Custom, Excise & Service Tax Tribunal
M/S. Rimjhim Ispat Ltd vs Cce, Kanpur on 25 February, 2013
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 1827-1831, 1864-1866 of 2011
[Arising out of Order-in-Original No. 04/ CE/Commr/2011 dated 31.3.2011 passed by the Commissioner of Central Excise & Service Tax, Kanpur ]
For approval and signature:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Mr. Sahab Singh, Member (Technical)
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 CESTAT (Procedure) Rules, 1982 for
publication in any authoritative report or not?
3. Whether Their Lordships wish to see the fair : Seen
copy of the Order?
4. Whether Order is to be circulated to the : Yes
Departmental authorities?
M/s. Rimjhim Ispat Ltd. Appellants
Shri Mukesh Aggarwal, MD
Shri Mukul Aggarwal
Juhi Alloys Ltd.
Shri Yogesh Aggarwal, Director
Shri Laxmikant Goel
Shri Anil Goel, Proprietor
Shri Kapil, Cutter
Vs.
CCE, Kanpur Respondent
Appearance:
Shri K.K. Anand, Advocate for the Appellants
Ms. Ranjana Jha, DR for the Respondent
CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Mr. Sahab Singh, Member (Technical)
Date of Hearing /decision: 25.02.2013
ORDER NO .FO/ 55823-55830/2013-EX(Br)
Per Archana Wadhwa (for the Bench):
All the appeals are being disposed of by a common order on the preliminary issue itself inasmuch as we note that the Commissioner has confirmed the duty against M/s. Rimjhim Ispat Ltd. and Juhi Alloys, jointly and severely. For the better reference, we reproduce the operative part of the impugned order :-
(i) I confirm the demand of Central Excise Duty and Education Cess & Higher Education Cess amounting to Rs. 6,68,94,028/- (Rupees Six Crore Sixty Eight Lacs Ninety Four Thousands and Twenty Eight Only) on 13073.529 MT quantity of SS Flats removed clandestinely by M/s Rimjhim Ispat Ltd., and M/s Juhi Alloys Ltd., Bharua, Sumerpur, Distt., Hamirpur from their factory during the period from 01.10.2006 to 22.11.2007 under proviso to Section 11A (1) of the Central Excise Act, 1944.
(ii) I also order for recovery of interest form M/s Rimjhim Ispat Ltd., and M/s Juhi Alloys Ltd., Bharua, Sumerpur, distt., Hamirpur on the amount of confirmed Central Excise duty till the date of actual payment under section 11AB of Central Excise Act, 1944.
(iii) I also impose a penalty of Rs. 6,68,94,028/- (Rupees Six Crore Sixty Eight Lacs Ninety four Thousands and Twenty Eight only) upon M/s Rimjhim Ispat Ltd., Juhi Alloys Ltd., Bharua, Sumerpur, Distt,. Hamirpur under Section 11 AC of the Central Excise Act, 1944.
2. As is seen from the above, duty stand confirmed in respect of final product removed clandestinely by M/s. Rimjhim Ispat Ltd. and Juhi Alloys Ltd. without segregating what amount stands confirmed against each of them. Similarly, penalties stand imposed upon both the manufacturing unit without any segregation of the amount of penalty imposed on each one of them.
At this stage, learned advocate has raised the above preliminary issue and has drawn our attention to the Tribunals decision in the case of Manohar Mali and others vs. Commissioner of Central Excise, Surat Final Order dated 12.8.2009 vide which by taking note of the earlier decision of the Tribunal, it was held that liability of each and every assessee has to be fixed separately. We, reproduce relevant part of the said order as under:-
After allowing the stay petition, we proceed to decide the appeal itself, inasmuch as we find that the Commissioner vide his impugned order has confirmed duties and has imposed penalties on the appellants jointly and severally. Tribunal vide its earlier orders has held that such confirmation of demands and imposition of penalties jointly and severally on various persons is not in accordance with law. Reference in this regard is made to the Tribunals decision in the case of M/s Shanti Processors which was followed in the case of M/s. Saikrupa Dyeing and Printing Mills Pvt. Limited vide order No. A/1282/WZB/AHD/2009 dated 23.6.2009.
2. In view of the above, we set aside the impugned orders and remand the matters for fresh decision and fixing the liability on each and every individual separately. We make it clear that no opinion is being expressed on the merits of the case. Stay petition as also appeals get disposed off in the above manner.
3. It is seen that said order of the Tribunal was challenged by the Revenue before the Honble High Court of Gujarat at Ahmedabad and their appeal was dismissed. Subsequently, the Tribunal, Mumbai Bench in the case of Hiren R. Kapadia by taking note of the above decision reported as 2013-TIOL-198-CESTAT-Mum held that individual duty liability is to be segregated separately against each different individual and common order in respect of different assessees confirming joint demands cannot be upheld. To the same effect is the Tribunal decision in the case of Sree Aravindh Steels Ltd. vs. CCE Trichy reported in [2007 (216) ELT 332 (Tri-Chennai)] laying down that duty should not be demanded from two different person in respect of same goods. Finding of the lower authorities holding that subject goods are manufactured jointly and severely by two companies which are jointly and severally liable to pay duty are not acceptable. Further, we note that in the case of Famous Textile vs. CCE, Rajkot [2005 (190) ELT 361 (Tri-Mum)] Tribunal held that demand directed against two persons without arriving at specific charges on whom determination is to be effected and liability should rest, cannot be upheld.
4. As against the above decision, learned Jt. CDR has brought to our notice, the Honble Supreme Courts decision in the case of Calcutta Chromotype Ltd. vs. CCE, Calcutta [1998 (99) ELT 202 (SC)], she submits that the appellants in the present case have joined hands with each other inasmuch as both the units are operated by same family members and it is not possible for the Revenue to segregate the demand against each and every manufacturing unit separately. We note that the issue in the case of Calcutta Chromotype Ltd. decided by the Honble Supreme Court was in respect of the related persons and even the specific para 14, to which our attention stands drawn by learned Jt. CDR has not dealt with the issue of confirmation of demand jointly and severely against two different persons. Similarly, the Allahabad High Court decision in the case of Meekin Transmission Ltd. vs. State of Uttar Pradesh [2010 (20) STR 390 (All)] relied upon by the learned Jt.CDR, nowhere lays down that confirmation of demand against two individual jointly and severely can be upheld. The same deals only with other issues and as such, not relevant for the said purpose. She specifically relied upon para 48 of the said judgment which lays down that there is no bar on the authorities to lift the veil of a company, whether a manufacturer or a buyer, to see it as not wearing that mask, or not being treated as related person, when both, the manufacturer and the buyer are infact the same persons. It is further held in the said decisions that tax planning may be legitimate provided within the framework of law but colourable devices cannot be part of tax planning. Dubious methods resorting to artifice cr subterfuge payment of taxes on which really is income can today no longer be applauded and legitimized as a splendid work by a wise man but has to be condemned and punished with severest of penalties and for that purpose if a person is found to indulge therein the lifting of veil would also be justified.
5. We do not appreciate the above argument by the learned Jt.CDR inasmuch as the matter in the present appeals do not relate to the lifting of veil about which there could be no doubt. Here, it is a case of clandestine removal against two different manufacturing units. M/s. Rimjhim Ispat Ltd. was manufacturing ingots / billets which according to the Revenue was being clandestinely transferred to Juhi Alloys Ltd. who were manufacturing flats clandestinely and further clearing clandestinely to various flat and rod manufacturers. Based upon the evidence, it is for the Revenue to confirm the demands in respect of billets against M/s. Rimjhim Ispat Ltd. and in respect of flats against Juhi Alloys Ltd. The decisions relied upon by the learned Jt.CDR nowhere permits the Revenue to confirm the duty jointly and severely against two different legal entities, one manufacturing the ingots and the other manufacturing the flats.
6. As we have already observed that there are various decisions laying down that a joint demand and joint penalty cannot be confirmed against the appellants against two persons, we deem it fit to set aside the impugned order and remand the matter to the adjudicating authority for fresh decision for fixing the liability of each and every individual separately. We make it clear that we have not gone to the merits of the case and the Revenue as well as assessee are entitled to raise all the legal issues including the appreciation of evidence on record, including the appellants request for cross examination afresh in the denovo proceedings.
7. All the appeals are disposed of in the above manner.
(Pronounced in the open court ) ( Archana Wadhwa ) Member(Judicial) ( Sahab Singh ) Member(Technical) ss ??
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