Custom, Excise & Service Tax Tribunal
4. Whether Order Is To Be Circulated To ... vs M/S Zenith Fibres Ltd on 13 September, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT AHMEDABAD
COURT - I
Appeal No.E/2652/2004-SM
Arising out of: OIA No.Commr.(A)/45/VDR-I/2004, dt.11.06.2004
Passed by: Commissioner of Central Excise & Customs (Appeals), Vadodara-I
For approval and signature:
Mr. H.K. Thakur, Honble Member (Technical)
1. Whether Press Reporters may be allowed to see the No
Order for publication as per Rule 27 of the CESTAT
(Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the .
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether their Lordships wish to see the fair copy of Seen
the order?
4. Whether order is to be circulated to the Departmental Yes
authorities?
Appellant:
M/s Zenith Fibres Ltd.
Respondent:
CCE Vadodara-I Represented by:
For Assessee: Shri Rahul Gajera, Adv.
For Revenue: Shri P.N. Sarvaiya, Astt. Commissioner (A.R.) CORAM:
MR. H.K. THAKUR, HONBLE MEMBER (TECHNICAL) Date of Hearing:13.09.13 Date of Decision:
ORDER No. /WZB/AHD/2013, dt. Per: H.K. Thakur
This appeal is being listed from 16.03.2010 in view of the remand order dt.29.10.2012 passed by Gujarat High Court in Tax Appeal No.2330 of 2010. In Para 6 and 6.1 of this order, Hon'ble High Court has given the following directions to CESTAT to decide the issue afresh by passing an order in accordance with Order dt.23.06.2009 passed by High Court in Tax Appeal No.1275/2006:-
6. However, having considered the total compass of the matter, it was clear from the order of remand passed by this court in Tax Appeal No.1275 of 2006 that the issue was remitted back to the Tribunal and the Tribunal was directed to consider and decide the same in light of the two Apex Court decisions in the case of Dharmendra Textile Processors (supra) and Rajasthan Spinning and Weaving Mills (supra). From the impugned order of the Tribunal, extracted hereinabove, it was noticed at the outset that the Tribunal did not discuss the issue with reference to those decisions of the Apex Court.
6.1 When the Tribunal was specifically directed to consider said decisions by an order of this Court, the Tribunal was duty bound to consider the same and render its decision with reference to and in light of the law laid down by the Apex Court. When a lower Court or quasi-judicial authority of the Tribunal is directed by the High Court to decide a question in a particular manner or with reference to a particular decision, such lower court of authority would be required to decide the issue in that manner only. The cryptic approach, as is reflected from the impugned order, cannot be justified. It is always permissible for the Tribunal to take a particular view and arrive at its own conclusion, however, the order it may pass has to be in conformity with the directions issued by this Court while remanding the matter.
2. The facts of this appeal are that appellant M/s Zenith Fibres Ltd was engaged in the manufacture of Polypropylene Staple Fibres at the relevant time and availed CENVAT Credit facility. On 30.08.2001, the officers of Central Excise visited the factory premises of the appellant, they found shortage of 10210 kgs of fabrics, valued at Rs.8,60,612/-. The duty liability on the shortage was Rs.1,40,898/- out of which appellant paid Rs.1,22,520/- on the date of visit of the officers and Rs.18,378 on 31.08.2001. Afterwards, a show cause notice dt.06.03.2003 was issued to the appellant which culminated into confirmation of demand and an equivalent amount of penalty was also imposed upon the appellant vide Section 11AC of Central Excise Act, 1944. On an appeal before Commissioner (Appeals), the said OIO passed by the adjudicating authority was upheld. Appellant took the case before CESTAT who passed order dt.20.03.2006 and held that since the entire amount of duty was paid before the issue of show cause notice, the penalty and interest was not payable by the appellant. Against the order dt.20.03.2006, Revenue filed Tax Appeal No.1275/2006 before High Court of Gujarat and by order dt.23.06.2009, High Court set aside the order dt.20.03.2006 and remanded the matter to CESTAT for considering the applicability of Section 11AC of the Act in the light of judgment of Apex Court in the case of UoI Vs. Dharmendra Textile Processors [(2008) 13 SCC 368] and in the case of UoI Vs. Rajasthan Spinning & Weaving Mills & Others [(2009) 92 RLT 691 (SC)]. According to remand order, dt.23.06.2009, the case was decided by this Bench as per Order No.A/399/WZB/AHD/2010, dt.29.04.2010 which was again agitated by the Revenue before CESTAT by filing Tax Appeal No.2330 of 2010. It is against second remand dt.29.10.2012 that this appeal was listed.
3. Shri Rahul Gajera, (Adv.) appearing on behalf of the appellant argued that the total amount of Rs.1,40,898/- was paid by the appellant before the issue of show cause notice and no investigation has been made later to establish that there was any clandestine removal of the goods found short in the factory. He made the Bench go through the appellants defence made before the adjudicating authority that shortage pointed by the Revenue could be due to accumulated shortages or in computing physical stock and is not because of clandestine removal of the finished goods. He also read the statement of Shri Shailesh Pandey, General Manager (Operations) and authorized signatory of the appellant, as given in the show cause notice dt.06.03.2003, and argued that appellant has only admitted the shortages and nowhere it has been admitted/accepted that shortages worked out by the Department has also been clandestinely removed without payment of duty. It is his case that such a conclusion has been drawn only on the basis of presumptions/assumptions for imposing penalty under Section 11AC of Central Excise Act, 1944. He relied upon the following case laws to support his claim that admitting shortages does not mean clandestine removal and hence no penalty imposable:-
a) CCE Meerut-I Vs. Silvertone Papers Ltd.
[2013 (287) ELT 478 (Tri-Del) ]
b) CCE Kanpur Vs. Minakshi Castings [2011 (274) ELT 180 (All.)]
c) Galaxy Textiles Vs. CCE Vapi [2011 (263) ELT 604 (Tri-Ahmd) ]
d) Mahavir Polyplast (P) Ltd. Vs. CCE Kanpur [2013 (287) ELT 139 (Tri-Del) ]
4. Shri P.N. Sarvaiya, (A.R.) appearing on behalf of the Revenue argued that once shortages are not satisfactorily explained, it is a clear cut case of clandestine removal of goods and penalty under Section 11AC of Central Excise Act, 1944 has been correctly imposed.
5. Heard both sides, perused the case records and the directions given by Hon'ble Gujarat High Court in their remand orders dt.23.06.2009 in Tax Appeal No.1275 of 2006 and dt.29.10.2012 in Tax appeal No.2330 of 2010. The crux of the remand proceedings is that CESTAT should examine the applicability of Section 11AC of the Central Excise Act, 1944 to the facts and circumstances of the appellants case in the light of Apex Courts order in the case of UoI Vs. Dharmendra Textile Processors (supra) and UoI Vs. Rajasthan Spinning & Weaving Mills & Ors (supra).
5.1 Honble Supreme Court in the case of UoI Vs. Dharmendra Textile Processors [2008 (231) ELT 3 (SC)] in Para 26 & 27 of its order dt.29.09.2008 held that in Union Budget of 1996-1997, Section 11AC of the Act was introduced which made the position clear that there is no scope for discretion and accordingly it can not be sustained that Rules 96 ZQ and 96 ZO have a concept of discretion in built to impose lesser penalty.
5.2 In its further judgment in the case of UoI Vs. Rajasthan Spinning & Weaving Mills [2009 (238) ELT 3 (SC)], Apex Court observed that judgment in the case of Uoi Vs. Dharmendra Textile Processors was not properly understood by the assessees and the Revenue and further gave the following interpretation in Para 23 of the judgment in the case of UoI Vs. Rajasthan Spinning & Weaving Mills (supra):-
23.?The decision in Dharamendra Textile must, therefore, be understood to mean that though the application of Section 11AC would depend upon the existence or otherwise of the conditions expressly stated in the section, once the section is applicable in a case the concerned authority would have no discretion in quantifying the amount and penalty must be imposed equal to the duty determined under sub-section (2) of Section 11A. That is what Dharamendra Textile decides. 5.3 In view of the above, first it has to be seen and established that in a particular case, the facts stated in Section 11AC of Central Excise Act, 1944 are applicable. Once Section 11AC is found applicable then an adjudicating authority has no discretion to reduce the penalty specified in Section 11AC of the Act.
6. In the light of the above law laid down by the Apex Court, it has to be seen whether the ingredients of Section 11AC are satisfied in the present case or not. It is the case of the appellant that they have only admitted the shortages and the same could be as a result of accumulated losses over a period or for any other reason. It was argued by the appellant that they have never cleared these shortages clandestinely. Investigation in the present case has not established that shortages found in fact were cleared clandestinely by the appellant. There is no confessional statement of the appellant that shortages were cleared clandestinely without payment of duty. Shortages found in the stocks could be a good ground for raising suspicion but it should be corroborated by the confessional statement of the assessee and/or other evidences that such shortages were clandestinely removed also. There is also no evidence of seizure of any goods clandestinely cleared by the appellant. Appellant has relied upon a series of judgments, one of them being of Allahabad High Court, as indicated in Para 3 above, wherein it has been repeatedly held that the shortage of finished goods by itself could not, unless it is related to clandestine removal of finished goods for which there was no material evidence, infer evasion of Excise duty. It is also an established law that any presumption, howsoever strong, cannot take the place of an evidence.
7. In view of the above observations, the ingredients as contained in Section 11AC of Central Excise Act, 1944 are not applicable to the facts and circumstances of the present case when examined in the light of law laid down by Honble Supreme Court in the case of UoI Vs. Dharmendra Textile Processors (supra) and UoI Vs. Rajasthan Spinning & Weaving Mills (supra) and read with the case laws relied upon by the appellant in the present proceedings. Accordingly, penalty imposed upon the appellant under Section 11AC of Central Excise Act, 1944 by lower authorities is not imposable and is set aside and appeal filed by the appellant is allowed.
(Pronounced in Court on ________________) (H.K. Thakur) Member (Technical) cbb ??
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