Custom, Excise & Service Tax Tribunal
Air Carrying Corporation (I) P. Ltd vs Commissioner Of Central Excise, Thane I on 19 July, 2011
IN THE CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
Appeal No. E/1114 & 1115/09
(Arising out Order-in-Appeal No. SB/50-53/Th-I/09 dated 21.7.2009 passed by the Commissioner of Central Excise (Appeals), Mumbai I)
For approval and signature:
Honble Mr. S.K. Gaule, Member (Technical)
1. Whether Press Reporters may be allowed to see
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 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 Departmental
authorities?
Air Carrying Corporation (I) P. Ltd.
Manoj J. Arya
Appellants
Vs.
Commissioner of Central Excise, Thane I
Respondent
Appearance:
Shri V.S. Sejpal, Advocate for the appellants Shri A.K. Prabhakar, JDR for the respondent CORAM:
Honble Mr. S.K. Gaule, Member (Technical) Date of hearing : 19.07.2011 Date of decision : 19.07.2011 O R D E R No:..
Heard both sides.
2. The appellants filed this appeal against OIA no. SB/50-53/Th-I/09 dated 21.7.2009 whereby Commissioner (Appeals) has upheld the adjudicating authoritys order. The issue involved in these two appeals is common. Therefore they are taken up together for disposal.
3. Briefly facts of the case are that the appellants are engaged in the manufacture of CTD bars falling under Chapter 72 of CETA 1985. Aftermath of a case booked against one M/s. Amar Ispat manufacturer of MS ingots who suppressed the production of in records and cleared the same without payment of duty to various Rolling Mills including the appellant M/s Air Carrying Corporation (I) P. Ltd. (ACC for short) the proceedings were initiated against ACC and its director on the ground that they purchased the MS ingots without documents. Statement of director Shri Manoj Arya was recorded wherein he admitted that they received 300 MT of MS ingots cleared without payment of duty by Amar Ispat during 2004-05 upto August 2005 and they cleared the same to various parties without payment of Central Excise duty. Accordingly, a show-cause notice was issued against the appellants and the stock brokers. The lower adjudicating authority confirmed the demand of Rs.8,02,332/- along with interest and imposed an equal penalty against the appellants under Section 11AC of CEA 1944 read with Rule 25 of CER, 2002 and penalty of Rs.2 lakhs on Manoj Arya, director of the appellant ACC. A penalty each of Rs.2 lakhs was imposed on two brokers which is not subject matter of this case. The appellants challenged the same. The Commissioner (Appeals) upheld the order of the lower adjudicating authority. Hence the appeal.
4. The ld. counsel appearing for the appellants submitted that they are not contesting the confirmation of demand. They are only challenging the imposition of penalty on the appellant M/s ACC. The contention is that first proviso to Section 11AC provides for an option to pay 25% of penalty liable to be paid. The contention is that neither of the lower authority has given the option to pay and since the interest was not quantified and duty has already been paid they are eligible for option provided vide 1st proviso to Section 11AC. As regards penalty imposed on the director of the appellants, the contention is that penalty imposed under Rule 25 of CER 2002 is subject to the provision of Section 11AC. Accordingly, ld. counsel has made a feeble attempt that no penalty is imposable against the director since penalty is imposed on the company under Section 11AC. However, in the alternate plea, ld. counsel submitted that penalty imposed on the director is on higher side. Therefore, lenient view may be taken. In support of his contention, he has placed reliance on these decisions:
1. CCE Surat II vs. Gopal Fibres P. Ltd. 2010(256) ELT 10 (Guj)
2. CCE, Surat I vs. Bhagyoday Silk Industries 2010(262) ELT 248 (Guj)
3. CCE Rohtak vs. J.R. Fabrics P. Ltd. 2009 (238) ELT 209 (P&H)
4. K.P. Pouches P. Ltd. vs. UOI 2008 (228) ELT 31 (Del).
5. Ld. JDR submitted that the appellants have not paid the interest therefore they are not eligible for the benefit under proviso to Section 11AC. With regard to penalty on the director, ld. JDR submitted that penalty under Rule 25 is subject to section 11AC and it is independent of provisions of Rule 26 and on that ground penalty cannot be set aside wherein the director has admitted his offence. In support of his contention, he has placed reliance on Supreme Court decision in Prakash Metal 2007 (216) ELT 660.
6. I have carefully gone through the submissions and perused the records. The appellants did not challenge the confirmation of demand. Therefore the issue remains to be decided is penalty on appellants ACC under Section 11AC and penalty on its director under rule 26. The director Manoj Arya who looks after day today work of the factory in his statement recorded under Section 14 of CEA 1944 recorded on 6.5.2005 has voluntarily admitted that they have received 300MT ingots from M/s. Amar Ispat without cover of Central Excise invoice without payment of duty. Therefore on confirmation of demand they have paid the duty voluntarily therefore the confirmation of demand and imposition of penalty under Section 11AC is sustainable. The only contention of the appellants is that no option has been given to them to pay penalty of 25%. Ld. JDR has countered the contention on the ground that appellants have not paid interest in this case. In find force in the contention of the appellants that interest was not quantified and no option was given to them for payment of reduced penalty. Hon'ble High Court of Gujarat in the case of Gopal Fibres supra held that option to payment of reduced penalty to the extent of 25%, if, not given to the assessee, such option should be given to the assessee and period of 30 days from the date of giving such option. Hon'ble High Court in the case of Bhagyoday Silk, J.R. Fabrics & K.P. Pouches had similar view, which indicates that various Courts are having consistent view on this issue. In view of the above, I give them option to pay reduced penalty of 25% in terms of section 11AC from the date of the receipt of the order. So far as the penalty on the director is concerned, there is no dispute that the director has made a confession statement admitting the offence I find force in the contention of the department that penalty under Rule 25 is subject to the provisions of Section 11AC which is not the case with penalty under Rule 26. Therefore, the contention of the ld. counsel that penalty is not imposable under Rule 26 is not of any avail to the appellants. However, considering the facts and circumstances the penalty on the director is reduced to Rs.1 lakh. Appeals are disposed of in the above terms. Commissioner (Appeals) is modified in the above terms.
(Dictated in Court) (S.K. Gaule) Member (Technical) SR 5