Custom, Excise & Service Tax Tribunal
M/S. Saboo Engg. (P) Limited vs Cce, Raipur on 31 July, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL, WEST BLOCK NO. 2, R.K. PURAM, NEW DELHI COURT III CENTRAL EXCISE APPEAL NO. 2336 OF 2007-SM [Arising out of Order-in-Appeal No. 133/RPR-I/2007 dated 11.6.2007 passed by the Commissioner (Appeals-I), Customs & Central Excise, Raipur] For approval and signature: Honble Mr. P.K. Das, Member (Judicial) 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 Departmental authorities? M/s. Saboo Engg. (P) Limited Appellants Vs. CCE, Raipur Respondent
Appearance:
Shri O.P. Agarwal, C.A. for the appellants;
Shri R.K. Verma, D.R. for the Revenue Coram:
Honble Mr. P.K. Das, Member (Judicial), Date of hearing/decision: 31st July, 2009 FINAL ORDER NO._________________ dated __________ Per P.K. Das:
The issue involved in this case is, as to whether penalty of Rs. 43,284/- could be imposed on the appellants under Rule 209A of the erstwhile Central Excise Rules, 1944.
2. Learned Chartered Accountant on behalf of the appellants submits that the appellants availed credit of Rs. 43,284/- in the month of June, 1995 on the basis of invoice issued by M/s. Mithlesh & Co., Raipur. The appellants are manufacturer of final product. During investigation, it was found that the appellants availed credit on the basis of invoice without receiving the goods. Hence, the appellants reversed the entire credit of Rs. 43,284/- on 12.4.2000. A show cause notice dated 28.9.2001 was issued proposing to impose penalty under Rule 209A of the erstwhile Central Excise Rules. The main contention of the learned Chartered Accountant is that imposition of penalty under Rule 209A of the erstwhile Central Excise Rules is contrary to the provisions of erstwhile rules. He submits that the appellants is a private limited company and Rule 209A is not applicable. He relied upon the decision of the Larger Bench in the case of Steel Tubes of India Ltd. vs. CCE, Indore, reported in 2007 (217) ELT 506 (Tri.-LB). He also relied upon the Division Bench decision of the Tribunal in the case of Woodmen Industries vs. CCE, Patna, reported in 2004 (164) ELT 339 (Tri.-Kolkata) which is upheld by the Honble Supreme Court as reported in 2004 (170) ELT A307. Other submissions of the learned Chartered Accountant is that the appellants had not dealt with the excisable goods and, therefore, imposition of penalty under Rule 209A of the Rules is not warranted.
3. He submits that on the identical situation the Division Bench of the Tribunal in the case of AIA Engg. Pvt. Ltd. vs. CCE, Ahmedabad-II, reported in 2006 (195) ELT 154 (Tri.-Mumbai) has held that in this situation provision of Rule 26 of Central Excise Rules, 2002 would not be applicable, which is para materia of the Rule 209A of the erstwhile Rules. On this issue he relied upon the following decisions:-
(a) BOB Corporation vs. CCE, Coimbatore 2007 (80) RLT 869 (CESTAT Che.);
(b) Jayantilal Thakkar & Company vs. UOI 2006 (195) ELT 9 (Bom.);
(c) Ruby Impex vs. CCE, Jalandhar
- 2004 (173) ELT 161 (Tri. Del.)
(d) Aarti Steel Industries vs. CCE, Nashik
- 2009 (92) RLT 582 (CESTAT Mum.)
4. Learned D.R. on behalf of the Revenue reiterates the findings of the Commissioner (Appeals). He submits that the word in any other manner deals with, any excisable goods under Rule 209A of the erstwhile rules indicates that there is no reason to handle the goods physically. It is his contention that the appellants availed the credit in connection with excisable goods which is sufficient for fulfilment of the ingredients of Rule 209A of erstwhile rules. He further submits that the appellants availed credit in connection with the excisable goods which is liable to confiscation as it was not accompanied with the invoice.
5. After hearing both sides and on perusal of the records relevant portion of Rule 209A of the erstwhile rules is reproduced below:-
RULE 209A. Penalty for certain offences. Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, [shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater.]
6. The fact which is not in dispute that the appellants availed credit only on the basis of invoice. They have not received any excisable goods in any manner. While interpreting Rule 209A of erstwhile rules, the Larger Bench of the Tribunal in the case of Steel Tubes of India Ltd. (supra) held as under:-
The ratio as laid down by Honble High Court squarely covers the issue referred to the larger bench in as much that for imposition of penalty under Rule 209A of the Central Excise Rules, 1944, the person must have dealt with the excisable goods with knowledge that they are liable for confiscation. In a given situation, where an assessee is only issuing invoices wherein there is no movement of the goods, they cannot be visited with penalty under Rule 209A. Respectfully following the judgment of the Honble High Court of Bombay, we hold that the conclusion reached by the West Zonal Bench in the case of Shaper Chemicals Ltd. (supra) is correct and does not require any reconsideration.
7. The Division Bench of the Tribunal in the case of AIA Engg. Pvt. Ltd. (supra) held that availment of credit without receipt of input in the factory Provisions not applicable inasmuch as no goods involved which were liable to confiscation. Further, the Division Bench of the Tribunal in the case of BOB Corporation (supra) held that penalty under Rule 209A of the erstwhile rules would not be liable in absence of any finding that the appellants physically dealt with the confiscated goods with the knowledge or reasonable belief that same were liable to confiscation.
8. The Tribunal in the case of Aarti Steel Industries (supra) held as under:-
The learned counsel is only opposing imposition of penalty of Rs. 2,00,000/- under Rule 26 of the Central Excise Rules, 2002 for abetting M/s. Nasik Strips Pvt. Ltd. in clearing the goods without payment of duty. It is his submission that under Rule 26, penalty can be imposed only on individuals and not on a firm and in this regard they have placed reliance on the Tribunals decision in the case of Woodmen Industries vs. CCE, Patna 2004 (60) RLT 330 (CESTAT Kol.) = 2004 (164) ELT 339, wherein it has been held that penalty under Rule 26 which is pari materia to Rule 209A, cannot be imposed on a firm as has been held in the case of Aditya Steel Industries vs. CCE, Hyderabad 1996 (14) RLT 600 (CEGAT = 1996 (84) ELT 229, which decision was upheld by the Supreme Court as reported in 2004 (170) ELT A307 (SC).
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4. I find that the limited issue involved in this case is whether penalty under Rule 26 can be imposed on a firm. I find that the Tribunal in the case of Woodmen Industries cited supra, has held that under Rule 26, penalty can be imposed only on individual and not on the firm. Following the same, I set aside the order of the Commissioner imposing penalty of Rs. 2,00,000/- on the appellants, and allow the appeal.
9. In view of the above decisions, I do not find any force in the submissions of the learned D.R. Accordingly, impugned order is set aside and the appeal filed by the appellants is allowed.
(Dictated & pronounced in the Open Court.) (P.K. DAS) MEMBER (JUDICIAL) RK