Custom, Excise & Service Tax Tribunal
Niyogi Offset Pvt.Ltd vs Cce, Delhi-Iii on 14 February, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Appeal No. E/470-471/2008-(SM)
(Arising out of OIA No.141-142/CE/DLH/2007 dated 28.11.2007 passed by the CCE (Appeals), New Delhi)
Date of hearing/Decision: 14.2.2014
1.
Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2.
Whether it would 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 the order?
4.
Whether order is to be circulated to the Department Authorities?
Niyogi Offset Pvt.Ltd. Appellant
Shri Bikash D.Niyogi
Vs.
CCE, Delhi-III Respondent
Present for the Appellant: None Present for the Respondent: Shri R.K.Mishra, DR Coram: Honble Mr.Manmohan Singh,Member (Technical) FINAL ORDER NO.52347-52348/2014 PER: MANMOHAN SINGH None present for the appellant. The appeals are of 2008. Notice was issued on 8.1.2014. Notice has not been returned back. None has caused appearance on behalf of the appellant. It is evident that appellants are not interested in judicial process. Since the appeals are relating to the year of 2008, I proceed to decide the appeals based on records with the assistance of Learned DR. It is observed that appellants have come in appeal against Order-in-Appeal No.141-142/CE/DLH/2007 wherein Commissioner (Appeals) has upheld the confirmation of demand by the adjudicating authority. However, penalty on Shri Bikash D. Niyogi was reduced from Rs.2 lakh to Rs.one lakh.
2. On the basis of specific intellegicene that appellants were wrongly availing the benefit of Notification No.8/2003-CE dated 1.3.2003 on the clearances of cartons and printing sheets for carton, carry bags, sim bags made of paper and paper board during the financial year 2003-04, 2004-05 and 2005-06 (upto July,05) as they had crossed the clearance value of Rs.300 lacs during financial year 2002-03,2004 and Rs.400 lacs in the financial year 2004-05, the premises of the assessee were visited by Central Excise Officers of Anti-Evasion-II on 23.7.2005 on the strength of search authorization issued by the Assistant Commissioner (AX), Central Excise, Delhi-II.
3. During the visit of the officers, Shri Bikash D.Niyogi, Director of the appellant was present. During scrutiny of records such as balance sheets and invoices, it was observed that the appellant had cleared the goods viz. sim bags, carry bags and cartons of paper and paper board classifiable under chapter heading 4819.12 of Central Excise Tariff Act, 1985 valued at Rs.8,022,997/- made during the period from 1.4.2003 to 23.7.2005. Further, the appellant had been availing SSI benefit under Notification No.8/2003-CE dated 1.3.2003 on the clearances of the said products. The officers conducted physical stock taking of goods lying in the factory, which resulted into recovery of 8000 pcs of printed carton sheets falling under chapter heading 4811.90 which were meant for packing of fresh frozen plasma cartons collectively valued at Rs.70,000/-. The said printed carton sheets were seized under Rule 24 of the Central Excise Rules, 2002 on the reasonable belief that the same were liable for confiscation under the provision of Central Excise Rules as the same were manufactured without obtaining Central Excise Registration and intended to be cleared without payment of duty. The said seized goods were handed over to Shri Niyogi, Director of the party under a superdginama dt.23.7.2005. The officers also resumed certain documents and samples of the manufactured items being relevant to the case. The entire proceedings were recorded in a panchnama dated 23.7.2005 which was drawn on the spot.
4. Shri Bikash D.Niyogi, Director of the appellant in his statement dated 23.7.2005 stated that they were engaged in the activity of printing (Offset); that they were not manufacturing corrugated boxes and cartons as they were purchasing from M/s.M.J.Packaging Systems and M/s.Sheetal Packaging; that they were making printed cartons for M/s.Blessman Kochman Beauty Products (P) Ltd.but the orders were placed by the customers through M/s.Vishal Print-N-Pack, Delhi; that he stated that they were manufacturing bags/paper products/sheets printing for making carton/sim envelope for Airtel. Mr.Bikash D.Niyogi stated that they were under bonafide belief that exemption limit under Notification No.8/2003-CE dated 1.3.2003 was available for the above items upto the clearance value of Rs.One crore in a financial year. However, after admitting their lapse, Shri Bikash Niyogi handed over a cheque of Rs.11,06,620/- dated 23.7.2005 towards Central Excise duty.
5. Adjudicating authority vide his Order-in-Original No.08/2006-07 specifically based as findings in para 18 to para 25, held that appellants were engaged in manufacture and clearance of excisable goods chargeable to duty during relevant material time without payment of duty with central excise registration. Para 18 to para 25 are reproduced below:-
18. In the show Cause Notice, Department has demaned Central Excise duty & Education Cess collectively amounting to Rs. 11,28,752/- under Section 11A of the Central Excise Act,1944 and interest under Section 11AB in respect of duty not paid on Sim bags and Cartons valued at Rs.69,16,376/- manufactured and cleared by them during the financial year 2203-2004,2004-2005 and 2005-2006(up to 23.07.2005). The allegation in the Show Cause Notice in that the party had wrongly availed the Small Scale Exemption under the notifications applicable/issued during the material period. Thus, they suppressed the production and clearance of excisable goods and removed the said goods from the factory without payment of duty amounting to Rs.11,28,752/- leviable on the said goods, without obtaining Central Excise registration and without following the Central Excise procedure as required under the various provisions of the Central Excise Rules, 2002. besides, the duty of Central Excise, it is proposed to confiscate the seized finished excisable goods i.e. Printed Carton Sheet valued at Rs.70,000/- involving Central Excise duty + Education Cess amounting to Rs. 11,424/- and impose penalty on the party under Section 11AC of Act ibid and Rule 25/Rule 26 of the Central Excise Rules, 2002.
19. The partys submission in respect of manufacturing and clearance of excisable goods i.e. Sim bags (actually envelopes), Carry bags and Cartons during the period 2003-04,2004-05 and 2005-06 (upto 23.7.05) without payment of duty is that they were under the impression that as in all the previous years the aggregate value of clearances for home consumption would be arrived by excluding the value of clearances of excisable goods on which duty was not payable. They have further stated that on being pointed out, they on the spot had voluntarily paid the entire amount of duty not paid on the offended goods. The fact of depositing voluntarily the duty for the entire period on the mistake being pointed out to them showed that they had no intention to evade payment of duty. Accordingly, they obtained the Central Excise registration and started maintaining statutory records. It is thus pleaded that penalty under section 11AC of the Act ibid as proposed in the show cause notice is not warranted.
20. They party has not disputed the charge of non-entitlement of the benefit of Small Scale exemption applicable to them in respect of excisable goods manufactured and cleared from the factory without payment of duty during the material period. The party has contested the classification of Sim Bags and sought its classification under Chapter heading No.4820.00 of the Central Excise Tariff i.e. Envelopes. Envelopes falling under Chapter heading 4820.00 though chargeable to duty at the rate of 16% ad valorem is wholly exempt from the duty by virtue of Notification No.10/2003-CE dated 01.02.2003. The other allegation disputed by the party is that 8000 printed sheets which were seized by the Central Excise officers and proposed for confiscation in the Show Cause Notice were not in fully manufactured condition as some processes were yet required to be carried out to complete their manufacture. It is pleaded that there was no evidence that preparation had been made for their removal from the factory and accordingly prayed for their discharge from the notice after appropriating the duty payable on the goods in question had already been deposited. It is further contended that the Education Cess may be re-calculated from the date it became payable.
21. Shri B.D.Niyogi, Director of the noticee company/party in his reply to the Show Cause Notice vide his letter 21.04.06 has submitted that there is no evidence cited in support of the allegation that he was looking after the day to day affairs of the company as day to day affairs of the company comprise mainly of producing printed materials and supplying them to respective customers. The activities of production, marketing and accounts are looked after by separate Executives appointed by the company and his duty as company and to over see the implementation of the said policy. Hence, no personal penalty is imposable on him under rule 26 of the Central Excise Rules, 2002 as held by the Tribunal in the case of C.P.Chinnasamy Vs. Commissioner of Central Excise, Madurai reported in 2004 (164) ELT 449 (Tri.-Chennai). Shri Niyogi has further submitted that there is no proof of that he had knowledge that the goods in question on which duty had become payable were liable to confiscation. In support of his submissions, he has relied upon the Tribunals decision in the case of Cipla Coated Steel (citation not given).
22. Now, I take up the issue whether Sim Bags allegedly manufactured and cleared by the party were Sim Envelopes and merits classification under Chapter Tariff Heading 4817.00 as claimed by them. The Bags and other packing containers of paper, paperboard, etc. classifiable under Chapter Tariff Heading 48.19. HSN (Section X) Heading 48.19 explains Bags as under:-
(A) Cartons, boxes, cases, bags and other packing containers.
This group covers containers of various kinds and sizes generally used for the packing transport, storage or sale of merchandise, whether or not also having a decorative value. The heading includes, cartons, boxes, cases, bags, cones, packets, sacks, paperboard drums (containers), whether manufactured by rolling or by any other method, and whether or not fitted with reinforcing circular bands of other materials, tublar containers for posting documents, protective garment bags, jars, pots and the like (e.g. for milk or cream), whether or not waxed. The heading also covers special purpose paper bags such as bags fro vacuum cleaners, bags for travel sickness and record boxes and sleeves. Envelopes are classified under Chapter Tariff Heading No.48.17 of the Central Excise Tariff Act, 1985. As per HSN (Section X:4817.10)-
This headings covers paper stationery of the kind used in correspondence e.g. envelopes, letter cards, plain postcards (including correspondence cards).
Bag is a container made of paper, cloth, mesh, metal and usually closed on all sides except for an opening that may be closed (as by folding, pasting, typing, r sew2ing): being of sizes ranging from small to very large and being specifically designed and read for properly holding, storing, carrying, shipping, or disturbing any maerial or product. Further, from the Explantory Notes of Chapter 48 contained in Section X of the HSN it is thus observed that the holder of Sim for cellular phone container is clearly a Bag and not a stationery item i.e. Envelope I, therefore hold that holder of sim card is Sim Bag and not Sim Envelope and as such appropriately classifiable under Chapter Tariff Heading No.48.17 of the Central Excise Tariff.
23. As regards confiscation of seized goods i.e. 8000 carton sheets valued at Rs.70,000/- which were meant for fresh frozen plasma cartons, the partys contention that the goods were not in fully manufactured condition as some processes were yet required to be carried out to complete their manufacture is not correct. The printed sheets i.e. printing on paper board though meant for cartons were fully manufactured and covered under Central Excise Tariff Heading No.4811.90. The printed paper sheets attract duty of Central Excise under the said heading. The party has not contested that the printed sheets were not for cartons. The printing on the paper board also clearly indicates that multiple cartons were to be made out of the said sheet. In view of this, I find there is no force in the contention of the party that the goods seized by the officers were not fully manufactured. Further, Note 11 of Chapter 48 of the Central Excise Tariff explains:
Except for the goods of heading No.48.14 or 48.21, paper, paper-board, cellulose wadding and articles thereof, printing with motifs, characters or pictorial representations, which are not merely incidental to the primary use of the goods fall in chapter 49.
24. Thus, the goods of Tariff heading 4811.90 do not fall under chapter 49. The fact that the party has/had been engaged in manufacturing and clearance of excisable goods chargeable to duty during the material period without payment of duty, without Central Excise registration, without following the Central Excise Rules as mentioned in the Show Cause Notice is, therefore, established.
25. As regards imposition of penalty on the party, I find that the party has suppressed the fact of manufacture of Sim bags, carry bags and cartons and evaded the payment of duty leviable on the said goods during the year 2003-04, 2004-05 and 2005-06 (upto June 2006) and therefore the duty demanded is recoverable under proviso to section 11A of the Central Excise Act, 1944. Interest on duty not paid/evaded is also recoverable under section 11AB. The penalty is thus imposable under section 11AC of the Act, ibid, and Rule 25 of the Central Excise Rules, 2002. The penalty is also imposable on Shri B.D.Niyogi, Director of the noticee party under Rule 26 of the Central Excise Rules, 2002 as he was looking after day-to-day affairs of the company. Shri Niyogi being director of the company and responsible for running the affairs of the company under his control and supervision cannot escape his liability by taking plea that these activities were handled by the Executives of the company. The Honble Tribunals judgment in the case of C.P.Chinnasamy Vs. Commissioner of Central Excise, Madurai reported in 2004 (164) ELT 449 (Tri.-Chennai) is not applicable to the facts of the present case. I, therefore, hold that Shri B.D.Niyogi is guilty of the offence committed by him and is liable to be punished under Rule 26 of the Central Excise Rules, 2002.
6. Demand of duty amounting to Rs.11,23,560/- was confirmed and appropriated amount of Rs.11,06,620/-. Equivalent amount of penalty was also imposed. Already deposited amount of penalty of Rs.2,76,655/- was appropriated. Penalty of Rs.2 lakh was also imposed on Shri Bikash D.Niyogi.
7. In appeal before Commissioner (Appeals), they raised the issue of exclusion of branded goods value from aggregate clearances. They also challenged quantification of duty demand on the basis of classification of envelopes and bags. Invocation of extended period of limitation was also challenged. They also contested imposition of penalty redemption fine and imposition of penalty on Director Shri Bikash D.Niyogi.
8. Commissioner (Appeals) in his order dealt the whole issue in detail. Though all issues were discussed in detail by the adjudicating authority but Commissioner (Appeals) has gone through all the issues and recorded his findings in para 8 of his order. Aggrieved by Commissioner (Appeals) order, appellant came before Honble Tribunal. They have raised same grounds as were raised before Commissioner (Appeals. On the other hand, learned DR reiterated the findings of Commissioner (Appeals).
9. Heard both sides and also gone through records including grounds of appeal taken by the appellant.
10. It is observed that Commissioner (Appeals) has gone through all grounds of appeal and concluded his findings. While going through those findings, it is observed that Commissioner (Appeals) has passed speaking ordser. There was no scope for other interpretation as SSI exemption was wrongly claimed and manufacture and sale were undertaken without any registration with Central Excise Department.
11. I have examined the findings recorded by Commissioner (Appeals) who has dealt all the issues in detail. Main issue of manufacture without registration and subsequently clearance without payment of duty is admitted. Duty and penalty were paid on being pointed out. Invocation of extended period has been justified as activities of manufacture and sale were undertaken without Central Excise Registration and without payment of duty clearly evidencing intent to evade. This factum has also been admitted by Shri Bikash D.Niyogi, Dierctor, imposition of penalty has rightly been justified on the appellant and director. Once manufacture and subsequent sale of excisable goods beyond the admissible SSI exemption is manifested, intent to evade becomes clear requiring no further evidence to corroborate the fact of evasion. Further, no force was noticed in their claim for exclusion of value of branded goods from the total aggregate value of clearance and mistake in calculation of duty. Detailed reasonings recoded in para 8 of Commissioner (Appeals) order are self explanatory I find no force warranting interference in his findings. However, commissioner (Appeals) reduced penalty from Rs.2 lakh to Rs.One lakh on Director which is not contested by the Revenue.
12. On overall re-assessment based on grounds of appeal taken by appellant, I do not find any scope for reconsideration once duty and penalty has been imposed after the admittance of facts of manufacture without obtaining Central Excise Registration and clearance of goods without payment of duty. Further Bonafides have not been proved. Actually intent to evade payment of duty is clearly manifested.
13. As regards to restriction of penalty to the 25% of the duty leviable, it is observed that the demand of Rs.11,06,620/- involved for the period 2003-04 to 2005-05 (upto June, 2005) stands deposited by the appellant. Penalty of Rs.2,76,755/- (25% of total duty) was also deposited on the day of visit of officer. As per basic law settled by various forums, if the penalty amounting to 25% of duty alongwith duty has been deposited prior to issue of show cause notice, that is to be considered as due compliance of condition of pre-deposit where stipulation is that penalty will be paid 25% of duty amount paid within thirty days of passing order. Accordingly, there is force in appellants contention for limiting the penalty to Rs.2,76,755/- which is 25% of the duty demand.
14. As regards imposition of penalty on the director of the company, initial penalty of Rs.2 lakh was imposed on Shri Bikash D.Niyogi by the adjudicating authority under Rule 26 of Central Excise Rules, 2002 but Commissioner (Appeals) reduced it to Rs.1 lakh. I find that Shri Bikash D.Niyogi is responsible for all the affairs of the company. Without human intervention, a company cannot function. Imposition of penalty on Shri Bikash D.Niyogi cannot be faulted. Commissioner (Appeals) has already reduced the penalty from Rs.Two lakhs to Rs.One lakh. There is no scope of further reduction in penalty. Accordingly imposition of penalty of Rs.1 lakh on Shri Bikash D.Niyogi is upheld.
15. In view of above, I uphold the findings recorded by Commissioner (Appeals) except justification for imposition of equivalent penalty on the appellant M/s.Niyogi Offset Pvt.Ltd. As discussed above, in the given circumstances, penalty is restricted to 25% of the duty amount.
16. Accordingly appeals filed by the appellants are partially accepted.
17. Ordered accordingly.
(pronounced in the open court) (MANMOHAN SINGH) MEMBER (TECHNICAL) mk 13 13