Custom, Excise & Service Tax Tribunal
Stelco Strips Ltd vs Cce, Ludhiana on 20 July, 2016
?CUSTOMS, EXCISE & SERVICE TAXAPPELLATE TRIBUNAL SCO 147-148, SECTOR 17-C, CHANDIGARH-160017 DIVISION BENCH COURT NO.1 Appeal No.E/2117-2118/06-EX(DB) [Arising out of the OIO No.09/Ldh/06 dt.31.3.2006 passed by the CCE, Ludhiana) Date of Hearing/Decision: 20.07.2016 For Approval &signature: HonbleMr.Ashok Jindal, Member (Judicial) Honble Mr. V.Padmanabhan, Member(Technical) 1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2. Whether it would be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes Stelco Strips Ltd. Appellant Shri Bharat Bhushan Jindal Vs. CCE, Ludhiana Respondent
Appearance Shri Kamaljeet Singh, Advocate- for the appellant Shri Vijay Gupta, A.R.- for the respondent CORAM: Honble Mr.Ashok Jindal, Member (Judicial) Honble Mr.V.Padmanabhan, Member (Technical) FINAL ORDER NO: 60985-60986/2016 Per Ashok Jindal:
The appellants are in appeals against impugned orders demanding duty of excise alongwith interest and imposing penalty on both the appellants.
2. The facts of the case are that the Income-Tax Authorities conducted at the business premises of M/s.Stelco Strips Ltd. and its associated concerns as well as the residential premises of the Directors and other business associates on 15.2.1995. During the search operations, incriminating documents were resumed/seized by the Income-Tax Authorities. The photocopies of the seized documents and result of the investigation done by Income-Tax Authorities were provided to the Central Excise department on 30.6.1997. On scrutiny of the records/documents taken over from the Income-tax department revealed that the appellant has received payments from certain persons/parties outside the books of account. The Managing Director of the appellant firm Shri B.B.Jindal stated that he has disclosed a sum of Rs.60 lakh for the financial year 1995-95 on 15.2.1995 and he also stated that cash amount of Rs.3.74 lakhs recovered from his residence would be reflected in the books of account and certain cash amount of Rs.5.90 lakh and jewellery of Rs.3.13 lakh seized from his locker has been acquired out of the business transactions of the appellant. On the basis of the documents supplied by the Income-Tax Authorities, a case has been booked against the appellant a treating income of the appellants from the manufacturing business of the appellant. In that circumstance, a show cause notice was issued to the appellant to demand duty of excise on account of clandestine removal of excisable goods cleared by the appellant without paymeant of duty alongwith interest and to impose penalty on both the appellants. The matter was adjudicated, demand of duty was confirmed alongwith interest and penalty of Rs.30,00,000/- was imposed on the first appellant and Rs.10,00,000/- on Shri B.B.jindal, Managing Director of the appellant. Against the said order, the appellants are before us.
3. Shri kamaljeet Singh, Advocate, learned Counsel for the appellants submits that no investigation was conducted against the appellants by the Central Excise department whether they have manufactured goods and cleared clandestinely and from where the inputs received how manufacturing process took place. The allegation has been made of clandestine removal on the basis of income-tax survey. In the circumstances, the demand of duty on excisable goods is not sustainable in view of the following decisions:-
(a) CCE, Ludhiana vs. Mayfair Resorts-2011 (21) STR 589 (Ttri.Del) which has been affirmed by the Honble High Court of Punjab and Haryana- CCE, Ludhiana vs. Mayfair Resorts-2011 (22) STR 263 (P&H)
(b) Ravi Foods Pvt.Ltd. vs. CCE, Hyderabad-2011 (266) ELT 399 (Tri.-Bang)
(c) Vardhman Chemtech Ltd.,Chandigarh vide Final Order No.60931-60932/16 dated 11.7.2016.
4. On the other hand, learned AR drew our attention to the records resumed by the Income-Tax Authorities and forwarded to the Central Excise and the entries have been relied on by the learned AR.
5. Heard the parties and considered the submissions.
6. On careful considering the submissions made by both the sides, we find that in this case, the allegation of clandestine removal is based on the investigation conducted by the Income-Tax department and during the course Income-Tax authorities investigation, the appellant surrendered the income of Rs.60 lakh. We have gone through the statement of Shri B.B.Jindal who stated that the income generated by them is from trading activity and they have not done any manufacturing activity for the surrendered income. We also take note of the fact that although the Income-Tax department supplied certain documents to the Central Excise Department but no investigation was conducted at the end of the Central Excise Department to find out whether the income surrendered by the appellant or the documents revealed during the course of investigation conducted by the Income-Tax Authorities pertains to the manufacturing activity or not? When no evidence has been produced by the Revenue of income surrendered by the appellant is due to manufacturing activity of the appellant, In the absence of that, the duty cannot be demanded as in the Central excise Act, the duty is to be demanded on the goods manufactured by the assessee. The same view was taken by this Tribunal in the case of Ravi Foods Pvt.Ltd. (supra) wherein this Tribunal has observed as under:
?10.We find that though the show-cause notice charged the appellants with the allegation of clandestine manufacturing and removal of the goods with intention to evade Central Excise duty, the findings of the adjudicating authority has not supported the said charge. It is seen from para 55, 56 and 57 that the adjudicating authority has let go the charge of clandestine removal from the factory premises, obviously for the reason that there was no corroborative evidence as regards the clandestine manufacturing and removal of goods. The adjudicating authority having not given any positive findings as regards the clandestine manufacturing and clearance of the goods, in itself would indicate that the said charges as alleged against the appellants were not proved. If that be so, the show-cause notice which proceeded against the appellants on the charge of clandestine manufacturing and removal of final products with intention to evade duty, proceedings should have been dropped. We find that the adjudicating authority has confirmed the demand on the appellants. We find that the judgments of the Honble Supreme Court in the case of CCE, Nagpur v. Ballarpur Industries Ltd. [2007 (215) E.L.T. 489 (S.C.)] and in CCE, Bhubaneswar-I v. Champdany Industries Ltd. [2009 (241) E.L.T. 481 (S.C.)], has settled the law that once the order confirms a demand beyond the allegations mentioned in the show-cause notice, then impugned order is not sustainable.
7. We further find that in the case of Vardhman Chemtech Ltd.,Chandigarh .(supra), this Tribunal has observed as under:-
8. The said issue came up before this Tribunal in the case of M/s Arisudana Industries Ltd. (Supra) wherein this tribunal has observed as under:-
8. As duty is payable on manufacture of the goods. Revenue have not come up with any positive evidence to shows that the appellant has manufactured excisable goods and cleared without payment of duty. In the absence of such evidence, duty cannot be demanded from the appellant. The same view was taken by this Tribunal in the case of Zalota Industries therefore, the duty cannot be demanded from the appellant according the demand of duty alongwith interest is set aside. As demand of duty is not sustainable, the question of imposing penalty does not arise.
9. On considering the facts that this issue has already been decided by this Tribunal holding that duty is payable of manufacture of goods and no evidence has been produced by the Revenue to that extent, therefore, without manufacturing the excisable goods and clearance the duty cannot be demanded from the appellants.
8. In view of the above, we hold that as no evidence has been provided by the Revenue that the appellant has manufactured the goods and the same had not been cleared clandestinely, therefore, the duty is not payable by the appellants. Consequently, no penalty is imposabsle on the appellants. In the circumstances, the impugned order is set aside and appeals are allowed with consequential relief, if any.
(Pronounced in the open court) (V.Padmanabhan) (Ashok Jindal) Member (Technical) Member (Judicial) mk 1