Custom, Excise & Service Tax Tribunal
Murugan Mills vs Commissioner Of Central Excise, Ltu on 1 September, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.E/980/2005
[Arising out of Order-in-Appeal No.229/2005 dt. 18.8.2005 passed by the Commissioner of Central Excise (Appeals), Coimbatore]
For approval and signature:
Honble Shri R. PERIASAMI, 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 Member wishes to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
Murugan Mills
Appellant
Versus
Commissioner of Central Excise, LTU
Chennai Respondent
Appearance:
Shri M. Karthikeyan, Advocate For the Appellant Shri K.P. Muralidharan, Superintendent (AR) For the Respondent CORAM:
Honble Shri R. Periasami, Technical Member Date of hearing : 30-07-2014 Date of pronouncement : 01.09.2014 FINAL ORDER No.40563/2014
1. The appellant has filed the present appeal against the Commissioner (Appeals) order dt. 18.8.2005.
2. The brief facts of the case are that an offence case was registered against the appellant consequent on the seizure of Grey Cotton Fabrics during interception of vehicle from the transporter removed without valid duty paying documents and without payment of Central Excise duty. Out of the total quantity of 65 bales of Grey Cotton Fabrics seized, 40 bales of Grey Cotton Fabrics belonged to the appellant. Immediate stock verification of finished goods in the appellant's factory, it was noticed a shortage of grey cotton fabrics of 49,831 mtrs. The adjudicating authority in his order confirmed the demand of Rs.83,467/- and also appropriated the same from the cash security of Rs.1,65,000/- paid by the appellants vide TR.6 challan No.9/03-04 dt. 16.3.2004 during provisional release of the seized goods and also confirmed interest and imposed equivalent penalty under Section 11AC of the Central Excise Act, 1944. He also confiscated 38,889 mtrs. of Grey Fabrics seized and provisionally released and imposed redemption fine of Rs.65,500/- in lieu of confiscation and also appropriated the same from the cash security. He dropped the demand of cenvat credit of Rs.15,428/-.
3. Aggrieved by the order, the appellant filed appeal before Commissioner (Appeals). The lower appellate authority vide impugned order held that the quantity found shortage at the factory premises is inclusive of seized quantity and since confiscation of such seized quantity is already justified to the remaining quantity of 10,942 mtrs. of grey fabrics and directed the adjudication authority to re-quantify the duty liability on the revised quantity and to determine the reduced penalty proportionately equivalent to the revised duty. Hence the present appeal.
4. The learned advocate for the appellant submits that the department has not conclusively proved clandestine removal of goods which was seized when the vehicle was intercepted by the departmental officers. The department has not considered the Invoice No.59 dt. 24.12.2004 which was available in the factory premises on 25.2.2004 whereas the department has concluded that the same invoice has been used for second time for clearance of said seized goods. He submits that stock taking carried out in the factory premises by the officers failed to bring out clear shortage of fabrics. He submits that goods transported under cover of invoice dt. 24.12.2004 already duty paid and the same goods were seized from the transporter. The seized goods were released provisionally and the same were allowed to be taken in their RG.1 Register and cleared subsequently on payment of duty. This amounts to double payment of duty. He also submits photocopy of extract of RG.1 Register and also copy of the order dt. 13.1.2006 passed by the Asst. Commissioner thereby the duty demand is re-quantified and reduced from Rs.83,467/- to Rs.18,328/-. Accordingly, penalty also was reduced proportionately. Further, he submits that if revised duty demand is taken into account and the same is already appropriated from the cash security of Rs.1,65,000/- paid during investigation, they are eligible for 25% of the penalty as per Section 11AC (1) (c) of the Central Excise Act. He submits that if revised duty and reduced penalty and redemption fine is taken together, it works out to only Rs.88,408/- and there is still excess amount of cash deposit already made by them.
5. Ld. A.R submits that show cause notice has clearly brought out clandestine removal and submits that seizure mahazar, detention mahazar, statement recorded from the partner of the appellant company, the sales invoices and the stock register recovered from the appellant's premises on 25.2.2004 clearly proved clandestine removal as well as shortage of goods in the factory premises. He submits that unsigned copy of RG.1 Register produced by the learned advocate cannot be relied upon whereas the stock register maintained by the appellant for the period 17.10.2003 to 24.2.2004 reveals that there was a quantity of 2,08,472.70 mtrs. of goods in stock whereas the physical verification of stock available in the unit was only 1,58,641.70 mtrs. resulting in shortage of 49,831 mtrs. The above shortage was admitted by the partner of the appellant company and he agreed to pay the central excise duty for the shortage goods.
6. Heard both sides. The lower appellate authority has discussed the issue in detail and also partially allowed their appeal to the extent of restricting the demand to the balance quantity of 10,942 mtrs of Grey Fabrics by taking together both seized quantity and the shortages noticed in the factory. On a perusal of the copy of order dt. 13.1.2007, the adjudicating authority had re-quantified the duty liability and the penalty as per the Commissioner (Appeals) order which is reproduced as under :-
"1. I reduce the Central Excise Duty demanded from Rs.83,467/- to Rs.18,328/- (Rs.Eighteen thousand three hundred and twenty eight nine only) on M/s.Murugan Mills on the unaccounted 10,942 mtrs of grey cotton fabrics and also confirm the same under Section 11A(1) of the Central Excise Act, 1944. I order appropriation of the duty demanded from the cash security of Rs.1,65,000/- paid vide TR6 challan No.9/2003-04 dated 16-3-2004.
2.Since duty confirmed is being reduced, I also reduce the penalty imposed from Rs.83,467/- to Rs.18,328/- (Rs. Eighteen thousand three hundred and twenty eight only) on M/s.Murugan Mills under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002.
Regarding other items the earlier order passed by the original adjudicating authority holds good."
7. From the above, it is seen that duty liability has been reduced to Rs.18,328/-and consequently penalty also reduced to Rs.18,328/-. The very fact that the when the goods were intercepted from the transporter there is no valid duty paying documents and this proves beyond doubt that the goods were clandestinely removed without payment of duty. The appellant failed to justify the invoice No.59 dt. 24.2.2004 which relates to the goods intercepted by the officers. As clearly held by the lower authorities, when all the invoices clearly mentioned the date and time of removal, except few invoices including invoice No.59 dt. 24.2.2004 which did not indicate at the time of removal clearly shows malafide intention on the part of the appellant for using the same invoice for multiple clearance. Since Commissioner (Appeals) has already taken the shortage quantity noticed in the factory premises and the seized quantity together and re-determined duty demand only on balance quantity, confiscation and the revised duty demand of duty and imposition of redemption fine is justified and liable to be upheld.
8. As regards the appellant's contention for claiming the benefit of 25% of revised penalty imposed by the adjudicating authority, I find that there is merit in the contention of the appellant as the adjudicating authority has appropriated the duty demand and redemption fine from the cash deposit of Rs.1,65,000/- paid by the appellants vide TR.6 challan No.9/2003-04 dt. 16.3.2004. If revised duty amount of Rs.18,628/- and the equivalent penalty under Section 11AC and Redemption Fine of Rs.65,500/- is taken together which is less than the cash deposit already paid by the appellant before issue of show cause notice. Therefore, the appellant is eligible for the reduced penalty of 25% as per Section 11AC of the Central Excise Act. Accordingly, I uphold the order of the lower authority to the extent of confirming the revised duty amount, redemption fine except reduced penalty of 25%.
9. The appeal is disposed of in the above terms.
(Pronounced in open court 01.09.2014) (R. PERIASAMI) TECHNICAL MEMBER gs 7