by the merchant-manufacturers. He further submitted that the merchant-manufacturers gave blank declaration forms and the details were manipulated by the appellants.
7. In the rejoinder, the learned Advocate for the assessee-appellants submitted that the findings of the Authorities below have no basis as the statements of the merchant-manufacturers and the appellants director clearly substantiate that the appellants were not aware and rather merchant-manufacturers have owned the responsibility of the undervaluation of the grey fabrics. It was also shown to the Bench that the blank declarations, duly signed by the merchant-manufacturers and also grey bills showing the value of the grey fabrics signed by the weavers and authenticated by the merchant-manufacturers were handed over to the appellants, who, in compliance with the central excise provisions, have only filled in the value as mentioned in the grey bills, duly signed and certified by the merchant-manufacturers.
8. Considered the submissions from both sides and perused the records. It is undisputed that the appellants had filed price declarations based on the declarations given by the traders/merchant-manufacturers for the relevant period. On subsequent investigations, it was noticed that the prices as declared by the merchant-manufacturers were not correct and hence, the appellants were sought to be saddled with the demand of differential duty. Though on merits, the appellants case is squarely covered against them by the Honble Supreme Court decision in the case of Ujagar Prints, 1989 (39) ELT 493 (SC), we find that the appellants have made out a case in their favour on the point of limitation. The appellants had filed declarations during the relevant period alongwith the declarations as submitted to them by the merchant-manufacturers/traders. The said declarations were accepted by the authorities and are not challenged nor did the authorities direct the appellants to produce further evidence as to the correctness of the declarations of the value made by them. We find that the merchant-manufacturers, in their statements, have clearly admitted that they had undervalued the grey fabrics and they took full responsibility for the same. They also stated that broker takes blank authorization under profroma A and B duly signed to hand over the same to the processor. However, the merchant-manufacturers took full responsibility on them for gross undervaluation and resultant short payment of central excise duty. The appellants only have filled the value appearing in the grey bills, provided by the merchant-manufacturers, which cannot be considered as manipulation.
The above facts have not been disputed by bringing in any contrary evidence by the Revenue. Rather the Lower Authorities have conveniently ignored the factual position and hence, findings have no basis.
9. During the relevant period, the Tribunal in series of judgements has clearly held that for wrong declaration of the value by the supplier, extended period is not available for recovery of the duty from the job workers. In this connection, the following judgements were relied upon by learned Advocate in support.
(i) Nikharka Dyg. & Ptg. -2006 (193) ELT 307 (T-Mum)
(ii) Tribunals Order No.A/942-943/WZB/06/C-II dt.15.05.2006
-Gurera Synthetics Pvt.Ltd.
(iii) Sangam Processors-2000 (122) ELT 45 (T-Del.)
(iv) Beekay Textile Mills -2001 (46) RLT 724 (T-Mum)
(v) Paras Prints Pvt.Ltd. 2000 (120) ELT 662 (T-Mum)
(vi) Khotar Fibres 2005 (192) ELT 529 (T-Mum)
(vii) Bhilwara Processors 2002 (146) ELT 455 (T-LB)
(viii) Vishnu Dyg. & Ptg. Works 2008 (221) ELT 369(T-Mum)
10. The Honble Supreme Court, vide its judgement dated 19.2.2008, in CCE, Mumbai versus Lajya Dyeing & Bleaching [2008 (124) ELT 345 (SC)] has held that for the misdeclaration of the merchant-manufacturers extended period is not invokable in the absence of the findings that the assessee knew or deliberately failed to declare correct cost of grey fabrics and there is no legal requirement for the processors to verify the correctness of the declaration furnished by owners.
11. With the above settled position of law on the issue and facts clearly substantiating that the appellants had no knowledge of the undervaluation of the grey fabrics, demand is clearly barred by limitation. For the said reason, the penalties imposed on the appellants company as well as on its director also do not sustain.
12. We accordingly allow the appeals.
(pronounced in the court)
(Ashok Jindal) (A.K.Srivastava)
Member (Judicial) Member (Technical)
mk
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