Custom, Excise & Service Tax Tribunal
Blue Star Ltd vs Commissioner Of Central Excise on 28 May, 2014
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI COURT No. II APPEAL No.E/3289 & 3290/04 & E/3151/05 (Arising out of Order-in-Original No.05/KKS/2004-2005 dated 13/08/2004 passed by Commissioner of Central Excise, Mumbai) For approval and signature: Honble Mr. P.R. Chandrasekharan, Member (Technical) Honble Mr. Anil Choudhary, 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? ========================================
Blue Star Ltd., H.M. Jhangiani Appellant Vs. Commissioner of Central Excise, Respondent Mumbai Commissioner of Central Excise, Appellant Mumbai Vs Blue Star Ltd., H.M. Jhangiani Respondent Appearance:
Shri.S.P.Sheth, Advocate for appellant Shri.Navneet, Addl. Comm. (AR), for respondent CORAM:
Honble Mr. P.R.Chandrasekharan, Member (Technical) Honble Mr.Anil Choudhary, Member (Judicial) Date of Hearing : 28/05/2014 Date of Decision : 28/05/2014 ORDER NO Per: P.R.Chandrasekharan
1. Both the Revenue and the appellants, M/s.Blue Star Ltd. and Shri H.M.Jhangiani are in appeal against Order-in-Original No.05/KKS/2004-2005 dated 13/08/2004 passed by Commissioner of Central Excise, Mumbai.
2. Vide the impugned order, the learned adjudicating authority has confirmed a duty demand of Rs.9,61,703.42 against the appellant, M/s.Blue Star Ltd. and has imposed an equivalent amount of penalty under Rule 173Q apart from a penalty of Rs.1.00 lakh on Shri H.M. Jhangiani, Executive Director of the appellant firm under Rule 209A of the erstwhile Central Excise Rules, 1944.
3. The learned Counsel for the appellant submits that they are not disputing the duty liability confirmed in the impugned order, which they have since paid. They are only disputing the penalties imposed on the appellant and its Executive Director. It is their contention that the appellants had been filing price lists based on provisional costs and the price lists were also approved provisionally. Subsequently on finalization of accounts, the correct data is taken into account and the differential duty liability is discharged on the basis of the revised data. In the present case, the data furnished by the appellant in respect of the price declarations were examined by the department with the help of Assistant Director (Costs), who made certain modifications in the cost data taken by the appellant. These pertain to the material cost based on purchase bills, labour cost taken from the pay roll of the company, overhead costs from the balance sheets of the company for the respective years and profit margin. Based on this, the Assistant Director (Costs) came to the conclusion that there was a short payment of duty to the extent of Rs.19,61,703.42. The said report of the Assistant Director (Costs) was accepted by the adjudicating authority and has been now confirmed. Inasmuch as the assessments were provisional, the question of imposing any penalty at the time of finalization would not arise at all. Reliance is placed on the decision of this Tribunal in the case of Godrej Foods Ltd. Vs. CCE, Indore 2000 (115) ELT 403 (Tribunal), Kevin Infotech (P) Ltd. Vs. CC (Port) Kolkata 2007 (216) ELT 435 (Tri-Kolkata) and the decision of the Honble High Court of Gujarat in he case of Kotak Mahindra Bank Ltd., Vs. District Magistrate 2011 (267) ELT 614 (Guj). In these decisions it has been held that if the assessments are provisional and if there is a short payment during the period of provisional assessment, which are confirmed at the time of final assessment, there is no need to impose any fine or penalty. In the Kotak Mahindra Bank Ltd. case, it was held that if proceedings are initiated after the legal provisions were omitted or repealed, then such proceedings cannot be sustained. In the present case, penalty is sought to be imposed under the provisions of Rule 173Q read with Section 11AC of the Central Excise Act, 1944. Since Rule 173Q has been omitted/repealed, the question of imposition of penalty under a non-existent provision cannot be sustained in law.
4. The learned Additional Commissioner (AR) appearing for the Revenue on the other hand submits that there is no evidence led by the appellant to show that the assessments were provisional and therefore, the impugned demands are sustainable and penalties are rightly imposable. In the appeal filed by the Revenue, the only ground urged is that the Commissioner has not considered the proposal relating to confiscation of land and building and confiscation of the goods under Rule 173Q (2), which were proposed in the show-cause notice and therefore, orders as deemed fit be passed in respect of the proposals made in the show-cause notice.
5. We have considered the submissions made by both the sides.
5.1 Both the Revenue and the appellants do not dispute the duty demands confirmed by the adjudicating authority in the impugned order. The only question is with regard to the imposition of penalty. From the records, it is seen that the appellant had claimed that the assessments were provisional as the price lists had not been finally approved and the assessments had not been completed. As per the Revenue, in a writ petition filed before the Honble High Court, the appellant had stated that all the price lists filed by them upto 31/07/1987 were finally approved and therefore, it cannot be held that the assessments were provisional. Only a few classification lists were provisionally approved which have been subsequently approved finally. It is not understood, if the assessments had already been finalized where was the need for the Assistant Director (Costs) to examine the records of the assessee and verify the costs. It is also in record that the assessee had not submitted the actual costs of material, labour costs, overheads, etc. during the adjudication proceedings which was done earlier. In the absence of actual data, it is not understandable how the department could have finalized the assessments. Therefore, there is a merit in the contention of the appellant that during the material period, the assessments were provisional. On the other hand, if the assessments had been finalized, a copy of the final assessment order would be available with the department for the impugned period. Since at the relevant time the assessments had to be done by the Range Officer. No such evidence is forthcoming from the Revenue in this regard. In the absence of any such evidence, the benefit of doubt has to be given to the assessee. Therefore, imposition of penalty when the assessments were provisional at the time of finalization based on the verification done by the Assistant Director (Costs) is clearly unsustainable as held by this Tribunal in the case of Godrej Foods Ltd. and Kevin Infotech (P) Ltd. cases cited supra. As regards the confiscation of land and building and the goods cleared if the assessments were provisional, the question of confiscation would not arise at all.
5.2 In view of the legal and factual position as discussed above, we are of the considered view that the appeal filed by the Revenue is devoid of merits. As regards the appeal of the appellant, the demand confirmed in the impugned order is upheld as the assessment is not disputed. However,the penalty imposed on the appellant is set aside. Thus, the appeal of the appellant is partly allowed.
(Operative part of the order pronounced in Court) (Anil Choudhary) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) pj 1 6