Custom, Excise & Service Tax Tribunal
Cce, Chennai vs M/S. Nivaran Herbal Pvt. Ltd on 9 December, 2009
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No. E/487/2002
(Arising out of Order-in-Appeal No.41/2002 (M-II) dated 6.6.2002 passed by the Commissioner of Central Excise (Appeals), Chennai)
For approval and signature:
Honble Ms. Jyoti Balasundaram, Vice President
Honble Dr. Chittaranjan Satapathy, Technical Member
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 the Members wish to see the fair copy of the Order?
4. Whether Order is to be circulated to the Departmental authorities?
CCE, Chennai Appellant
Vs.
M/s. Nivaran Herbal Pvt. Ltd. Respondents
Appearance Shri V.V. Hariharan, Jt. CDR, for the Appellant Shri K.R. Natarajan, Advocate for the Respondents CORAM Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of Hearing: 09.12.2009 Date of Decision: 09.12.2009 Final Order No. ____________ Per Dr. Chittaranjan Satapathy Heard both sides. The respondents had taken a registration for manufacture of 8 ml. Velvette brand shampoo. The present proceedings started with detection of clearance of 8 ml. shampoo and 100 ml. shampoo without payment of duty. The adjudicating authority has confirmed a demand of Rs.2,11,874/- and has imposed a penalty of equal amount under Section 11AC of the Central Excise Act, 1944 in addition to imposing a further penalty of Rs.25,000/- under Rule 173Q of the Central Excise Rules, 1944 and demanding interest under Section 11AB of the Act. The lower appellate authority has set aside the demand except for an amount of Rs.387/- and the penalty leading to this appeal by the Department.
2. Shri V.V. Hariharan, learned Jt. CDR appearing for the Department argues that the impugned Order-in-Appeal requires to be set aside for the reason that the same has been passed without taking into account the voluntary statement made by the Director and Despatch Clerk of the respondent-company to the effect that the clearances were made without payment of duty. He also states that the respondents had taken registration only for manufacture of 8 ml. shampoo and they had taken no registration for 100 ml. shampoo. The submission made by the respondents that they have received 8 ml. shampoo for re-processing and that the same was sent back as such cannot be accepted as the respondents had filed no D3 intimation, nor in the central excise accounts maintained by them and returns filed by them they have recorded return of defective/leaking of shampoo sachets. Moreover, the respondents had not taken any registration for manufacture of 100 ml. shampoo, but 100 ml. packets were found in the premises and the production register had a page for 100 ml. shampoo. As regards the claim that the respondents had traded 100 ml. shampoo, he states that the respondents had taken no permission for receiving and storing such shampoo in their factory premises as required under the rules. Besides, the purchase vouchers submitted by the respondents show that most of these vouchers were of a date subsequent to the date of sale of 100 ml. shampoo by them. This also goes to show that the explanation regarding trading in 100 ml. shampoo given at a belated stage cannot be accepted. He argues that the statement voluntarily given along with other attendant facts and circumstances clearly point out that there was clandestine manufacture and removal.
3. Heard Shri K.R. Natarajan, the learned counsel for the respondents. He states that the statements were given by one Smt. Sujatha, Director of the company and the same cannot be relied upon as she was new and not in-charge of the day to day activities. He also reiterates the defence taken before the lower appellate authority. He argues that the original authority while confirming the demand had not allowed cum-duty assessment which is required to be allowed in the event the explanation put forth by the respondents is not accepted by the Tribunal. Similarly, he states that the original authority has not allowed input duty credit in respect of inputs used in the alleged clandestine manufacture and clearance of the impugned goods.
4. After hearing both sides and perusal of case records, we find that the respondents have admitted in the course of investigation that the impugned goods were produced and sold clandestinely without payment of duty and they had also made good Rs.1,90,000/- towards duty which was later on appropriated by the original authority adjudicating the case. The subsequent explanation given on behalf of the respondents that the 8 ml. sachets were defective shampoos and the same were received for reprocessing and that these were further sent back cannot be believed in the absence of any documentary evidence such as D3 intimation, omission of recording in the statutory registers and non-reflection in the statutory returns. Similarly, the subsequent version that 100 ml. shampoos were being re-traded cannot also be accepted in the absence of required permission for receiving and storing duty paid goods and the respondents having possession of 100 ml. bottles for shampoos. The lower appellate authority has also not carefully scrutinized the documents placed before him inasmuch as he has allowed relief to the respondents without noticing that the documents produced for purchase of 100 ml. shampoos happen to be of dates subsequent to the date of removal of the shampoos and therefore no conclusion can be drawn that the 100 ml. shampoos were traded as no shampoo bought on a future date could have been sold on an earlier date.
5. After considering the entire facts and circumstances of the case as also the case records and arguments made before us, we hold that the impugned order passed by the lower appellate authority requires to be quashed and the order of the original authority requires to be upheld. We order accordingly. However, we are of the view that the duty amount determined is required to be reworked giving the respondents the benefit of cum-duty price assessment as the related documents do not show collection of the excise duty separately. As regards the penalty under Section 11AC is concerned, we uphold the same but the amount has to be reworked out along with the re-quantification of the duty demand. We find that there is no warrant for imposition of a separate penalty under Rule 173Q in this case and hence penalty of Rs.25,000/- imposed under the said rule is set aside. The interest under Section 11AB would be leviable in accordance with law in respect of the duty to be re-quantified. For the limited purpose of re-quantifying the duty, penalty under Section 11AC and interest under Section 11AB after allowing cum-duty price assessment, we remand the matter to the original authority. The input duty credit can not be considered in the absence of any documentary evidence coming forth from the respondents.
6. The appeal is thus partly allowed by way of remand in the above terms.
(Operative portion of the order was pronounced
in open court on completion of the hearing)
(Dr. Chittaranjan Satapathy) (Jyoti Balasundaram)
Technical Member Vice President
Rex
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