Custom, Excise & Service Tax Tribunal
C.E. Kim vs Cce, Chennai-Iv on 5 March, 2015
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI E/604 & 605/2009 (Arising out of Order-in-Appeal No. 14 & 15/2009 (M-IV) dated 01.07.2009, passed by the Commissioner of Central Excise (Appeals), Chennai). 1. C.E. Kim : Appellants 2. M/s. Kocon India Pvt. Ltd. Vs. CCE, Chennai-IV : Respondent
Appearance Shri C. Manickam, Adv., For the applicant Shri M. Rammohan Rao, AC (AR) For the respondent CORAM Honble Shri D.N, PANDA, Judicial Member FINAL ORDER No. 40218-40219 / 2015 Date of Hearing/Decision: 05.03.2015 Per: D.N. Panda Ld. Counsel submits that the appellant company was new to Indian law when came to set up its factory. It commenced manufacture of Conveyor Belts in July, 2006. It made application to the Excise Department for grant of registration under the Central Excise Law. Such registration was granted w.e.f. 22.09.2006. It made first clearance of the goods manufactured to Hyundai Motors on 07.09.2006 issuing excise invoice awaiting registration. It realized sales consideration with excise duty. Appellant did not dispute that central excise duty with cess amount collected from the buyer of the goods was payable to the Department. But, that could not be deposited with the department without knowing the time for deposit. There was no reason to cause evasion. Appellants conduct was not at all malafide nor its intention is bad. None of the statement recorded from the Accountant in charge as well as authorized representative demonstrate appellants evasive intention. It deposited the duty realized on 08.03.2007 with interest, upon detection by Revenue on 06.03.2007. This does not establish deliberate intention to cause evasion. In such circumstances, Section 11AC does not apply automatically against the appellant to impose huge penalty of Rs.42,13,660/-. Even the director who was innocent should not face penalty.
2. According to appellant, ld. Commissioner (Appeals) granted partial relief of penalty to Shri. C.E. Kim, Managing Director of the Company, who faced penalty under Rule 26 of Central Excise Rules, 2002. That was reduced to Rs. 5,00,000/- as against Rs.10,00,000/- imposed on him. But appeal of the appellant company was dismissed by him. Appellant, even today does not dispute duty liability. Appellants therefore prayed that penalty imposed on both of them may be waived considering the facts and circumstances of the case.
3. On the other hand, Revenue submits that the appellant did not deposit the duty element collected from buyer of the goods which is a clear case of duty evasion. Upon detection by Revenue on 06.03.2007, the duty element was deposited by the appellant, which otherwise would have been evaded. Mere payment of interest does not exonerate the appellant from penalty.
4. Heard both sides and perused the record.
5. On perusal of the statement recorded from the aforesaid two persons that does not show the reason why the department failed to ask question to know the reason why the duty collected was not deposited. Department has not come out with clear evidence to show malafides of the appellants or their contumacious conduct to establish evasion.
6. Section 11AC of Central Excise Act, 1944, has two essential ingredients. First ingredient is intention and the second one is evasion. From the totality of the reading of the records, that nowhere exhibits the intention of the appellants to defraud Revenue with a view to cause evasion or deliberately suppressed facts. No doubt, this awaiting registration, appellant made first clearance but realized duty. There is nothing on record to show habitual conduct of evasion not being discovered by any direct or circumstantial evidence. Intention of the appellant does not appear to be evasive. Therefore, presumption of ill intention to cause evasion is impermissible on the facts and circumstances of the case. Therefore, there shall not be penalty on both the appellants. Such decision can be taken following the ratio laid down by the Apex Court in the case of Continental Foundation Joint Venture Vs. CC, Chandigarh 2007 (216) ELT 177 (S.C.). Accordingly, both the appeals are allowed.
(Order dictated and pronounced in the open Court) (D.N. PANDA) JUDICIAL MEMBER BB 1