Custom, Excise & Service Tax Tribunal
M/S Haldiram Marketing Pvt. Ltd vs Cce, Delhi on 17 March, 2011
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING : 17/03/2011. DATE OF DECISION : 17/03/2011. Excise Appeal No. 2033 of 2004 M/s Haldiram Marketing Pvt. Ltd. Appellantss Versus CCE, Delhi Respondent
Excise Appeal No. 2034 of 2004 Shri M.L. Aggarwal, Director ] M/s Haldiram Marketing Pvt. Ltd. ] Appellants Versus CCE, Delhi Respondent [Arising out of the Order-in-Appeal No. 3-CE/2004 dated 20/01/2004 passed by The Commissioner of Central Excise (Appeals), Delhi.] For Approval and signature :
Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, 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 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?
Appearance S/Shri Shekhar Vyas and Arun Kumar, Advocates for the Appellants. Shri S.K. Panda, Authorized Representative (Jt. CDR) for the Respondent. CORAM : Honble Shri Justice R.M.S. Khandeparkar, President Honble Shri Rakesh Kumar, Member (Technical) Order No. ________________ Dated : ,,,,,,,,,,,_____________ Per. Shri Justice R.M.S. Khandeparkar :-
Heard the advocate for the appellants and Jt. CDR for the respondent. These appeals were heard pursuant to the remand order dated 29th of October 2010 passed by Honble Delhi High Court in CEAC No. 27 of 2005. The Honble Delhi High Court while holding that the penalty imposable under Section 11AC cannot be less than the amount of duty determined as payable under the Act has remanded the matter to the Tribunal to decide whether the conditions laid down under Section 11AC of the Central Excise Act, 1944 were satisfied or not. While considering the said point it has also been made clear by the Honble Delhi High Court that the question has to be gone into by the Tribunal only if such a plea was raised by the appellants in the grounds of appeal before the Tribunal. In other words the Tribunal is directed to consider the issue regarding the penalty imposable under Section 11AC of the said Act subject to the grounds in that regard raised in the memo of appeal before the Tribunal.
2. The learned advocate for the appellants drawing our attention to the orders passed by the original Authority and lower Appellate Authority submitted that the appellants were selling the goods packed in plain boxes which did not carry the brand name of another person and the carry-bags bearing brand of another person were used merely for transportation of the goods sold to the customers. However, they did not form part of the said transaction and hence it cannot be said that appellants lack bonafide in assuming their entitlement to avail benefit of SSI Notification No. 8/2000-CE dated 1st March 2000. He further submitted that the appellants had paid the duty much prior to issuance of show cause notice as the duty was paid on 18th of October 2000, whereas the show cause notice was issued on 5th February 2001. He also submitted that the matter involved purely a question of interpretation of the notification and, therefore, question of imposition of penalty does not arise. He also submitted that the authorities have not arrived at the finding that the goods were cleared with the brand name affixed thereon. Reliance is sought to be placed in the decision in the matters of CCE, Coimbatore vs. Ooty Bakers & Confectioners (P) Ltd. reported in 2008 (228) E.L.T. 607 (Tri. Chennai), Supercoat Industries, Chennai vs. CCE, Chennai II reported in 2008 (225) E.L.T. 477 (Tri. Chennai), Cookie Man Foods India (P) Ltd. vs. CCE, Chennai reported in 2006 (196) E.L.T. 425 (Tri. Chennai), CCE, Indore vs. Kumer Industries reported in 2010 (249) E.L.T. 78 (Tri. Del.), CCE vs. Malbro Appliances P. Ltd. reported in 2007 (208) E.L.T. 503 (Del.), Kathuria Portfolios vs. CCE, Delhi I reported in 2003 (158) E.L.T. 355 (Tri. Del.), Piccaso Home Products. Vs. CCE, Daman reported in 2005 (189) E.L.T. 48 (Tri. Mumbai), and CCE, Rohtak vs. Surya Vinayak Industries Pvt. Ltd. reported in 2010 (258) E.L.T. 513 (Tri. Del.). On the other hand, the Departmental Representative submitted that the issue of penalty has to be decided within the parameters of the grounds sought to be raised in the memo of appeal in view of specific direction in that regard by the Honble Delhi High Court in the remand order. Drawing our attention to the show cause notice and the findings arrived at by the authorities below, he submitted that Shri M.L. Aggarwal, Director of the appellants firm had admitted the use of brand name of another person as well as payment of royalty for use of such brand name as well as full knowledge about the fact of availing exemption benefit under the SSI exemption notification. This apparently discloses, according to the Departmental Representative, lack of bonafide. He further submitted that the appellants have not challenged the findings about failure on the part of the appellants to clear the dues and non-applicability of the benefit under the said notification besides that they had paid the entire duty without any protest after intimation by the department and hence the same discloses failure on the part of the appellants to comply with the requirement of law with the intention to evade the duty till necessary action was taken by the department. Once justification for invocation of extended period of limitation having not been challenged, the imposition of penalty is justified in the facts and circumstances of the case.
3. It cannot be disputed that in terms of the remand order by the Honble Delhi High Court the scope of inquiry in this appeal in relation to the issue of penalty has been restricted to the grounds raised in the memo of appeal before the Tribunal. Para 15 of the remand order is very clear to that effect. It has been specifically stated that we make it clear that this question would be gone into by the CESTAT only if such a plea was raised by the assessee in the grounds of appeal before the Tribunal.
4. On perusal of the memo of appeal, the same undoubtedly discloses the contention having been raised to the effect that the penalty is not imposable. It also discloses four grounds on which the said submission has been made. Firstly, that the duty to the tune of Rs. 4,11,190/- was paid on 18th October 2000 when the officers of the excise department visited their factory, which was prior to issuance of show cause notice dated 5th February 2001. Secondly, the appellants had not contravened any of the provisions of the excise law to warrant imposition of penalty. Thirdly, the issue involved is regarding the availability of benefit of SSI notification which is purely a question of law and hence no penalty can be imposed. Fourthly, there was no bifurcation of penalty under Rule 173Q and Section 11AC and there cannot be consolidated penalty.
5. Before considering the above grounds relating to penalty, it is pertinent to note that the appellants have not contested the duty demand confirmed under the order passed by the Adjudicating Authority. The Additional Commissioner by his order dated 31st December 2001 had confirmed the demand to the tune of Rs. 4,11,190/- and had imposed penalty of equal amount against the appellants company under Rule 173Q readwith Section 11AC of the Act and the personal penalty of Rs. 10,000/- against Shri M.L. Aggarwal, Director of the company under Rule 209A of the Central Excise Rules, 1944. There is a clear recording to that effect in the earlier order passed by the Tribunal on 30th August 2004 and the same was never challenged by the appellants. The said duty demand related to the period from 16th April 1999 to 17th October 2000 and the show cause notice in that regard was issued on 5th February 2000. The duty amount was paid as already stated above on 18th October 2000. In other words as rightly pointed out by the Departmental Representative, the appellants did not dispute their liability to pay the duty and non-availability of exemption benefit under the SSI exemption notification in question. Simultaneously they also did not dispute invocation of extended period of limitation by the department for compelling the appellants to clear the duty liability in respect of the period in question.
6. Added to above, there is a clear mention in the show cause notice and further confirmed by the Adjudicating Authority in its order that Shri M.L. Aggarwal, Director of the appellants company who was looking after the affairs of the company had clearly stated in his un-retracted statement that the appellants were aware that the goods in question were branded goods of another person and for the same reason, the appellants company was paying royalty to such another person and further that the appellants were aware that they were availing SSI exemption benefit under Notification No. 8/2000-CE dated 1st March 2000. This apparently discloses that in spite of knowing well that they were availing SSI exemption even though the same was not available to those persons using the brand name of another person for their product yet they continued to clear the goods with the use of the brand name by paying royalty to the another person to whom the brand name belonged to and yet continued to avail the exemption benefit under the said exemption notification till the date of visit by the excise officers to their factory. It was only after the visit by the excise officers to their factory that the appellants paid the duty. However, no interest for delayed payment of duty was paid. Very fact that the appellants awaited the visit of excise officers to their factory to pay the duty in relation to period of about one and half year itself discloses lack of bonafide. Perhaps in the absence of visit by the excise officers to the factory of the appellants, they would have continued to avail the benefit of exemption without payment of duty, even though they were not entitled to avail such benefit. There is no explanation coming from the appellants as to what prevented them from clearing those dues prior to 18th October 2000 even though their Director has admitted that they knew that they were using the brand name of another person for their goods and for that purpose they were also paying royalty to such another person. Mere payment of duty, and that too only duty without any interest for delayed payment, cannot by itself be a ground to evade the liability in relation to the penalty.
7. Though it is sought to be contended on behalf of the appellants that their case had been that the goods were not cleared with the brand name but they were packed in white boxes without any name being affixed on the box and brand name was used only on carry bags which were used by the customers to carry the product enclosed in the boxes and that the carry bags did not form the part of transaction between the appellants and their customers, no such ground has been raised in the memo of appeal. That apart by mere raising the defence without placing any evidence in support thereof is not sufficient to contend that the appellants did not lack bonafide. In order to justify the said action, which was specifically pleaded by the appellants in defence, it was necessary for the appellants to place corroborative piece of evidence on record. It was more so, in view of clear admission on the part of the Director of the appellants company about the full knowledge about the notification as well as use of brand name on payment of royalty to another person. However, the appellants did not make any efforts in that regard.
8. All the decisions which are sought to be relied upon are essentially on the merits of the case as to whether the assessee therein were entitled to avail the benefit of SSI exemptions or not. The decisions which relate to the aspect of penalty are of the Honble Delhi High Court in CCE vs. Malbro Appliances P. Ltd. (supra) case and of the Tribunal in Kathuria Portfolios vs. CCE, Delhi I (supra). In Malbro Appliances, the Honble Delhi High Court observed that the assessee had already paid the duty before issuance of the show cause notice. The Tribunal in its order had reduced the duty from the amount of Rs. 1,86,605.50, which were 100% to the penalty of Rs. 40,000/-. The said order was passed by the Tribunal on 31st October 2003. That was much prior to the decision in the case of Union of India vs. Dharamendra Textile Processors 2008 (231) E.L.T. 3 (S.C.) and Union of India vs. Rajasthan Spinning & Weaving Mills reported in 2009 (238) E.L.T. 3 (S.C.), wherein the Apex Court has clearly laid down the law that in case of penalty under Section 11AC there is no discretion given to the authorities in relation to the quantification of the penalty and it has to be equivalent to the amount of duty defaulted. Being so, the decision of Honble Delhi High Court in CCE vs. Malbro Appliances P. Ltd. (supra) case can be of no help to the appellants.
9. The decision of the Tribunal in Kathuria Portfolios vs. CCE, Delhi I (supra) was to the effect that since the issue involved was in respect of interpretation of small-scale exemption, no penalty was called for.
10. It is true that the appellants has raised the ground to the effect that the issue involved in the matter relates to the availability of benefit under notification and that the same is pure question of law. The contention is totally devoid of substance. The availability of benefit under notification was not claimed on the basis of interpretation of notification was on the ground that factually the appellants are not using the brand name on the goods cleared by the appellants and the brand name is affixed only on the carry bags. As already observed that apart from making the tall claim in that regard in their reply to the show cause notice the appellants did not bother to produce any evidence in support of such plea raised by the appellants. It is pertinent to note that as far as initially burden which was caused upon the department was concerned was clearly discharge by the department by placing on record clear admission on the part of the Director of the appellants about use of brand name of another person for the product of the appellants. Knowing well this aspect, the appellants has raised the specific defence in their reply, however, the appellants did not produce any material on record to support the plea raised by them in their reply. There was no question of interpretation of law or question of law involved in the matter. It was essentially a matter of appreciation of facts and the appellants failed to place on record the necessary facts to warrant a finding in their favour. Obviously, therefore, the decision of the Tribunal in Kathuria Portfolios vs. CCE, Delhi I (supra) is of no help to the appellants.
11. The last ground relating to the penalty is relating to consolidated amount of penalty imposed under Rule 173Q and Section 11AC. The learned advocate for the appellants has not even attempted to make this ground good in the course of his argument and perhaps rightly so and, therefore, we do not deal with the same.
12. About the violation of provisions of law, once it is the duty liability is not disputed and the records disclose default in payment thereof, it goes without saying that the appellants had violated the provisions of law in that regard.
13. In the facts and circumstances of the case, therefore, we find that the appellants failure to pay the duty was in contraventions of the provisions of law and more particularly comprised under the notifications in question and inspite of knowing the same, they continued to claim exemption benefit under the said notification and evaded the payment of duty till the Departmental persons visited their factory and, therefore, the case is squarely covered by the provisions of Section 11AC and hence the 100% penalty was imposable in the matter. The same having been imposed by the lower authorities and by taking into consideration of the facts and circumstances of the case in the matter, we do not find any infirmity therein and hence the appeals in that regard fail and are dismissed.
(Justice R.M.S. Khandeparkar) President (Rakesh Kumar) Member (Technical) PK