Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise & St, ... vs M/S. Isher Alloys Pvt. Limited on 2 November, 2017
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH 160 017 COURT NO. I Appeal No. E/880-881/2008-DB Date of Hearing : 13.07.2017 Date of Decision : _________ [Arising out of Order-in-Appeal No. OIA- 16-17/CE/APPL/LDH/2008 dated 16.01.2008 passed by the Commissioner (Appeals) Central Excise & ST, Chandigarh] For approval and signature: Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Commissioner of Central Excise & ST, Ludhiana : Appellant vs. M/s. Isher Alloys Pvt. Limited : Respondent
Shri Pritpal Singh, Director Appearance:
Shri Atul Handa, A.R. for the Appellant(s)- Revenue Shri Sudhir Malhotra, Advocate for the Respondent(s) CORAM:
Honble Mrs. Archana Wadhwa, Member (Judicial) Honble Mr. Devender Singh, Member (Technical) Final Order No. /2017 Interim Order No is 29-30 / 2017 Per : Archana Wadhwa Being aggrieved with the order passed by Commissioner (Appeals) vide which, while upholding the order of clandestine removal, he has extended the benefit of small scale exemption to the respondent and have also set-aside the penalty on the Director, Revenue has filed the present two appeals.
2. After hearing both the sides and on going through the impugned order, it is find that the Commissioner (Appeals) has upheld the allegation of clandestine removal of goods worth Rs. 1,41,27,730/-. However, he has observed that the respondents are entitled to small scale exemption upto a limit of Rs. One Crore during the relevant period, in terms of Notification No. 8/2003-CE and has accordingly directed the respondents to pay duty on the balance amount of Rs. 41,27,730/-.
3. As such, a short question required to be decided in the present appeals of the Revenue is, as to whether the benefit of small scale exemption is required to be extended to the assessee, when the final product stands removed by clandestine manner. Revenue has relied upon the Tribunal decision in the case of B.L. Kapur & Sons vs. CCE, Jallandhar 2014 (177) ELT 948 (Tri. Del.), in support of their plea that in cases of clandestine removal, the benefit of exemption cannot be extended. However, on going through the said decision, we note that there is no ratio of law declared by the Tribunal in the said decision. On the contrary, we find that the issue stands decided by the Tribunal decision in the case Premier Rubber Factory vs. CCE 1990 (47) ELT 125 (Tribunal), laying down that, exemption cannot be denied even if the goods are removed clandestinely. To the same effect is the Tribunal decision in the case of P.R. Industries vs. CCE, Delhi 2016 (344) ELT 234 (Tri. Del.). As such, we find no infirmity in the impugned order of Commissioner (Appeals).
4. As regards penalty on the Director, the appellate authority has set-aside the same on the ground that, since the manufacturing unit is penalised to the full extent, there is no justification for imposing separate penalty on the Director. We find that, admittedly the unit has been penalised and the separate role of the Director has not been justified by the Revenue. In such circumstance, setting aside penalty on the Director, cannot be held to be unjustified.
5. In view of the foregoing, both the appeals filed by Revenue are rejected.
(Order pronounced in the court on _______________) Devender Singh Member (Technical) Archana Wadhwa Member (Judicial) KL PER: DEVENDER SINGH
6. Having gone through the draft order prepared by Ld. Member (Judicial), I write a separate order.
7. While I agree with the Ld. Member (Judicial) on the issue of allowing the benefit of small scale exemption even when there is finding of clandestine removal, on the issue of imposition of penalty on Shri Pritpal Singh, the Director, I am not in agreement with the view expressed by the Ld. Member (Judicial). The adjudicating authority has imposed penalty of Rs.10 lakhs on the Director under Rule 26 of Central Excise Rules, 2002. I find that the charge of clandestine removal without any kind of records and bills against the appellants is clearly proven. Admittedly, the Director of the company, Shri Pritpal Singh was looking after the overall affairs of the company and thus was the man incharge. There are evidences that he was directly involved in the clandestine manufacture and clearance of 1101.705 MT of M.S.Ingots valued at Rs.2,08,00,190/- Shri Subash Chand Sharma, authorized signatory in his statement dated 30.8.2005 stated that purchase of scrap and sale of finished goods was being looked after only by Shri Pritpal Singh, Director and he did the work as assigned by Shri Pritpal Singh to him from time to time. It is also evident from the statement dated 30.1.2006 of Shri Pritpal Singh, director that he was fully controlling the production and various personnel in the factory including the one unknown person, who was claimed to be looking after the works of their unit. It was Shri Pritpal Singh, who provided separate figures vide his letter dated 5.10.2005 and item-wise break-up of electricity consumption in the production.
8. I also find that in the connected seizure case of same appellant, this Tribunal vide Final Order No.56545-56546/13 in appeal No.E/3538 & 3542/2010-Ex (SM) has upheld the penalty on Shri Pritpal Singh, Director for his role in relation to the seizure of M.S.Ingots removed clandestinely on the day of visit to the appellants factory on 29.8.2005, when the proceedings culminating in the present appeal were started.
9. In view of above, it is clear that the clandestine removal has taken place with full knowledge and under the overall supervision of Shri Pritpal Singh, Director. Therefore, I hold that the penalty under Rule 26 is imposable on Shri Pritpal Singh, Director. However, considering the quantum of evasion involved in this case, I am of the view that ends of justice would be met if the penalty imposed on Shri Pritpal Singh, Director is reduced to Rs.5 lakh. Accordingly, the appeal of the Revenue is partly allowed.
(DEVENDER SINGH) MEMBER (TECHNICAL)
10. In view of difference of opinion emerging between the Honble Members on the issue of imposition of penalty on Shri Pritpal Singh, Director, the Registrar is directed to place the matter before the Honble President for nominating the third Member for resolving the following:
DIFFRENCE OF OPINION Whether in the facts and circumstances of this case, a penalty of Rs.5 lakh should be imposed on Shri Pritpal Singh, Director under Rule 26 of Central Excise Rules, 2002 as held by Member (Technical) or Whether no penalty under Rule 26 ibid should be imposed on Shri Pritpal Singh, Director as held by Honble Member (Judicial).
(Devender Singh) (Archana Wadhwa)
Member (Technical) Member (Judicial)
mk
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Appeal No. E/880-881/2008