Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise, ... vs M/S. Mahindra & Mahindra Ltd on 2 June, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. II APPEAL NO. E/788/10, E/789/10 E/CO/22/10 (Arising out of Orders-in- Appeal Nos. VSK/20/MV/2010 dtd. 18/2/2010 and VSK/22/MV/2010 dated 18/2/2010 passed by the Commissioner(Appeals) Central Excise, Mumbai Zone-1] For approval and signature: Honble Mr Ramesh Nair, 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 : seen
of the Order?
4. Whether Order is to be circulated to the Departmental: Yes
authorities?
=======================================================
Commissioner of Central Excise, Mumbai-V.
:
Appellants
VS
M/s. Mahindra & Mahindra Ltd.
:
Respondent
Appearance
Shri. Ashutosh Nath, Asstt. Commissioner(A.R.) for the Appellants
Shri. Sachin Chitnis, Advocate for the Respondent
CORAM:
Honble Mr. Ramesh Nair, Member (Judicial)
Date of hearing: 2/6/2015
Date of decision: 2/6/2015
ORDER NO.
Per : Ramesh Nair
These two appeals of the Revenue directed against Orders-in- Appeal Nos. VSK/20/MV/2010 dtd. 18/2/2010 and VSK/22/MV/2010 dated 18/2/2010 passed by the Commissioner(Appeals) Central Excise, Mumbai Zone-1, wherein Ld. Commissioner has set aside the penalties imposed under Section 11AC.
2. The fact of the case is that during the period from November, 2005 to March, 2006 the appellant defaced fully manufactured goods such motor vehicles part falling under Chapter heading 87089000 of CTA, 1984 valued at Rs. 10,99,408/- within the factory premises as some were damaged during the flood of 26/7/2005. The scrap generated by such defacement was cleared on payment of duty. The department was of view that remission of duty was not granted on the finished goods, duty was payable therefore show cause notices were issued, wherein the demand of Cenvat Credit of Rs. 1,79,423/- and 16,82,222/- respectively proposed. In the order-in-Original, demand of duty, equal amount of penalty and interest was confirmed. Aggrieved by both the said orders-in-original Nos. 89/27/DC/MLD/08 dated 30/4/2008 and 41/07 /V/ 2008 /JC/ KNP dated 1/4/2008, the appellant filed appeal before the Commissioner(Appeals), who on consideration of the matter of remission of duty due to the damaged inputs by the flood is subjudice before the Tribunal therefore he refrained from passing any decision on the duty amount as same will be decided in accordance with the decision on remission by the Tribunal. However Ld. Commissioner(Appeals) passed the order only in respect of penalty and according to the impugned order he dropped the penalty on the ground that adjudicating authority has failed to provide any evidence that inputs were clandestinely removed, when the fact that loss on account of natural disaster which is not disputed. Aggrieved by the said impugned order the Revenue is before me only for imposition of penalty.
4. Shri Ashutosh Nath, Ld. Asstt. Commissioner (A.R.) appearing on behalf of the Revenue submits that respondent has not informed the department regarding the loss due to the flood and they have suo moto cleared the damaged input as scrap. In view of this fact penalty is rightly imposable and the adjudicating authority is correct in imposition of penalty. Shri. Nath (A.R.) placed reliance on the judgment in the case of Lear Automotive India Pvt. Ltd. Vs. Commr. of C. Ex. Nashik [2012(286) E.L.T. 558(Tri- Mumbai)].
5. On the other hand, Shri. Sachin Chitnis, Ld. Counsel for the respondent submits that Ld. Commissioner(Appeals) dropped penalty on the ground that loss due to flood is beyond the control of the respondent and it was a natural disaster in Mumbai which is well known to the every citizen of country. Loss of the goods in the flood cannot be construed as clandestine removal and no malafide can be alleged on the respondent, therefore Ld. Commissioner(Appeals) considering this undisputed aspect, dropped the penalty which deserves to be maintained. He further submits that the matter of remission of duty is still pending before the Tribunal, therefore in overall fact and circumstances of the case Ld. Commissioners order must be upheld and he prayed for the dismissal of the appeals of the Revenue. He placed reliance on the following judgment.
(a) Varun Coatings Vs. Commissioner of Central Excise, Thane-II[2014(306) ELT 643(Tri. Mumbai)]
(b) Mira Chemicals Vs. Commissioner of Central Excise, Surat-II[2009(234) ELT 328(Tri- Ahmd.)].
5. I have carefully considered the submissions made by both sides and perused the record.
6. I find that Ld. Commissioner dropped the penalty on the ground that the goods have lost in natural disaster i.e. flood and it is not the case of clandestine removal. The relevant finding of the Ld. Commissioner (Appeals) is reproduced below:
10. I have gone through the facts of the case including the oral and written submissions made by the appellant. I find that this is a case where finished goods were destroyed/damaged by the floods. Some of the damaged finished goods were defaced and cleared as scrap on payment of duty. I find that the appellants had applied for remission of duty in terms of Rule 21 of Central Excise Rules which was rejected and clarified that the matter was pending in appeal before the Tribunal. In terms of Rule 21 of the Central Excises Rules, 20002, the powers of remission are vested with the Commissioner and it would therefore would not be appropriate for me to pronounce a decision, especially as the matter is pending before the said remission case, I am of the view that under the given facts and circumstances of the case, the imposition of equivalent penalty under Section 11AC of Central Excise Act, 1944, was not warranted.
11. In this case of the finished products were defaced and the resultant scrap was cleared on payment of duty. The original adjudicating authority has failed to establish in his order that there was any intent to evade duty as required in terms of the Honble Supreme Courts decision in the case of Rajasthan Spinning and Weaving Mills Ltd. Vs. CCE Jaipur reported in 2003(152) ELT 232 (SC)]. I, therefore, find no merit in imposition of mandatory penalty especially in the background of damage caused by floods which is not disputed.
12. I, therefore, find merit in the submission of the original adjudicating authority that the imposition of penalty was not warranted. Therefore, while not pronouncing any decision on the duty demand, I set aside the order to impose the penalty and therefore, pass the following order.
13. I set aside the penalty imposed by the original adjudicating authority. Accordingly the order of the original adjudicating authority is modified.
From the above findings of the Ld. Commissioner(Appeals), I find that it is not the case of clandestine removal nor any act on the part of the respondent to defraud the department with intension to evade payment of duty. The goods on which demand was confirmed has not been cleared clandestinely whereas same has been admittedly destroyed in the flood which was beyond the control of the respondent. It is kept in the mind that without any intension of the respondent they have already suffered huge loss because of natural disaster therefore it will be very unfair to ask for penalty on the respondent. In view of my above discussion, I am of the view that the orders of the Ld. Commissioners (Appeals) are just and legal and I do not fine any infirmity therein. I therefore uphold the orders of the Commissioner (Appeals) and dismiss revenues appeals. CO filed by the respondent is also disposed of accordingly.
(Operative part pronounced in court) Ramesh Nair Member (Judicial) sk 6