Custom, Excise & Service Tax Tribunal
Babaji Udyog vs Cce, Delhi-Ii on 7 September, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
SINGLE MEMBER BENCH
Court No.III
Appeal No. E/60406-60408/2013-Ex-SM
(Arising out of OIA No. 148/CE/D-II/2013 dated 27.8.2013 passed by the CCE(Appeals), Delhi-I)
Date of Hearing: 30.07.2015
Date of Order: 07.09.2015
For approval & Signature:
Honble Smt.Sulekha Beevi C.S., Member (Judicial)
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
Babaji Udyog Appellant
Inder Aggarwal
Santosh Aggarwal
Vs.
CCE, Delhi-II Respondent
Appearance:
Present for the Appellant: Shri Abhas Mishra, Advocate & Shri A.K.Mishra, Consultant Present for the Respondent: Shri G.R.Singh, DR Coram: Honble Smt.Sulekha Beevi C.S., Member (Judicial) Final Order No. 52787-52789/2015 Per: Sulekha Beevi C.S.
1. As all the above appeals arise out of the same impugned order, they are heard together and disposed by this common order.
Brief facts are as under:
2. The appellant, M/s.Babaji Udyog are engaged in the manufacture and packing of edible oils. M/s.SLH International another proprietary concern is engaged in the manufacture of PET jar and Bottles and PET perform. The appellant purchases pet jars from M/s.SLH International which is used in the packing of edible oils. In pursuant to survey conducted by the anti evasion branch of the Central Excise department, it was revealed that M/s.SLH International cleared the goods to M/s,Babaji Udyog witout payment of duty in clandestine manner. The other appeals are filed by Shri Inder Aggarwal and Shri Santosh Aggarwal of M/s.Babaji Udyog Ltd. The appellants are aggrieved by the imposition of penalty under Rule 26 of Central Excise Rules, 2002.
3. At the time of hearing, learned Counsel for the appellants submitted that he is confining his arguments with regard to imposition of penalty. The primary adjudicating authority imposed penalty of Rs.1,50,000/- on M/s.Babaji Udyog, Rs.1,00,000/- on Shri Santosh Aggarwal, and penalty of Rs.1,50,000/- was imposed on Shri Inder Aggarwal. The learned Counsel submitted that the main noticee in the proceedings viz. M/s.SLH International had already deposited duty demand alongwith interest and 25% penalty before issuance of the show cause notice and that therefore as per proviso to sub clause (2) of section 11A of Central Excise Act, 1944, the proceedings against the appellants, who are co-noticees have also been concluded. That therefore, no penalty can be imposed on the co-noticees. It was also submitted that Shri Santosh Agarwal is the partner of the firm and no separate penalty of Rs.1,00,000/- could be imposed upon him as penalty of Rs.1,50,000/- was imposed upon the firm M/s.Babaji Udyog. He also relied upon the decision rendered by the Tribunal in the case of CCE, Raipur vs. Abir Steel Rolling Mills-2013 (296) ELT 90 (Tri.-Del.).
4. Against this, the learned DR vehemently argued that though the proceedings against the main noticee M/s.SLH International has been concluded, as they have deposited duty demand alongwith interest and 25% penalty, the proceedings against the co-noticees cannot be said to be concluded. It is his case that the penalty upon the appellants have been imposed under Rule 26 which is an independent proceeding. To fortify his arguments, learned DR relied upon the decision in CCE, Raipur vs. Anand Agrawal-2013 (288) ELT 90 (Tri.-Del.).
5. The issue in the above appeals revolves around a narrow compass. The question that poses for consideration is that if the main noticee discharges the duty liability alongwith interest and 25% penalty, whether the proceedings would come to an end in regard to other co-noticees also. It is not in dispute that the main noticee M/s.SLH International has deposited the demand alongwith interest and 25% penalty. According to Revenue, the proceedings against the main noticee only stands concluded and that the proceedings against the appellant do not come to an end.
7. ?Sub-section (2) of Section 11A is reproduced below :
(2)?The Central Excise Officer shall, after considering the representation, if any, made by the person on whom notice is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined :
Provided that if such person has paid the duty in full together with, interest and penalty under sub-section (1A), the proceedings in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of Sections 9, 9A and 9AA, be deemed to be conclusive as to the matter stated therein :
Provided further that, if such person has paid duty in part, interest and penalty under sub-section (1A), the Central Excise Officers, shall determine the amount of duty or interest not being in excess of the amount partly due from such person. (emphasis supplied)
8. In Anand Aggarwal case (supra), the Tribunal has taken the view as under:
6.?I also find that the proviso to Section 2 also refers to the other persons. As such it has to be seen as to who other person can be in respect of which the proceedings would get concluded on payment of duty interest and part penalty. The said proviso does not refer to all other persons, but the same qualifies the other persons to whom notices are served under sub-section (1). As such the reference to other persons in the said proviso is not to all other persons to whom notices are served for imposition of penalty under law but are restricted to other persons to whom notices are served under sub-section (1) of Section 11A. As already observed, notices under sub-section (1) of Section 11A are served only to those persons who are required to pay duty and have either not paid duty or short-paid. Notices under sub-section 1 are not to be issued to other persons who may be employees of the manufacturing unit. As such analyzing the proviso to sub-section (2) of Section 11A, it becomes clear that the proceedings are deemed to be conclusive only in respect of such person who discharges his duty liability in terms of sub-section (1A) or to whom notices stands served under sub-section (1).
8.?As is seen from the above, the invocation of penal provision of Rule 26 is dependent upon so many factors which are unconnected with the provisions of Section 11A. No doubt a combined show cause notice under Section 11A demanding short-paid or non-paid dues along with proposal to imposition of penalties under Rule 26 is issued but as already discussed, the two proposals are independent of each other and mutually exclusive. Rule 26 which provides for imposition of penalty in certain circumstances cannot be said to be a part of the proviso to sub-section (2) of Section 11A so as to conclude the proceedings in respect of all noticees on payment of duty, interest and part penalty by main manufacturer. The said proviso, in my views, only concludes the proceedings in respect of the persons against whom notice under Section 11A is issued and who have deposited the duty in terms of provisions of sub-section (1A) of Section 11A. As such I agree with the Revenue that payment of short paid and non-paid duty by the main manufacturer would not result in conclusion of proceedings against all other persons on whom penalty stands proposed to be imposed in terms of Rule 26. If the legislative intent was extending immunity to all connected persons, the language used would have been simpliciter in respect of all persons.
9. The above judgement has been distinguished by CESTAT in Abir Steel Rolling Mills (supra). In Abir Steel Rolling Mills, the Tribunal observed as under:
6.1?In my view, therefore, the words other persons used in first proviso to sub-section (2) would cover the co-noticees/persons who face the allegations of contravention of Central Excise Rules, which are linked with the allegation of deliberate/fraudulent short payment, non-payment or erroneous refund of duty against the person chargeable with duty facing the duty demand i.e. the person who are alleged to have knowingly dealt with the excisable goods, liable for confiscation in the manner mentioned in Rule 26(1) of the Central Excise Rules, 2002 and for this reason have been show caused for imposition of penalty under this Rule, either in the notice under Section 11A(1) issued to the person chargeable with duty or by separate notices issued in this regard. This interpretation would make sense, as when the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest plus 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the Directors/employees of the manufacturer/assessee company.
6.3?The intention of sub-section (1A) read with sub-section (2) of Section 11A, as is evident from Boards Circular No. 831/08/06-EX, dated 26-7-2006, is to give opportunity to manufacturer/assessee to settle his tax dispute immediately after the receipt of issue of Show Cause and thereby avoiding the litigation. The interpretation of these provisions sought by the Revenue would be contrary to this objective.
Thus, in Abir Steel Rolling Mills case, the Tribunal has taken the view that if the proceedings have been concluded against the main noticee, as provided in these provisions then no further proceedings can be continued against co-noticees.
9. The interpretation by the Tribunal of the words such person and other persons made in Abir Steel Rolling Mills case is more agreeable to me. The Tribunal in that case, has not only considered that when the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest and 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the directors/employees of the manufacturer/assessee company. The Tribunal has discussed the category of persons that would fall into the group other persons. Further the Boards circular NO.831/08/2006-EX dated 26.7.2006 has also been considered. I concur with the ratio laid in Abir Steel Rolling Mills case, which is squarely applicable to the instant case, the facts in issue being similar.
10. In view of foregoing discussion, applying the proposition laid in Abir Steel Rolling Mills case (supra), I find that penalty imposed on the appellants is unsustainable. The same is set aside and the appeals are allowed.
(pronounced in the open court on 07/09/2015) (Sulekha Beevi C.S.) Member (Judicial) mk 6