Custom, Excise & Service Tax Tribunal
M/S. Tej International Pvt. Ltd vs Cce, Jaipur on 19 February, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
COURT NO. III
Excise Appeal No. 2556, 2573/2007-Cus[SM]
[Arising out of Order-In-Appeal No.165-166 (GRM)/CE/JPR-I/2007 Dated 11.06.07 passed by CCE, Delhi]
For approval and signature:
Honble Ms. Archana Wadhwa, Judicial Member
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Tej International Pvt. Ltd. Appellant
Vs.
CCE, Jaipur Respondents
Appearance:
Ms. Nupur Maheshwari, Advocate for the Appellant Shri B.B. Sharma, AR for the Respondent Coram: Honble Ms. Archana Wadhwa, Judicial Member Date of Hearing: 21.01.2014 Date of Decision: 19.02.2014 FINAL ORDER NO. 50750-50751/2014_ Per Ms. Archana Wadhwa:
The challenge in the present appeal is to imposition of penalty of Rs. 11,16,697/- imposed upon M/s. Tej International Pvt. Ltd., Bhiwadi under Rule 25 of Central Excise Rules as also under Rule 15(1)of Cenvat Credit Rules, 2004. In addition penalty of identical amount stand imposed of Shri Daljeet Singh, Director of M/s. Tej International Pvt. Ltd.
2. Briefly stated facts of the case are that appellants are engaged in the manufacture of footwear falling under sub-heading No. 6401.11 of the schedule to Central Excise Tariff Act, 1985. Appellants are having another factory in the name of M/s. Tej International Pvt. Ltd., 10th 11th KM Stone, Agra Mathura Road, Antoni, Agra (UP). Appellants had decided to shift their Bhiwadi unit to their Agra Unit for the sake of merger. They have closed down manufacturing activities at their Bhiwadi unit on 01.12.2004 and shifted their entire factory located at Bhiwadi alongwith entire machinery, capital goods, inputs and finished goods as lying in their Bhiwadi unit as on 01.12.2004 to their Agra unit.
3. As per the Revenue, the appellants have stock transferred 16530 pairs of footwear involving Central Excise duty of Rs. 10,16,702/- in contravention of the provisions of Rule 4,8 and 11 of the Central Excise Rules, 2002 and liable for penal action under Rule 25 ibid. They had stock transferred 89.100 Kg. of Additive without reversal the credit of Rs. 10,692/- and 6.5 pairs of moulds without reversal the credit of Rs. 89.303/- taken on the same in contravention to Rule 3(5) of the Cenvat Credit Rules, 2004 and are liable for penal action under Rule 15(1) ibid. Moreover, this removal was made vide invoice No. 279 dated 04.12.2004 i.e. before 06.12.2004, the date on which the intimation of shifting of the Bhiwadi unit to Agra on account of merger was given to the department. Thus, they are liable for penal action under Rule 15(1) Cenvat Credit Rules, 2004.
4. The notice issued to the appellant for contravention of the provisions of Cenvat credit Rule and proposing penalties stands adjudicating by the original adjudicating authority. The said order was challenged before Commissioner (Appeals), on the following grounds:-
(i) The entire factory including inputs, capital goods and under processed goods shifted from Bhiwadi to Agra after furnishing due intimation dated 06.12.2004, 10.12.2004 and 16.12.2004 to the officers of Central Excise Division, Agra and Bhiwadi. There is no such provision under the Central Excise Rules, 2002 requiring any prior permission from the department for shifting of unit. Hence, the appellants have not violated any of the provisions of Central Excise Rules, 2002 and Cenvat Credit Rules, 2004. Hence, imposition of penalty is unwarranted and without authority of law.
(ii) In the instant matter the appellants have shifted their factory from one place to other place alongwith entire set up. This is not a case of removal of any goods from the factory, but shifting of entire factory from one place to another place taking reasonable steps and entire goods transferred from one place to other place have been verified by the counterpart of the department. In such a situation referring the provisions of removal of goods from factory is uncalled for, where ownership remained with the same company. Under the Central Excise procedure no such provisions have been laid down with regard to shifting of unit from one place to another place. Hence, in absence of any provisions, the appellants can not be held guilty without any reasons.
(iii) The appellants have not removed any goods from Bhiwadi Unit to Agra Unit clandestinely violating any of the provisions of Central Excise Rules, 2002 with intent to evade payment of duty. Hence, the provisions of rule 25 of Central excise Rules, 2002 are not applicable in the facts and circumstances of the instant matter.
(iv) Rule 3(5) of Cenvat Credit Rules 2004 is applicable where the capital goods on which Cenvat Credit has been taken are removed as such or without being use or installed in such a position the amount of duty equivalent to credit availed is to be paid, but in the instant matter, the capital goods were being used in the manufacture of goods which were transferred from Bhiwadi to Agra unit and the same are being used continuously by the same company as usual. There was no need to pay duty on such capital goods. In this connection, the following citations are relevant:-
(a) Salona Cotspin Ltd. V/s. C.E.E. Salem (2008 (201) ELT-592) Cenvat Used Capital goods They are different from capital goods as such, and on their removal no duty is required to be paid Rule 3(4) of Cenvat Credit Rules, 2001/2002 Rule 3(5) of Cenvat Credit Rules, 2004.
(b) Eicher Tractors V/s. CCE (2005(189) ELT-131)
(v) In the instant matter, violation of any of the provision of Central Excise Rules, 2002 or Cenvat Credit Rules, 2004 with intent to evade payment of duty is absent. All the activities remained well with in the knowledge of the department. Hence, imposition of penalty is illegal.
5. The Commissioner (Appeals) upheld the impugned order, by observing as under:-
6. I have carefully gone through in case records, grounds of appeal and submissions made at the time of personal hearing. The issue before me is whether the appellant had followed the procedure to clear the goods without payment of duty from the factory at Bhiwadi to their factory at Agra and they are liable for penal action or otherwise. The adjudicating authority has alleged that appellant No. 1 has removed the goods from the factory of manufacture to their another unit without following the procedure as under law or any exemption provided under law. On other hand, appellant has contended that their is no need to inform the department prior to shifting of units from one place to another place. In this regard, I hold that, if there is no provision of law for obtaining prior permission for shifting the goods to their another unit located out of the jurisdiction, but they should have intimated to the department so that necessary arrangement could have been made for safeguard of the revenue involved in the goods being shifted.
7. I find that the Appellant No. 1 have acted arbitrarily in a whimsical manner and did not allow the department to take stock of goods which were being shifted to their Agra Unit. Under such a situation, the department could not take necessary steps to safeguard the revenue. The department also could not refer the matter to the counterpart officers at Agra for verifying the identity of the goods shifted to their jurisdiction. Therefore, I am of the view, that Appellant No 1 has rightly been imposed penalty under Rule 25 of the Central Excise Rule 2002 for contravention of Rule 4 and 8 of the Central Excise Rules 2002, and Rule 15 (1) of Cenvat Credit Rules 2004 for contravention of Cenvat Credit Rules 3(5) of the Cenvat Credit Rules 2004.
6. As is seen from the above order of Commissioner (Appeals), has observed that even if there is no provision of law for taking prior permission for shifting the goods to their another unit, they should have intimated to the department so that necessary arrangement could have been made to safeguard the revenue. I have seen the intimation letter filed by the appellant. The first letter was filed on 06.12.2004 itself, clearly stating that they are shifting their factory from Bhiwadi to Agra as they have closed down manufacturing activities at their Bhiwadi Unit. They clarified that the entire quantity of inputs, under-processed goods, finished goods and capital goods will be shifted from thereto their Agra Unit.
7. Second intimation was given to Deputy Commissioner vide letter dated 10.12.2004 where in they gave the total detailed inventory of their final product and intimated shifting of the unit to their Agra Unit.
8. In their subsequent letter dated 16.12.2004 addressed to the Superintendent, further particular above the transfer of the various inputs and capital goods were intimated.
9. As such there is no dispute on record that the appellant filed due intimation with the Revenue for removal of the inputs, finished goods, semi-finished goods and capital goods to their Agra Unit. The only grievance of the revenue is that no prior permission was taken by them. It is not understood that when the intimations were being given, why the revenue did not take action and stopped the appellant from shifting till the permission is granted by them. Further the lower authority have not referred to any provisions of law requiring prior permissions. When the due intimation stand given by the appellant, the subsequent stand of the revenue they should have removed the goods only after due permission, without any reference to any rule, cannot be appreciated. The revenue was free to check the inventory of the goods, even at the time of filing of intimation. In any case, inasmuch as there are no alleged discrepancies, I do not find it to be a case for fit imposition of penalty on the appellant. Accordingly, I set aside both the order and appeals are allowed with consequential relief to the appellants.
(Pronounce in the open Court on 19.02.2014) (Archana Wadhwa) Member (Judicial) Jyoti* ??
??
??
??
6