Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise vs M/S. Dhariwal Industries Ltd on 4 December, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI COURT No. I Appeal No. E/250/07 (Arising out of order-in-original No. PIII/BKS/CEX/13/2005-06 dated 05.01.2006 passed by Commissioner of Central Excise (Adjudication) Pune I) For approval and signature: Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) ================================================
1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen of the Order?
4. Whether Order is to be circulated to the Departmental : Yes authorities?
Commissioner of Central Excise Pune Appellant Vs. M/s. Dhariwal Industries Ltd. Respondent Appearance:
Shri Ajay Kumar, Jt. Commr (AR) for appellant Shri Mayur Shroff, Advocate for respondent CORAM:
Honble Mr. M.V. Ravindran, Member (Judicial) Honble Mr. C.J. Mathew, Member (Technical) Date of Hearing: 04.12.2015 Date of Decision: 04.12.2015 ORDER NO Per: M.V. Ravindran This appeal is filed by revenue against order-in-original No. PIII/BKS/CEX/13/2005-06 dated 05.01.2006.
2. Heard both sides and perused the records.
3. On consideration of the submissions made by both sides and perusal of records, we find that the revenue is aggrieved by the impugned order on the ground that the adjudicating authority has not imposed any penalty on the respondent though there was allegation of clandestine removal of the goods which were in contravention of various Central Excise Rules.
4. The argument of the learned departmental representative is that penalties are imposable as the allegation of clandestine removal is not quashed but the demand has not been raised only on the ground that the demand is for the period beyond 5 years from the date of show cause notice. He would take us through the show cause notice and the findings recorded and submit that the adjudicating authority has misdirected his findings to drop the proceedings initiated for imposition of penalties. He would submit that the Supreme Court in the case of D. Bhoormal - 1983 (13) ELT 1546 (S.C.) has held that the Department is not required to prove its case with mathematical precision but what is required is establishment of such a degree of probability that a prudent man may on its basis believe in the existence of the facts in issue. He would submit that the responsible personnel of the respondent had admitted that there was clandestine removal.
5. Learned Counsel on the other hand would draw our attention to the facts of the case, that show cause notice itself accepts that there cannot be any demand of duty as allegation of clandestine removal was for the period 1995 96 to 1998 99. He would draw our attention to the order in original and submit that the adjudicating authority has clearly recorded that the judgement of the Honble Supreme Court in the case of HMM Ltd 1995 (76) ELT 497 will be applicable as the Department is not able to sustain the demand in show cause notice on the point of limitation. He would also submit that the adjudicating authority has recorded that the investigation is flawed and there is no material on record to sustain the basic charge of clandestine manufacture and clearance by the respondent as also the finding that there was no co- relation established between the alleged clandestine manufacturer and removal subsequent and the challans by some other dealer even if the said dealer is a HUF. He would also draw our attention to the judgement of the Tribunal in the case of Godrej soaps Ltd to submit that when the demand gets dropped on any account penal provisions cannot survive against the assessee. He produces a copy of the judgement of the larger bench as reported at 2004 (174) ELT 25.
6. We have considered the submissions made by both sides and perused the records. The issue involved in this case is whether penalty can be imposed on the respondent when demand itself is not sustainable.
6.1 It is undisputed that the show cause notice issued to the respondents clearly and unequivocally accepts the fact that demand of duty liability cannot be sustained as the demand for duty in show cause notice is beyond the period of 5 years. Provisions of section 11 A of the Central Excise act 1944, mandates the Department to recover duty within a period of 5 years from the date of issuance of the show cause notice. Therere no provisions to demand any duty beyond the period of 5 years from the date of show cause notice. The adjudicating authority has correctly followed the law and has held that when the demand is not sustainable on the question of limitation, penalties can be imposed on the assessee under the Central Excise Rules 1944. We do not find any merits in the arguments put forth by the learned departmental representative. The judgement of Honble Supreme Court in the case of HMM Ltd will be directly applicable wherein their Lordships have clearly settled the law, that question of penalty would arise only if the Department is able to sustain its demand. We also find that the larger bench in the case of Godrej Soaps (supra) held as under echoing the ratio of Apex Court:-
6.In the light of above, we are of the view that when the demand gets dropped on any account, penal provisions cannot survive against the assessee. For the similar reason confiscation of the goods, which is penal in nature, cannot be upheld. The point referred to the Larger Bench is answered accordingly. The main appeals be placed before the Original Bench for passing appropriate orders. 6.2 In view of the foregoing, in the facts and circumstances of this case, we find that the adjudicating authority was correct in dropping the proceedings initiated for imposing penalties on the respondent.
7. In our considered view the impugned order is correct and legal and does not require any interference. The appeal is rejected (Operative part of the order pronounced in Court on 04.12.2015) (C.J. Mathew) Member (Technical) (M.V. Ravindran) Member (Judicial) nsk ??
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1 5Appeal No. E/250/07