Customs, Excise and Gold Tribunal - Delhi
Cce vs Surya Ispat Udyog on 24 September, 2007
Equivalent citations: 2008(126)ECC204, 2008(152)ECR204(TRI.-DELHI)
ORDER P.K. Das, Member (J)
1. Revenue filed this appeal against the order of the Commissioner (Appeals) whereby the Commissioner (Appeals) set aside the penalty of Rs. 50,000/- imposed on the respondent.
2. The relevant facts of the case, in brief, are that M/s. Monga Brothers Limited, Ludhiana (in short "the manufacturer) were engaged in the manufacture of Iron & Steel Ingots and availing Cenvat Credit on the inputs. Show cause notice dated 22.7.2003 was issued by the jurisdictional Deputy Commissioner of Central Excise of the manufacturer, alleging that the manufacturer availed irregular Cenvat credit amounting to Rs. 1,03,160/- on the basis of the fake invoices issued by the respondent, sold through registered dealer M/s. V.K. Aggarwal & Sons. The adjudicating authority disallowed the credit of Rs. 1,03,360/- which was deposited by the manufacturer at the time of detection and a penalty of 25% of the duty was imposed on them. He also imposed penalty of Rs. 50,000/- each on the respondent and M/s. V.K. Aggarwal & Sons under Rule 26 of the Central Excise Rules, 1944 The Commissioner (Appeals) set aside the penalty imposed on the respondent as well as the registered dealer on the ground that the Deputy Commissioner of Central Excise, Ludhiana has no jurisdiction to impose penalty on the respondent whose factory and the registered dealer's office are situated at Mandi Govindgarh. The next finding of the Commissioner (Appeals) is that penalty under Rule 26 of the Central Excise Rules, 2002, is imposable only on a person and not on the firm.
3. The learned Jt. C.D.R. on behalf of the Revenue placed relevant portion of the adjudication Manual. She submits that Monga Brothers Limited availed irregular credit which is within the jurisdiction of the Deputy Commissioner of Central Excise, Ludhiana. Therefore, the Deputy Commissioner of Central Excise, Ludhiana rightly imposed penalty on the respondent in connection with the irregular availment of the credit by Monga Brothers Ltd. She also submits that the larger Bench of this Tribunal in the case of Gopal Industries Ltd. v. CCE, Indore 2007 (81) RLT 572 (CESTAT-LB) held that partnership firm is not different or distinct legal entity or personality from its partners which is applicable in the case of proprietorship firm, as in this case.
4. The learned advocate on behalf of the respondent submits that the case proceeding was initiated on the allegation that the respondents issued fake invoices whose factory is situated at Mandi Govindgarh and, therefore, penalty can be imposed by the jurisdictional Deputy Commissioner of Mandi Govindgarh. He submits that the Commissioner (Appeals) rightly held that penalty cannot be imposed on the firm under Rule 26 of Central Excise Rules, 2002 as held by this Tribunal. He further submits that Rule 26 cannot be invoked on any person who issued invoices for availment of Cenvat Credit. It is his contention that imposition of penalty in such a situation has been incorporated under Sub-rule (2) of Rule 26 of the Central Excise Rules, 2002 by inserting notification No. 8/2007 dated 1.3.2007. He further submits that this Tribunal in the case of CCE, Chandigarh v. Ashish Gupta reported in 2007 (214) ELT 339 (Tri.-Del.) held that penalty under Rule 209A of erstwhile Central Excise Rules, 1944 (Rule 26 of the Central Excise Rules, 2002) cannot be imposed on the ground that the person had facilitated evasion of duty by issuing the fake invoices in question.
5. After hearing both sides and on perusal of the record, it is seen that the Commissioner (Appeals) held that imposition of penalty upon the respondent is extra jurisdictional. The relevant portion of para 55 of Adjudication Manual as placed by the learned Jt. C.D.R. is reproduced below:
Competent authority for Adjudication of an offence committed in one Collectorate but Seizure of Goods made in another Collectorate.- (i) If excisable goods are dispatched from one Collectorate to another and it is discovered at the place of destination that the goods were dispatched by the consignor in contravention of certain provisions of the Central Excise Rules, 1944 which rendered such goods liable to seizure, it is the officer in whose jurisdiction the offence was committed (place of removal in this context) who is competent to adjudicate the cases. The chief criterion to determine jurisdiction in Central Excise cases is thus the place where the offence is committed.
(ii) In respect of Customs cases however, the principle to be applied in respect of seizure and adjudication is not the same as stated in the preceding sub-paragraph. Section 110 of the Customs Act gives power to the proper officer to seize any goods if he has reason to believe that such goods are liable to confiscation under the Act. There is no reference in this Section to the place at which such seizure can be effected. As such the seizure can be effected at any place and the case adjudicated by the competent officer under whose jurisdiction the goods were seized.
6. It transpires from the above paragraph that chief criterion to determine jurisdiction is the place where the offence is committed. In the present case, it is seen from the record that the offence was committed by M/s. Monga Brothers Limited, who had availed irregular credit on the basis of the fake invoices, within the jurisdiction of the Deputy Commissioner of Central Excise, Ludhiana. The Deputy Commissioner of Central Excise, Ludhaina rightly adjudicated the matter and imposed penalty upon the respondent. Therefore, the finding of the Commissioner (Appeals) that imposition of penalty upon the respondent under Rule 26 is extra jurisdictional, is not sustainable.
7. It is well settled that partnership firm and the partners are not separate. In this case, the penalty imposed on the partnership firm instead of the partners is well within Rule 26 of the Central Excise Rules, 2002. Therefore, the findings of the Commissioner (Appeals) in this regard are also not sustainable. I find that the Commissioner (appeals) had not given any finding on merit. Therefore, I set aside the impugned order and remand back matter to the Commissioner (Appeals) to decide it on merits. The learned advocate is at liberty to take all the points as agitated here on merits before the Commissioner (Appeals).
The appeal is allowed by way of remand.
(Dictated and pronounced in open court)