Custom, Excise & Service Tax Tribunal
M/S. Annapurna Industries Pvt. Ltd vs C.C.E. Allahabad on 28 January, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. E/202 & 203/2005 -Ex[DB]
[Arising out of Order-In-Appeal No. 637-638/CE/ALLD/2004 dated: 15.10.2004 passed by U.P. Commissionerate, Allahabad]
For approval and signature:
Hon'ble Mr. Rakesh Kumar, Member (Technical)
Hon'ble Mr. S.K. Mohanty, 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 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?
M/s. Annapurna Industries Pvt. Ltd. ...Appellant
M/s. Shivam Udyog
Vs.
C.C.E. Allahabad Respondent
Appearance:
Mr. Bipin Garg, Advocate for the Appellants Mr. M.S. Negi, DR for the Respondent CORAM:
Hon'ble Mr. Rakesh Kumar, Member (Technical) Hon'ble Mr. S.K. Mohanty, Member (Judicial) Date of Hearing/decision.28.01.2015 FINAL ORDER NO. 50304-50305 /2015-Ex(Br) Per Rakesh Kumar (for the Bench):
1. Both the appellant units are engaged in manufacture of plastic containers and were availing SSI exemption with cenvat credit facility i.e. they were paying duty at the concessional rate prescribed in the SSI notification and were availing the cenvat credit. Both the units were visited by the Jurisdictional Central Excise Officer on 09.09.2002. Both the units were found to adjacent to each other and separated by a passage. At the time of officers visit to the units, while M/s. Shivam Udyog was found closed since 03.09.2002 due to break-down of the DG set, M/s. Annapurna Industries was functioning. Stock taking of the finished goods and raw materials was done in both the units. The RG-1 register in both the cases showed nil balance. However, certain quantity of the goods manufactured by M/s Annapurna Industries was found in the factory premises of M/s. Shivam Udyog as well as in the passage and the duty involved on those goods was Rs. 9,398/-, the officers were of the view that these finished goods had been cleared by M/s Annapurna Industries to M/s Shivam Udyog without payment of duty and without issue invoices and the same were placed under seizure. In the factory premises of M/s Annapurna Industries, 780 KG of unaccounted scrap was found which was also placed under seizure. On stock taking of the cenvat credit availed raw material - Plastic Granules in both the units, while there was shortage of 4125 KG of cenvat credit availed plastic granules in the factory of M/s Annapurna Industries, in the factory of M/s Shivam Udyog there were shortage of 15,375 KG. According to the officers, the quantity of plastic granules found short in the factory premises of M/s Annapurna Industries and M/s Shivam Udyog had been cleared clandestinely and without payment of amount in terms of Rule 4(5) of the Cenvat Credit Rules and that the amount payable in the case of M/s Annapurna Industries was Rs. 2,90,613/- and the amount payable by M/s. Shivam Udyog of Rs. 4,46,426/-. At the time of stock taking of plastic granules, Shri D P Singh, the Authorized Representative of both the units was present and on being asked, he could not give any explanation whatsoever, and as such accepted the shortage.
1.1 After issued a show cause notice, the matter was adjudicated by the Joint Commissioner vide order-in-original dated 31.03.2004 by which he confirmed the demand of Rs. 2,90,613/- against M/s Annapurna Industries and demand of Rs. 4,46,426/- against M/s Shivam Udyog under Rule 12 of the Cenvat Credit Rules, 2002 along with interest thereon under section 11AB and beside this, penalties of equal amount on them under Rule 13(2) of Cenvat Credit Rules, 2002, read with section 11AC of Central Excise Act, 1944. By the same order, the Joint Commissioner also confirmed duty demand of Rs. 9,398/- against M/s Annapurna Industries along with interest thereon under section 11AB in respect of the finished products held to have been removed by them and which have been found partly in the passage and partly in the factory premises of M/s Shivam Udyog. Beside this, another penalty of Rs. 10,000/- was imposed on M/s Annapurna Industries under section 11AC. The unaccounted seized goods valued Rs. 1,98,006/- were also ordered to be confiscated with option to be redeemed on a redemption fine of Rs. One Lakh and penalty of Rs. 20,000/- was also imposed on this accountt on M/s Annapurna Industries. In course of hearing before the Joint Commissioner, the appellants with regard to the shortage of cenvat credit availed on plastic granules pleaded that there was no shortage as the granules alleged to have been found short had actually being sent to job workers under job work challans for manufacture of Plastic Caps and Plastic Handles for which the appellants do not have the capacity and in this regard they also produced the job work register and the job work challans. According to the appellant, 4125 KG of Plastic Granules found short in the premises of M/s Annapurna Industries had been sent by them under job work challan no. 9 dated 08.09.2002 at 5:00 P.M. to M/s Bansal Polypect, Varanasi, for job work for manufacture of Plastic Caps and Plastic Handles and similarly the plastic granules weighing 15,375/- found short in the factory premises of M/s Shivam Ugyog had been sent to M/s JJ Packagers Pvt. Ltd. and M/s Swastik Industries for job work under 3 job work challan No. 17, 18, 19, each dated 08.09.2002, However, the Joint Commissioner did not accept this plea holding that these job work challans have been fabricated and are not genuine and as such this plea is an afterthought.
1.2 On appeals being filed to Commissioner (Appeals) against this order of the Joint Commissioner, the same were dismissed by the Commissioner (Appeals) vide order in appeal dated 15.10.2004. Against this order of the Commissioner (Appeals), these appeals have been filed.
2. Shri Bipin Garg, Advocate, the Ld. Counsel for the appellant, pleaded that as regards the stock of plastic containers and caps found in the passage between the two units and in the premises of M/s Shivam Udyog on 09.09.2002, the same had not been cleared to M/s Shivam Udyog but the same had only been temporarily shifted as there were shortage of space in the premises of M/s Annapurna Industries and the second unit of M/s Shivam Udyog was closed, that the Plastic Containers and caps found were not in fully finished condition, that as regards alleged excess quantity of 780 KG of Plastic Scrap, the same was meant for recycling and for this reason only, the same had not entered in the RG-1 Register, that in view of this the confiscation of 780 KG of scrap and confiscation of the plastic containers/ caps is not sustainable, that as regards the alleged shortage of 4125 KG of Plastic Granules in the factory of M/s Annapurna Industries and alleged shortage of 15,375 KG of Plastic Granlues in the factory of M/s Shivam Udyog, as explained by the appellant in their reply to the Show Cause Notice, there was no shortage, as this quantity of plastic granules had been sent to various other manufacturers including M/s JJ Packagerr Unit II for manufacture of plastic caps and handles on job work basis, that that though at the time of officers visit to the factory, the Authorized Representative present at that time, could not produce the job work challans, subsequently at the time of reply to the Show Cause Notice, the job work challans along with job work register had been produced, that the plastic granules sent to the job workers had been processed by the respective job workers and the appellants have received back the plastic caps and handles, that in view of this the demands of Rs. 2,90,613/- against M/s Annapurna Industries and demand of Rs. 4,46,426/- against M/s Shivam Udyog are without any basis, more so when no inquiry has been conducted with the job workers as well as transporters, that in any case, the amount of Rs. 2,90,613/- and Rs. 4,46,426/- demanded from M/s Annapurna Industries and M/s Shivam Udyog under Rule 4(5)A are on much higher side, as the Department has adopted some value of the plastic granules on arbitrary basis and has calculated the amount payable at the rate of 16% ad valorem, that both the appellants had purchased the Granules from JJ Packagerrs (the Authorized Stockiest of Gas Authority of India Ltd.), and on the basis of the invoices of GAIL, the value of the plastic granules alleged to have been found short would be much lower and on that basis, the amount payable would be much lower, and that in view of the above submissions, the impugned order is not sustainable.
3. Shri M S Negi, the Ld. DR, defended the impugned order by reiterating the findings of the Commissioner in the impugned order. With regard to the alleged clearance of plastic containers by M/s Annapurna Industries to M/s Shivam Udyog without payment of duty, he pleaded that at the time of officers visit to the factory, the RG -1 register was showing nil balance which shows that the goods found in the passage between the two units and in the factory of M/s Shivam Udyog had been illicitly cleared and hence the duty of Rs. 9,398/- has been correctly demanded from M/s Annapurna Industries in respect of the same and the goods had been correctly confiscated. With regard to the alleged removal of 4125 KG of Plastic Granules by M/s Annapurna Industries and 15,375 KG of Plastic granules by M/s Shivam Udyog, he pleaded that at the time of visit to the factory, Shri D P Singh, the Authorized Representative of both the units could not give any explanation whatsoever and absolutely made no mention that the goods had been sent to job workers under job work challans and on the contrary had accepted the shortage. He also pleaded that while the job work challans produced along with reply to the Show Cause Notice show the date of removal as 08.09.2002 it is surprising that at the time of officers visit to the unit, the authorized representative was not aware of sending of the consignments of plastic granules to various job workers. He, therefore, pleaded that the cenvat credit demand in respect of the quantity of plastic granules found short has been correctly upheld by the Commissioner (Appeals). He accordingly pleaded that there is no infirmity in the impugned order.
4. We have considered the submissions from both the sides and perused the records. Coming first to the question of non-accountal of 780 KG of plastic scrap found in the premises of M/s Annapurna Industries, there is no dispute that the same was not accounted for in the RG-1 Register. However, we are of the view that the appellants plea that the same being intermediate product was meant for recycling and was exempted from duty under notification no. 67/95 CE and for this reason, the same was not accounted for in the RG-1 Register is acceptable. Accordingly, we hold that the confiscation of 780 KG of Plastic Scrap under Rule 25(1) of Central Excise Rule 2002 and imposition of penalty on M/s Annapurna Industries on that account is not sustainable and has to be set aside.
5. As regards, the alleged removal of plastic containers by M/s Annapurna Industries to M/s Shivam Udyog and duty demand of Rs. 9,398/- on the same and the confiscation of these goods, we are of the view that there is merit in the appellants plea that these goods were not in fully finished condition and had been shifted to the adjacent premises of M/s Shivam Udyog on account of lack of space in M/s Annapurna Industries and as such the same cannot be said to have been cleared to M/s Shivam Udyog without payment of duty. In view of this, the duty demand of Rs. 9,398/- and confiscation of these goods has also to be set aside.
6. Coming to the question of cenvat credit demand of Rs. 2,90,613/- against M/s Annapurna Industries and cenvat credit demand of Rs. 4,46,261/- against M/s Shivam Udyog in respect of alleged shortage of 4125 KG and 15,375 KG respectively of Plastic Granules in their factories, there is no dispute that at the time of stock taking, these shortages had been found and Shri DP Singh, Authorized Representative of both the units could not give any explanation though both the appellants now plead that the plastic granules had been sent under job work challans on 08.09.2002 to various job workers for making plastic caps and plastic handles on job work basis, and in this regard both the appellants had subsequently produced the job work challans along with the job work register, we are of the view that this plea of the appellant is not acceptable for the reason that if the plastic granules had been cleared to job workers under job work challans on 08.09.2002 there is no explanation as to why the Authorized Signatory of the appellants was not aware about the same. Therefore, we hold that the Commissioner (Appeals) has correctly held that the plea of sending the plastic granules to job workers under job work challan are only an afterthought. However, we find that the amount of Rs. 2,90,613/- from M/s Annapurna Industries and the amount of Rs. 4,46,426/- demanded from M/s Shivam Udyog has been determined by adopting some value of the granules and calculating the duty on the same at rate of 16%, while in our view only the cenvat credit originally taken in respect of Granules would be payable which according to the appellant would be a much lesser amount. The cenvat credit attributable to 4125 KG of plastic Granules found short in the premises of M/s Annapurna Industries and 15,375 KG of Plastic Granules found short in the factory premises of M/s Shivam Udyog can be determined on the basis of the invoices issued by GAIL under which M/s JJ Packagerr had received the consignments. Accordingly for this limited purpose the matter has to be remanded to the Original Adjudicating Authority. The penalty imposable on the appellant would be according to the re-quantified cenvat credit demand.
7. In view of the above discussion, while the confiscation of the goods valued of Rs. 1,98,006/- and imposition of penalty and also the duty demand of Rs. 9,398/- against M/s Annapurna Industries along with interest and equivalent amount of penalty is set aside, the matter of quantification of cenvat credit demand from M/s Annapurna Industries and M/s Shivam Udyog on account of shortage of the plastic granules is remanded to the original adjudicating authority for re-quantification in terms of our directions in this order. The penalty imposable under rule 13(2) of the cenvat credit Rule read with section 11AC would be according to re-quantified cenvat credit demand.
(Dictated and pronounced in open court) (S.K. Mohanty) (Rakesh Kumar) Member(Judicial) Member(Technical) Neha Page | 1