Customs, Excise and Gold Tribunal - Delhi
Media Video Ltd. vs Commissioner Of C. Ex. on 24 December, 2002
Equivalent citations: 2003(160)ELT609(TRI-DEL)
ORDER P.S. Bajaj, Member (J)
1. This appeal has been filed by the appellants against the impugned order-in-original dated 2-3-2001 vide which the Commissioner of Central Excise has confirmed the duty, imposed penalties on them and disallowed Modvat credit of various amounts as detailed therein, to them.
The facts leading to the filing of the present appeal may briefly be stated as under :
2. On receipt of an intelligence that the appellants were manufacturing and clandestinely clearing video cassettes and TV video games and cartridges without payment of duty, Central Excise officers carried out search of their premises and also of their dealers/distributors on 12-12-91. On conducting physical stock verification of finished excisable goods and goods in respect of Modvat credit was availed, the same were found in excess or short vis-a-vis recorded balance in the statutory records. The unaccounted goods found were 7281 video cassettes involving Central Excise duty of Rs. 4,28,486.85 and the same were seized. It also revealed that the appellants had clandestinely removed without payment of duty 40,000 video cassettes involving duty of Rs. 23,54,000/-. It was also found that they had wrongly availed Modvat credit of Rs. 91,924.34 on plastic moulded components and also of Rs. 21,55,428/- on 130632 Sq mts. of magnetic video tapes as the same were found short and clandestinely removed from the factory premises. The inputs found short in the factory premises of the appellants involved duty of Rs. 3,802.43. The premises of M/s. Usha Electronics, Kolkata, M/s. Media CP, New Delhi, and M/s. Zaveri Agencies and Marketing, Ajmer to whom the goods were cleared by the appellants without payment of duty, were also searched. To these firms goods involving duty of Rs. 49,027.61 and Rs. 5097.73 were found to have been cleared without payment of duty. The statement of Shri Anil Kumar Sanghi, Executive Director of the appellants company was also recorded wherein he did not dispute the excess and shortage of the goods found in the factory. The statement of Praveen Chaudhary, Director of the company was also recorded who also did not dispute the removal of 40,000 unrecorded video cassettes for export to warehouse without following the procedure and without making any entry in the record. Similarly Krishna Kumar Sabharwal, Production Manager of the appellants in his statement also did not dispute the shortage of inputs found in the factory. The statements of other dealers and distributors to whom the goods were cleared by the appellants without payment of duty, were also recorded. On completion of investigations, the appellants and some other noticees detailed in the show cause notice (who are not appellants before us) were issued show cause notices. On receipt of reply to that notice from the appellants and after hearing them, the adjudicating authority i.e. Commissioner of Central Excise, passed the impugned order.
3. We have heard both sides. So far as the confiscation of 7281 video cassettes valued at Rs. 3,64,050/- involving Central Excise duty of Rs. 4,28,486.85 is concerned, the same has been contested by the Counsel on the ground that these goods though not accounted for, in the statutory record, were still lying in the factory premises and as such no confiscation of the same could be ordered. The Counsel has further contended that only penalty under Rule 226 of the Rules could be imposed and not under Rule 173Q. The redemption fine imposed, according to the Counsel of Rs. 50,000/-for the redemption of these goods is also exhorbitant and so also the penalty of Rs. 50,000/-, as under Rule 226, the penalty to the extent of only Rs. 2000/-could be imposed. The learned Counsel has placed reliance, in support of his contention on the decision of the Tribunal in Bhilai Conductors Ltd. v. C.C.E -2000 (125) E.L.T. 781 wherein it has been observed by the Tribunal that in the absence of any evidence to prove the malafide intention, for non-accountal of the goods, the assessee could only be penalised under Rule 226 and not under Rule 173Q.
4. The S.D.R. has refuted this contention of the Counsel and referred to the Bombay High Court judgment rendered in Kirloskar brothers Ltd. v. Union of India and Ors. - 1988 (34) E.L.T. 30 (Bom.) wherein it has been held that for non-accountal of the goods, the assessee can be penalised under Rule 173Q.
5. In our view, the contention raised by the learned Counsel for the appellants cannot be accepted. Admittedly, 7281 video cassettes were found unaccounted lying in the factory premises and no sufficient or cogent reason was afforded by the appellants for not entering these goods in the statutory records. The ratio of the law laid down in Bhilai Conductors (supra) is of no help to the appellants in the present case. They, in fact, had failed to offer any convincing explanation for non-accountal of the goods. Their intention for not entering the goods in the statutory records could be safely gathered from their act and conduct that they intended to remove the goods in a clandestine manner without payment of duty. This conclusion also finds corroboration from the fact that they did not dispute the already clandestinely removal of 40,000 video cassettes involving duty of Rs. 23,31,428/- they even deposited the duty without any objection. This circumstance goes along with to reflect their mala fide intention, to keep and then remove the excess goods lying in the factory as and when they found proper opportunity, in a clandestine manner, and thereby to evade the duty. Under these circumstances, it is difficult to hold that the provisions of Rule 173Q could not be invoked against the appellants. Even otherwise, the provisions of this Rule could be invoked and penalty could be accordingly imposed under it on the appellants in view of the law laid down by the Bombay High Court in Kirloskar Brothers Ltd. (supra), which has to take precedence over the judgment of the Tribunal. Therefore, it must be held that confiscation of 7281 video cassettes, had been correctly ordered in the instant case, by the adjudicating authority. However, we find that the redemption fine and the personal penalty imposed are on the higher side. We accordingly reduce the redemption fine to Rs. 25,000/- and the personal penalty to Rs. 20,000/-.
6. The confirmation of duty of Rs. 23,31,428/- in respect of 40,000 video cassettes removed in a clandestine manner from the factory premises, had not been disputed before us by the learned Counsel. Even otherwise the perusal of the impugned order shows that the removal of these cassettes without payment of duty was admitted by Shri Anil Kumar Sanghi, Executive Director of the appellants company. The appellants had even deposited the duty amount already. Therefore, we confirm this order of the adjudicating authority.
7. The adjudicating authority has disallowed Modvat credit of Rs. 91,924.34 p. on the plastic moulded components to the appellants and the learned Counsel has not disputed the correctness of this order as the plastic moulded components of TV Video games involving duty of Rs. 91,924.34 were found short and this shortage was admitted by Shri Anil Kumar Sanghi, Executive Director of the appellants company as is evident from the impugned order itself.
8. However, the recovery of Modvat credit of Rs. 21,55,428/-alledgedly wrongly availed on 13062 sq.mts. of magnetic video tape, under Rule 57-I of the Rules, which were found short, has been contested by the Counsel before us. The Counsel has contended that even if it is taken that 13062 sq.mts. of magnetic video tapes were found short, still the appellants were liable to reverse the Modvat credit only to the extent to which they had availed the same in respect there-of and not at the effective rate of duty in force on the date of clearance of those inputs. According to the learned Counsel, the appellants could only be asked to reverse the Modvat credit of Rs. 13,78,595/- which they availed on the short found inputs and not more than that and this amount they had already reversed. In our view, this contention of the Counsel deserves to be accepted in view of the ratio of law laid down by the Larger Bench of the Tribunal in C.C.E., Vadodara v. Asian Brown Boveri Ltd. - [2000 (120) E.L.T. 228 (T-LB) = 2000 (39) R.L.T. 575] wherein it has been ruled that the rate of duty paid on the inputs by the manufacturer has to be applied for debiting the duty equal to the credit taken and not the effective rate of duty in force on the date of clearance of the inputs. Therefore, the demand of differential amount of Rs. 7,76,833/- from the appellants cannot be held to be justifiable and as such is set aside. They were liable to reverse the credit of Rs. 13,78,695/- the amount which they availed Modvat credit on the inputs found short and allegedly cleared in a clandestine manner and that amount they had already reversed.
9. The disallowance of Modvat credit of Rs. 3802.43 to the appellants on the inputs found short in the factory has not been contested before us by the Counsel and as such, we affirm the impugned order in that regard.
10. However, the demand of Rs. 49,027.61 and Rs. 5097.73 paise on the video games and cartriges allegedly found without bills in the premises of M/s. Usha Electronics, M/s. Media CP, New Delhi, M/s. Zaver Agencies and Marketing, Ajmer had been contested by the Counsel before us on the ground that the same was earlier dropped by the then adjudicating authority while adjudicating this very show cause notice, vide order dated 29-12-95. The appellants only challenged some part of that order before the Tribunal and the Tribunal remanded the matter for fresh decision vide order dated 1-5-2000 in the light of the material placed on record by the appellants. The Revenue did not challenge that part of the order of the Commissioner vide which he dropped the demand of Rs. 49,027.61 and 5097.73 against the appellants. Therefore, that order had already become final. After the remand, the adjudicating authority could not confirm the same demand again which was earlier dropped against the appellants. Therefore, we set aside this part of the order of the adjudicating authority.
11. The adjudicating authority has imposed penalty of Rs. 8 lakhs under Rule 173Q on the appellants. The learned Counsel has contended that the penalty imposed is very exhorbitant and deserves to be reduced to a reasonable extent, keeping the facts and circumstances of the case that the appellants had already reversed the Modvat credit and paid duty also. We have gone through the record and in our view, in the light of the facts and circumstances referred to above and the conduct of the appellants that they had already reversed the Modvat credit of huge amounts and even deposited the duty by accepting their liability, the penalty amount deserves to be reduced. We accordingly reduce the penalty to Rs. 5 lakhs (Rupees Five lakhs only).
12. No other contentions had been raised by the Counsel. In view of the discussions made above, the impugned order-in-original of the Commissioner stands reversed/modified to the extent detailed above. The appeal of the appellants accordingly stands disposed of in the above terms, with consequential relief, if any, permissible under the law.