Custom, Excise & Service Tax Tribunal
King Bell Apparels vs Commissioner Of Central Excise on 17 April, 2015
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNALSOUTH ZONAL BENCH
CHENNAI
Appeal No.E/97/2009
[Arising out of Order-in-Appeal No.154/2008to 157/2008 dt.28.11.2008passed by the Commissioner of Central Excise (Appeals), Salem]
King Bell Apparels Appellant
Versus
Commissioner of Central Excise,
Salem Respondent
Appearance:
Ms.Minchu, Advocate For the Appellant ShriK.P.Muralidharan, AC (AR)For the Respondent CORAM :
HonbleShriR. Periasami, Technical Member Date of Hearing/Decision :17.4.2015 FINAL ORDER No.41000/2015 The appellant filed appeal against the Order-in-Appeal No.154/2008 to 157/2008 dt. 28.11.2008 passed by Commissioner (Appeals).
2. The case relates to clandestine removal of cotton yarn dyed woven fabrics without payment of duty and also failure of appellant to remit duty already collected from the customers. The adjudicating authority confirmed the demand of Rs.34,72,714/- and appropriated Rs.13,11,900/- towards the demand and imposed equivalent penalties under Section 11AC of the Central Excise Act, 1944 as well as under Rule 25 of CER 2002 on the appellant and also imposed equivalent penalty on the Managing Partner of the appellant-company. On appeal by the appellant, Commissioner (Appeals) modified the order and reduced the demand and proportionately reduced the penalty under Section 11AC and also interest and set aside the penalties under Rule 25 and Rule 26. Hence the present appeal.
3. The learned advocate for the appellant submits that the investigation was commenced on 12.2.2007 andimmediately after detection of the case,they have already paid major part of the demandbetween 16.5.2003 and 10.7.2004whereas the SCN was issued only on 12.2.2007 and therefore the demand is hit by limitation and extended period is not invokable. She further submits that after the Commissioner (Appeals) reduced the duty payment, they have paid an amount of Rs.3,84,251/-vide T.R. 6 challandt. 26.2.2015. Therefore, they have paid entire demand and not liable for penalty and interest. She relied on the following :-
1) CCE VsKrishnaram Dyeing & Finishing Works 2013 (298) ELT 376 (Guj.)
2) A. Tathinam, Prop. Michael Match Works Vs CCE 1992 (60) ELT 451 (Tribunal)
3) CCE Mangalore Vs Pals Microsystems Ltd.
2009 (234) ELT 428 (Kar.)
4) CCE Mangalore Vs Pals Microsystems Ltd.
2011 (270) ELT 305 (SC)
5) Mohan Bakers Pvt. Ltd. Vs CCE Kolkata 2008 (221) ELT 308 (Tri.-Kol.)
4. On the other hand, Ld. A.R reiterated the findings and the adjudication order at para03.01, 04.01 and submits that extended period hasbeen rightly invoked and the appellants have removed clandestinely without payment of duty and also collected duty amount from the customers in their invoices and failed to remit the duty in the government account which was clearly admitted by the partner in their own statement and also submits that they are not eligible for reduced penalty of 25% under Section 11AC as they have not paid entire duty amount within the stipulated time. He relied on the following citations :-
(1) CCE VizagVs Mehta & Co.
2011 (264) ELT 481 (SC) (2) CCE SuratVsNeminath Fabrics Pvt. Ltd.
2010 (256) ELT 369 (Guj.) (3) Union Quality Plastic Ltd. Vs CCE Vapi 2013 (294) ELT 222 (Tri.-LB)
5. I have carefully considered the submission of both sides and examined the records. The short issue in the present appeal relates to waiver of penalty and interest asthe appellants already paid the revised/reduced duty amount as per Commissioner(Appeals) OIA.
I find that the LAA dealt the issue in detail both on merits and invoking the extended period. This is the case where the appellants have cleared the cotton yarn dyed woven fabrics without payment of excise duty whereas they collected the Central Excise duty from the customers and the same was not remitted to government account. I find that the adjudicating authority confirmed the demand of Rs.34,72,714/- and appropriated the amount of Rs.13,11,900/- and imposed equal penalty under Section 11Ac and also equal penalty under rule 25 on the appellants as well as on the partner of the company. Whereas the LAA in his findings considered the appelants plea and reduced the duty amount based on verification report received from the adjudicating authority. The relevant para 6.3 of OIA is reproduced as under :-
Based on the above verification report, it is observed that the appellant are eligible for cenvat credit to the tune of Rs.17,76,563/-. The total demand made by the Lower Authority in the impugned order is Rs.34,72,714/-. The amount already paid by the appellants and appropriated by the Lower Authority in the impugned order is Rs.13,11,900/-. The Lower Authority has stated in the verification report dated 07.11.2008 that the appellants are eligible to avail cenvat credit to the tune of Rs.17,76,563/-. Therefore, the demand of Rs.34,72,714/- confirmed by the Lower Authority in the impugned order is to be reduced from Rs.34,72,714/- to Rs.16,96,151/- (34,72,714 17,76,563). Considering that the appellants have already paid Rs.13,11,900/- towards the demand of duty the balance duty payable by the appellants is Rs.3,84,251 (Rs.34,72,714 13,11,900 17,76,563).
Therefore, it is evident that the LAA not only allowed cenvat credit and proportionately reduced the duty demand from Rs.34,72,714/- to Rs.16,96,151/- and reduced penalty under Section 11AC but also set aside the equal penalty imposed on the appellant under Rule 25. I find that the appellant produced copy of TR-6 challandt. 26.2.2015 as evidence of payment of balance amount of Rs.3,84,251/-. The LAA rightly relied the Honble Supreme Courts decision in the case of UOI VsDharmendra Textile Processors [2008 (231) ELT 3 (SC)] and upheld the reduced penalty under Section 11AC. As regards invoking extended period intention toevade payment of duty which was already collected butnot remitted to the government is suppression of facts has been clearly established and the same was admitted by the appellant and paid the duty amount. In this regard, the Honble High Court in the case of CCE VsNeminath Fabrics Pvt. Ltd. (supra) upheld the invoking proviso to Section 11A for demand under extended period. Further, I find that the Tribunals Larger Bench in the case of Union Quality Plastic Ltd. Vs CCE (supra) by relying the HonbleHigh Court decision of CCE VsNeminath Fabrics Ltd. (supra) ruled in favour of the Revenue. The relevant paragraphs of the above High Courts order are reproduced as under :-
The issue referred [2009 (239) E.L.T. 341 (Tri.-Ahmd.)] for consideration by the Larger Bench is whether the show cause notice issued after six months from the date of visit of Revenue officers or the date of completion of investigations, as reflected in the show cause notice, is barred by limitation in terms of Section 11A of Central Excise Act, 1944; or the show cause notice may be issued, within the extended period of five years from the date of visit of Revenue officers or completion of investigations, as the case may be.
2.?It is agreed, by the ld. Counsel for the assessee and the ld. Departmental Representative appearing for Revenue that the issue is no longer res integra in view of the decision of the jurisdictional, High Court of Gujarat in Commissioner of Central Excise, Surat-I v. Neminath Fabrics Pvt. Ltd. reported in 2010 (256) E.L.T. 369 (Guj.). The High Court ruled that whenever there is non-levy or short-levy of duty with an intention to evade payment of duty, or any of the circumstances enumerated in the Proviso to Section 11A(i) of the Central Excise Act, 1944; such suppression or wilful omission is either admitted or demonstrated, invocation of the extended period of limitation would be justified; and that the proviso cannot interpreted to mean that since Revenue has knowledge of suppression, the extended period of limitation cannot be legitimately invoked.
3.?In the aforesaid circumstances, the reference becomes infructuous since the issue is governed by the ratio propounded in Neminath Fabrics Pvt. Ltd. It is so declared. The appeals will now be placed before the appropriate Bench for adjudication on merits. The ratio of the Honble Apex Court decision and the Tribunals decision are squarely applicable to the present case. By respectfully following the above decisions I hold that reduced demand ordered by LAA and consequent Section 11AC penalty and interest is liable to be upheld. Therefore, I do not find any infirmity in the impugned order in so far as the demand and Section 11AC penalty and demand of interest. Accordingly, the impugned order is upheld and assesses appeal is dismissed.
(Operative part of the order pronounced in open court on 17.4.2015) (R. PERIASAMI) TECHNICAL MEMBER gs 3