Customs, Excise and Gold Tribunal - Mumbai
Vinay Kumar Baid, Vinay Enterprises, ... vs Commissioner Of Central Excise And ... on 10 September, 2003
Equivalent citations: 2004(164)ELT33(TRI-MUMBAI)
ORDER Gowri Shankar, Member (T)
1. Uniflex Cable Ltd. was a manufacturer of insulated electric wire and cable and J. Prakash Jain, manager of this assessee. Vinay Enterprises, of which Vinay Kumar Baid was the proprietor, and Maganbhai H. Dodia was the manager was engaged in the cutting of shorter length the galvanised wire that Uniflex Cables Ltd. received as raw material. A visit by the officers to the factory of Uniflex Cables Ltd. and Vinay Enterprises showed that there was a shortage in the factory of the former of about 89000 kg. of galvanised wire and 12552 kg. of galvanised strips both inputs and the duty paid on which had been taken as modvat credit. The assessee's explanation was that the goods had been sent for cutting to shorter length to Vinay Enterprises. Verification of the stock at Vinay Enterprises showed the presence there of this quantities of galvanised iron wires and 11,075 kg. of galvanised strips resulting in the shortage of the latter of 477 kg. of strips (wrongly shown in the notice as 677 kg.). Notice was issued to the two firms and its employees and partner as specified above. The quantity of goods lying in Vinay Enterprises was seized since no permission for sending the inputs for processing as provided in Rule 57F(3) had been obtained by Uniflex Cables Ltd.. Duty was also demanded under Rule 9 on the seized goods. Modvat credit was also proposed to be denied on the quantity of strips found short. Adjudicating on the notice, the Asst. Commissioner confirmed the denial of the modvat credit of Rs. 4134/-, demand for duty of Rs. 2,72,377/- on the seized goods and imposed penalties. He ordered confiscation of the seized material appropriating bank guarantee of Rs. 3.50 lakhs that had been executed and the goods were provisionally cleared. On appeal from this order, the Commissioner (Appeals) set aside the demand for duty and on the seized goods and reduced the penalties and redemption fine to the amounts which are as follows.
Redemption fine - Rs. 2 lakhs Penalty on Uniflex Cables Ltd. - Rs. 1.5 lakhs Vinay Enterprises - Rs. 1 lakh J. Prasad Jain and Vinay Kurriar Baid - Rs. 75,000/- each Maganlal H. Dodia - Rs. 50,000/-.
Hence these appeals.
2. The contention of the common representative of the appellant is only that there was no mala fide on the part of the assessee or two firms and failure to obtain permission under Rule 57F(3) was procedural. He cites the judgment of Hindustan Steel v. Stale of Orissa 1978 ELT J159 in support.
3. As the departmental representative points out this does not appear to be a simple case of failure to obtain permission in terms of the procedure prescribe under Rule 57F(3). The inputs in question did not even enter the premises of Uniflex Cables Ltd. being sent directly to Vinay Enterprises. The representative of the former does not deny that no accounts were therefore kept of the goods which were sent to Vinay Enterprises. The contention that it was under the impression that the process at Vinay Enterprises did not amount to manufacture and thus the provision of Rule 57F would not apply is entirely unacceptable. The rule does not refer to it being applicable to in case of only manufacture. It is in fact this rule which is relied upon even when the inputs did not reach the appellant directly. If Uniflex Cables Ltd. chose to rely upon 57F for taking credit it should have been responsible enough to ask for permission in terms of that rule. The reliance of the decision of the Tribunal in 1990 (46) ELT 385 is not very appropriate. The ratio of the decision is that credit should not be denied in such cases as is already been applied since credit had not been denied except in respect of inputs found short. However in principle, I find nothing wrong with the order of the Commissioner. The fact that 477 kgs. of the inputs were missing itself underlines the contention of his conclusion, I therefore find no justification for reduction of penalty on Uniflex Cables Ltd.. However, the penalty on its two employees, about whom it is not alleged that they gained personally deserve reduction. I therefore reduce the penalty on J. Prasad Jain from Rs. 75000/- to 35,000/- on Maganlal H. Dodia from Rs. 50,000 to 25,000/-. I set aside the penalty on Vinay Kumar Baid since penalty cannot he imposed on the firm and its proprietor. I reduce the penalty imposed on Vinay Enterprises from Rs. 1 lakh to Rs. 50,000/- and fine for redemption of goods from Rs. 2 lakhs to Rs. 1 lakh.
4. Appeal E/652/98 allowed. Appeal E/655/98 dismissed. Other appeals allowed in part.