Custom, Excise & Service Tax Tribunal
M/S Kuber Tobacco Products Pvt. Ltd vs Cce, Delhi I on 20 March, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. III DATE OF HEARING : 20/03/2014. DATE OF DECISION : 20/03/2014. Excise Appeal Nos. 1363-1364 of 2007 (SM) [Arising out of the Order-in-Appeal No. 33-34/CE/DLH/2007 dated 04/04/2007 passed by The Commissioner (Appeals), Central Excise, New Delhi.] For Approval and signature : Honble Ms. Archana Wadhwa, 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 would 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 : Department Authorities? M/s Kuber Tobacco Products Pvt. Ltd. ] Appellants Shri R.P. Sharma, Manager ] Versus CCE, Delhi I Respondent
Appearance Shri Manish Pushkarna, Advocate for the appellants.
Shri M.S. Negi, Authorized Representative (DR) for the Respondent.
CORAM : Honble Ms. Archana Wadhwa, Member (Judicial) Final Order No. 51271-51272/2014 Dated : 20/03/2014 Per. Archana Wadhwa :-
Both the appeals are being disposed of by a common order, as they arise out of the same impugned orders by which the lower authorities have confirmed the demand of duty of Rs. 14,00,100/- against M/s Kuber Tobacco Products Pvt. Ltd. alongwith imposition of penalty of identical amount. In addition, penalty of Rs. 50,000/- stand imposed on the second appellant Shri R.P. Sharma, Manager of M/s Kuber Tobacco Products Pvt. Ltd. in terms of the provisions of Rule 26 of the Central Excise Rules.
2. After hearing both the sides duly represented by Shri Manish Pushkarna, Advocate the learned Counsel for the appellant and Shri M.S. Negi, learned DR for the respondent, I find that M/s Kuber Tobacco Products Pvt. Ltd. are engaged in the manufacture of gutkha and pan masala. Their factory was visited by the Central Excise officers on 18/10/03, who conducted various checks and verifications. Certain excesses and shortages were detected, which are not under challenge in the present appeal.
3. In addition, the Revenue officers recovered three loose papers showing details of cash sales of gutkha and pan masala pertaining to the months of July, August and September 2003. The appellant admitted that the entries made in the said loose papers relate to the clandestine clearance of their final product. Accordingly, they debited the duty on 28/12/03.
4. On the above basis proceedings were initiated, which culminated into an order passed by the original Adjudicating Authority. Apart from confirming the demand, he also imposed penalty of identical amount under Section 11AC of the Central Excise Act, 1944 on the manufacturing unit. Penalty of Rs. 50,000/- was imposed upon the Manager. The original Adjudicating Authority, extended the option to the appellant to deposit the entire duty and interest alongwith 25% of penalty within a period of 30 days of receipt of the order, subject to which, the penalty shall stand reduced to 25% of the same.
5. However, the appellant did not exercise the said option and filed an appeal before Commissioner (Appeals), who upheld the impugned order of the Joint Commissioner of Central Excise.
6. Learned advocate appearing for the appellant is not disputing confirming of demand of duty on the allegation of clandestine removal. His only prayer is to reduce the penalty to 25% of the duty amount in as much as they have already deposited the duty and interest, immediately after the visit of the officers. He also prays for setting aside penalty of Rs. 50,000/- on the Manager, in as much as there is no evidence on record indicating that he was the one associated with the clandestine clearances. For the above propositions, learned advocate relies upon the Honble Punjab & Haryana High Court decision in the case of CCE vs. Gowardhan Knitting Works reported in 2010 (260) E.L.T. 77 (P&H).
7. Countering the arguments, learned DR appearing for the Revenue submits that the said decision of Honble Punjab & Haryana High Court is not applicable to the facts of this case, in as much as there is nothing in the said decision to reveal that the original Adjudicating Authority had given option to the assessee to pay the duty, interest and 25% of penalty within a period of 30 days. It is only when such an option was not extended by the original Adjudicating Authority, various courts have held that the same can be extended by the higher appellate forum. In as much as in the present case the appellant was given the said option, the appellants prayer cannot be accepted at the second appeal stage.
As regards penalty on the Manager, he submits that he was the person looking after day-to-day affairs of the company and as such imposition of penalty upon him is justified.
8. After carefully considering the submissions made by both the sides, I confirm demand of duty of Rs. 14,00,100/- as not contested. As regards, penalty, I find that the allegations against the appellant is that of clandestine manufacture and clearance of their final product. In terms of the provisions of Section 11AC and in terms of the law declared by the Honble Supreme Court in the case of Union of India vs. Dharamendra Textile Processors reported in 2008 (231) E.L.T. 3 (S.C.), the authorities have no option to impose penalty lesser than equal to 100% of duty evaded. As such, the penalties required to be imposed upon the appellant in terms of Section 11AC of the Act, is 100% of duty amount.
9. However, proviso to Section 11AC gives an option to the assessee to pay the entire duty amount alongwith interest and 25% of the penalty within a period of 30 days from the passing of the order-in-original, in which case, the penalty shall stand reduced to 25%. Where such an option has not been extended to the assessees by the original Adjudicating Authority, courts have taken a view that such an option can be extended at the time of appeal stage. However, in the present case, I find that the Joint Commissioner, while adjudicating the show cause notice has, in clear terms, extended the said option to the appellant, who have chosen not to avail the same. Once such option was given to the assessee, who have failed to exercise the same, the reduction of penalty at the second appellate stage would neither be justified nor in accordance with the provisions of law. The entire idea of depositing the dues alongwith 25% of penalty within a period of 30 days from the passing of the order by the original Adjudicating Authority gets defeated if the appellant who has chosen to ignore such an option on that particular point of time is extended the same after a gap of period, at the appeal stage. As such, I find no merits in the prayer of the learned advocate to reduce the penalty to 25%. Accordingly the appeal filed by M/s Kuber Tobacco Products Pvt. Ltd. is rejected.
10. As regards penalty of Rs. 50,000/- on Shri R.P. Sharma, the Manger of the company. I find that there is no direct evidence on record indicating his involvement in the clandestine activities. He was only an employee of the company and in the absence of any evidence to implicate him, I, by extending the benefit of doubt to him set aside the penalty of Rs. 50,000/- imposed upon on him. Both the appeals are disposed of in above manner.
(Dictated and pronounced in open court) (Archana Wadhwa) Member (Judicial) PK ??
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