Custom, Excise & Service Tax Tribunal
M/S. D.M. Exporters vs Commissioner Of Central Excise, Mumbai ... on 3 March, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/1348/2010 (Arising out of Order-in-Appeal No. SB(38)38/M-V/2010 dated 20.04.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai-I ) For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) ======================================================
1. Whether Press Reporters may be allowed to see : No
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 : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s. D.M. Exporters
:
Appellant
VS
Commissioner of Central Excise, Mumbai V
:
Respondent
Appearance
Shri V.S. Sejpal, Advocate for Appellant
Shri Sanjay Hasija, Supdt.(A.R) for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Date of hearing : 03/03/2016
Date of decision: 03/03/2016
ORDER NO.
This appeal is directed against the Order-in-Appeal No. SB(38)38/M-V/2010 dated 20.04.2010 passed by the Commissioner of Central Excise (Appeals), Mumbai-I whereby Ld. Commissioner rejected the appeal of the appellant by upholding the Order-in-Original No. 759/12/V/2006/JC/KNP dt. 30.11.2006.
2. The fact of the case is that the appellant are engaged in the manufacture and export of manmade fabrics, readymade garments and made ups falling under Chapters 54, 61 and 62 of the First Schedule to the Central Excise Tariff Act, 1985. They shifted their factory from Laxmi Industrial State, Penkar Pada, Mira Road (East) Gala No.7 Sarita Building, Prabhat Industrial Estate, Dahisar (East), Mumbai. The appellant while shifting the factory was having a Cenvat Credit balance of Rs.5,62,355/- in their Cenvat Account, the appellant filed an application to the Deputy Commissioner Central Excise Borivali Division vide their letter dt. 6.9.2004 for transfer of Cenvat Credit in balance to their subsequent factory premises. The application was rejected on the ground that transfer of Cenvat Credit is allowed only if, the stock of inputs as such or in process is also transferred, along with the factory to the new site or ownership, as there was no stock of inputs lying in the balance at the time of applying for the transfer of Credit, the application was rejected. Thereafter, the appellant filed a refund claim on 20.12.2004 for Rs. 5,62,354/- the said refund claim was rejected on time bar as per the RG 23A Part-II and ER-1 Returns submitted to the Range Office as on 31.7.2004, the closing balance of the quantity of inputs was shown as NIL in the Input Stock Register and which has been continued to be shown on nil till 24.3.2005. The appellant purchased 184904 L. meters. of fabrics and recorded in their Input Stock Register, maintained in RG.23A Part-I register and submitted to the Range Office with the ER-1 of March 2005, there was no Cenvat duty involved and no Cenvat duty paid at the time of purchase of the said inputs, as the duty amount was not mentioned in these commercial invoices. The appellant shown clearance of 184904 L. Meters of fabric on payment of duty of Rs.5,62,107/- showing removal of input as such. Show cause notice dt. 27.3.2006 was issued alleging that the fabrics of 184904 L. Meters was not cenvatable and therefore no duty is payable on the clearance of the said material, hence the appellant has wrongly utilized the Cenvat Credit lying in the cenvat account. Accordingly, it was proposed to be recovered under Rule 14 and the penalty was also proposed under Rule 15 and also under Rule 27 of the Rule. On adjudication, the demand of Rs.5,62,107/- was confirmed for a recovery under Rule 14, and the same was appropriated as the appellant have paid the said amount on 21.09.2005 and 19.1.2006, demand of interest was also confirmed, the same was appropriated against the amount of interest already paid by the appellant on 3.12.2006, a penalty of Rs.5,000/- was imposed under Rule 27 and also a penalty of Rs. 5,62,107/- was imposed under Rule 15(2) of Cenvat Credit Rules 2004. Aggrieved by the Order-in-Original, the appellant filed an appeal before the Ld. Commissioner (Appeals), which was rejected, therefore the appellant is before me.
3. Shri Vinay Sejpal, Ld. Counsel for the appellant submits that atthe time of clearance of the fabrics they have already debited the Cenvat Credit, therefore further recovery could not have been made, this will amount to double recovery of the same amount. However, the appellant is not contesting the demand as in addition to their debit entry in their Cenvat account while removing the non-excisable goods also paid the same amount in cash along with interest. The appellant is only contesting the penalty under Rule 15(2) of Cenvat Credit Rules. He submits that the show cause notice was issued within the period of 1 year on the basis of their records such as RG 23 A Part-I & II and ER.1 Returns submitted to the department. He submits that the removal of the fabric on which the Cenvat Credit was utilized for payment has been declared in the Cenvat account as well as in the ER.1 Return, from these records only, the Department has issued the show cause notice, therefore there is no suppression of fact on their part, penalty under Rule 15(2) could not have been imposed. He further submits that the show cause notice has not explicitly made the charges of any ingredients such as suppression of fact, mis-declaration, fraud, collusion etc. for imposition of penalty under Rule 15(2) of the Rule. Moreover, the show cause notice proposed the penalty only under Rule 15 without mention of Sub-rule (2) of Rule 15 of the rule. For this reason also equal penalty under Rule 15(2) was wrongly imposed. He submits that in view of various Supreme Court judgments it has been held that for invoking the penal provision under Section 11AC of the Act, the show cause notice should specifically mention the charges under which the penalty under Section 11AC can be imposed. In the absence of invocation of any charge and ingredients for invocation of such provision, penalty under Section 11AC cannot be imposed. In support he placed reliance on the following judgments.
(i) Collector of Central Excise Vs. H.M.M. Ltd. 1995 (76) E.L.T.497 (S.C.)
(ii) Raj Bahadur Narain Singh Sugar Mills Ltd. Vs. Union of India 1996 (88) E.L.T. 24 (S.C.)
(iii) Kaur & Singh Vs. Collector of Central Excise, New Delhi 1997 (94) E.L.T. 289 (S.C.)
4. On the other hand, Shri Sanjay Hasija, Ld. Supdt. (A.R.) appearing on behalf of the Revenue reiterates the findings of the impugned order. He submits that for invoking the penal provision under Section 11AC or Rule 15(2), the period of one year is not relevant, the penalty provision under Section 11AC is independent proviso to Section 11AC(1) of the Act. Therefore, if it is established that there is a suppression of fact, mis-delcaration, fraud, and collusion etc. even during the normal period of one year penalty under Section 11AC of the Act can be imposed. He further submits that though in the show cause notice there is no specific mention about Sub-rule(2) of Rule 15 of the Cenvat Credit Rules, but only for this reason show cause notice will not stand vitiated. In the Honble Supreme Court judgement in the case of J.K. Steel Ltd. Vs. Union of India 1978 (2) E.L.T. J355 (S.C.)It was held that wrong mention or non-mention or Rule or Section will not vitiate the show cause notice. He submits that the appellant has willfully intended to wrongly utilize the Cenvat Credit therefore the penalty under Section 11AC/Rule 15(2) was correctly and legally imposed on the appellant.
5. I have carefully considered the submissions made by both the sides. The only issue to be decided by me is whether the appellant is liable for penalty under Section 11AC of Central Excise Act,1944/Rule 15(2) of Cenvat Credit Rules, 2004. In the facts and circumstances of this case, I find that the appellant have debited the Cenvat Credit even though wrongly at the time of removal of non-excisable fabric, and the appellant has also paid additional equal amount in cash after issuance of show cause notice which they have not contested. As regard the issue whether there is suppression of fact, mis-declaration, fraud, collusion etc. I find that the department has made out a case on the basis of the facts declared in their Cenvat account as well as in the ER-1 return regarding the removal of non excisable goods on the payment of duty from the balance of Cenvat credit. On careful reading of the show cause notice, I find that there is no specific allegation that the appellant has suppressed the fact of removal of non-excisable goods on payment of duty. The appellant shows the debit entry in their RG 23A Part-II account and also shown the quantity of fabrics removed in their RG 23A Part-II account, the same has been reflected in the ER-1 Return. Therefore, in the absence of any specific allegation in the show cause notice and the disclosure of entire fact in the statutory record does not show suppression of fact on the part of the appellant. The Honble Supreme Court in the above cited judgment held that for invoking a penal provision under Section 11AC of the Act, the specific ingredients contained in such Section must be shown in the show cause notice, therefore, merely mentioning the Section alone will not help the department to penalize an assessee. As per the above facts and circumstances, I find that the penalty under Section 11AC/Rule 15(2) is not imposable on the appellant, however there is no doubt that the appellant have contravened the provision. Therefore the penalty under Section 11A is set aside and the demand of Cenvat Credit, interest and penalty under Rule 27 are maintained. The appeal is allowed in the above terms.
(Pronounced & Dictated in court) (Ramesh Nair) Member (Judicial) SM.
7Appeal No. E/1348/2010