Custom, Excise & Service Tax Tribunal
M/S. Universal Auto Industries vs Commissioner Of Central Excise on 29 April, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX
APPELLATE TRIBUNAL, NEW DELHI
PRINCIPAL BENCH, COURT NO. III
Excise Appeal No. 402 & 433 of 2010 - EX[DB]
[Arising out of Order-In-Original No. 28/D-I/2009 dated 30.9.2009 passed by Commissioner of Central Excise, New Delhi ]
For approval and signature:
Honble Ms. Archana Wadhwa, Member (Judicial)
Honble Mr. Manmohan Singh, Member (Technical)
1
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
No
2
Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
Yes
3
Whether Their Lordships wish to see the fair copy of the Order?
Seen
4
Whether Order is to be circulated to the Departmental authorities?
Yes
M/s. Universal Auto Industries Appellants Shri S K Kukreja, partner
Vs.
Commissioner of Central Excise Respondent
Delhi I
Appearance:
Shri Piyush Kumar, Advocate for the Appellants
Ms. Ranjana Jha, Jt.CDR for the Respondent
CORAM:
Hon'ble Ms. Archana Wadhwa, Member (Judicial)
Hon'ble Mr. Manmohan Singh, Member (Technical)
Date of Hearing : 29.08.2013
Date of decision: 14.03.2014
Date of Decision: 29.04.2014
Interim ORDER NO. / 166-167/2014-EX(BR)
FO/ 51913-51914/2014
Per Archana Wadhwa (for the Bench):
Both the appeals are being disposed of by a common order as they arise out of same impugned order passed by Commissioner of Central Excise vide which he has confirmed the demand of duty of Rs.51,95,406/- (Rupees Fiftyone lakh nintyfive thousand four hundred and six only) against M/s. Universal Auto Industries by denying them the benefit of Cenvat credit of duty availed by them in respect of various inputs. In addition penalty of Rs.52,00,000/- (Rupees Fiftytwo lakhs only) stand imposed on the said applicant under Rule 15(2) of Cenvat Credit Rules, 2004 and Rule 25 of Central Excise Rules, 2002 read with section 11 AC of Central Excise Act, 1944. Penalty of Rs. 10 lakhs stand imposed on Shri S K Kukreja, partner of M/s. Universal Auto Industries under Rule 26 of the Central Excise Rules, 2002. Learned advocate, Shri Piyush Kumar appearing for the appellant is not contesting the confirmation of demand against the appellant. He only submits that inasmuch as the Commissioner while imposing penalty under various provisions of law read with section 11 AC of Central Excise Act has not extended the benefit of reduced penalty of 25% to the appellants. By drawing our attention to various decisions, he submits that penalty on M/s. Universal Auto Industries be reduced to 25% in terms of proviso to section 11 AC. As regards penalty of Rs.10 lakh on Shri S K Kukreja, partner, he submits that apart from observing that Shri Kukreja was a partner of M/s. Universal Auto Industries, and as such, the beneficiary of the wrongly availed credit, the adjudicating authority has not come to a concrete finding based on evidence to show that wrongfully credit was availed with the knowledge and approval of the said partner.
2. After hearing the learned DR, We find that various decisions of the Honble Courts have held that if the adjudicating authority has not extended the option to pay 25% of penalty, such option of reduced penalty can be exercised by appellate authority. Reference is made to the following decisions:
1. CCE vs. Swati Chemicals Industries Ltd.
[2013 (294) ELT 208 (Guj)];
2. Shreeji Aluminum Pvt. Ltd. vs. CCE Vapi
[2012 (282) ELT 234 (Tri-Ahmd)];
3. Sonam Clock Pvt. Ltd. vs. CCE Rajkot
[2012 (278) ELT 263 (Tri-Adhmd)];
4. CCE, Surat II vs. Suncity Synthetics
[2011 (273) ELT 211 (Guj)];
5. CCE, Surat vs. Gopal Fibres Pvt. Ltd.
[2010 (256) ELT 10 (Guj)];
6. CCE, Surat vs. Bhagyoday Silk Industries
[2010 (262) ELT 248 (Guj)];
7. CCE, Daman vs. R A Shaikh Paper Mills Pvt Ltd.
[2010 (259) ELT 53 (Guj)];
8. Exotic Associates vs CCE
[2010 (252) ELT 49 (Guj)];
9. CCE, Rohtak vs. J R Fabrics (P) Ltd.
[2009 (238) ELT 209 (P&H)];
10. K P Pouches (P) Ltd. vs. Union of India
[2008 (228) ELT 31 (Del)];
11. M/s. Narayan Builders vs. CCE, Jaipur
[2013-TIOL-816-CESTAT-Del];
12. CCE, Chandigarh vs. Kashmir Conductors
[1997 (96) ELT 257 (Tri)]; and
13. Madura Coats vs CCE, Bangalore
[1996 (82) ELT 512 (Tri)]
3. However, learned DR has drawn our attention to latest decision of Mumbai High Court in the case of Commissioner of Central Excise, Raigadh vs. Castrol India Ltd. [2012 (286) ELT 194 (Bom)] wherein it stands held that such an option can not be exercised at the appellate stage and the benefit of reduced penalty is available only when the assessee has deposited the entire duty along with interest and 25% of penalty within a period of 30 days from the date of passing of adjudication order.
4. As this stage, we are confronted with two sets of decisions of Honble High Courts. The question which arises is as to which High Court decision would be applicable to the appellants. The said issue i.e. when there are conflicting decisions of the High Courts, which decision can be appropriately adopted for application has been the subject matter of various decisions. The Larger Bench of the Tribunal in the case of CCE, Chandigarh vs. Kashmir Conductors [ 1997 (96) ELT 257 (Tri-LB)] held as under:
10. The question as to how the Tribunal should? proceed in the face of conflicting decisions of High Courts has been considered in M/s. Atma Steels P. Ltd. and others v. Collector of Central Excise, Chandigarh reported in l984 (17) E.L.T. 331 wherein the Larger Bench consisting of five Members held that, in view of its All India jurisdiction and peculiar features, the Tribunal cannot be held bound to the view of any one of the High Courts, but has the judicial freedom, to consider the conflicting views, reflected by different High Courts, and adopt the one considered more appropriate to the facts of a given case before the Tribunal. The Tribunal also indicated that this should be so, irrespective of the fact whether one particular assessee was within the jurisdiction of a specified High Court or the original adjudicating authority was located there. The judgment of the Apex Court in the case of M/s. East India Commercial Co. Ltd. v. Collector of Customs, Calcutta reported in 1983 (13) E.L.T. 1342 (S.C.) was brought to the notice of the Larger Bench, but, was not adverted to sufficiently in the course of discussion. In the East India Commercial Co. case, one of the questions for consideration was whether the interpretation given by the Calcutta High Court to Section 167 of the Sea Customs Act, 1878 would be binding on authorities functioning within the jurisdiction of the High Court and the Supreme Court held that it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to its supervision should conform to the law laid down by it. ........We, therefore, hold that the law declared by the highest Court in the State is binding on authorities or Tribunals under its superintendence.......... This decision has been followed by the Bombay High Court in CIT v. Godavaridevi Saraf reported in 1978 (2) E.L.T. (J 624).
10.1 In the case of? U.P. Laminations v. Collector of Central Excise, Kanpur reported in 1988 (35) E.L.T. 398 (T), the Tribunal has followed the Supreme Court judgment in the case of East India Commercial Co. case and set aside the show cause notice issued against the appellants therein as it was in direct violation of the law laid down by the Allahabad High Court within whose jurisdiction both the manufacturer and the Collector of Central Excise were situated.
10.2 In a recent decision of the Tribunal in the? case of Madura Coats v. CCE, Bangalore reported in 1996 (82) E.L.T. 512, it has been held that the decision of a particular High Court should certainly be followed by all authorities within the territorial jurisdiction of that High Court and that the authorities in another State are not bound to follow the views taken by a particular High Court in the absence of a decision by the jurisdictional High Court with regard to constitutionality of a provisions. The Tribunal has held that since the adjudication of vires of a provision of a statute or Notification is outside the jurisdiction of the Tribunal and the jurisdictional High Court i.e., the High Court having jurisdiction over the authority and the assessee, has not struck down the provision or Notification as ultra vires, the Tribunal has to follow the same and the assessee is entitled to take the stand that he is entitled to the benefit of the particular provision or Notification since the jurisdictional High Court has not struck it down, even though some other High Court may have done so. In case the conflict of decisions among High Courts does not relate to vires of any provision or Notification, it has been held that the Tribunal has to proceed in accordance with the decision in Atma Steels P. Ltd. in the light of the decision of Supreme Court in the East India Commercial Company case i.e. where the jurisdictional High Court has taken a particular view on interpretation or proposition of law, that view has to be followed in cases within such jurisdiction. If the jurisdictional High Court has not expressed any view in regard to the subject matter and there is conflict of views among other High Courts, then the Tribunal will be free to formulate its own view in the light of Atma Steels P. Ltd. case; however, there is a decision of only one High Court in regard to disputed interpretation or proposition of law, the Tribunal is bound to follow that order since it is not at liberty to disregard the solitary High Court decision.
We also take note of recent decision of the Tribunal in the case of M/s. Narayan Builders vs. CCE, Jaipur [2013-TIOL-816-CESTAT-DEL] wherein after taking note of Larger Bench decision in the case held that jurisdictional High Court decision is required to be followed. For better appreciation, we reproduce the relevant paragraphs of the said decision:
15.?A full Bench of this Tribunal in Madura Coats v. CCE - 1996 (82) E.L.T. 512 clarified that where a conflict of decisions among High Courts does not relate to interpretation of provisions or a notification (and not vires thereof) the decision of the jurisdictional High Court which has jurisdiction in respect of the authority which adjudicated the matter initially and of the assessee and has taken a particular view of interpretation or proposition of law, must be followed in cases falling within that jurisdiction. Madura Coats was reiterated by a Larger Bench of this Tribunal (5 Honble Members) in Collector of Central Excise v. Kashmir Conductors - 1997 (96) E.L.T. 257. The Larger Bench referred to the Madura Coats decision and reiterated the principle that pronouncements as to the interpretation of a statutory provision or notification, by the High Court having jurisdiction inter alia over the assessee would be binding.
16.?We are bound by the decision of the full Bench in Madura Coats and the Larger Bench in Kashmir Conductors and respectfully follow the same. Since the Rajathan High Court in S.B. Construction has interpreted Section 65(23) of the Act, in favour of the assessee the assessee must succeed and the appellate order impugned herein dated 30-3-2007 confirming the adjudication order dated 1-6-2007 must suffer invalidation.
5. In view of the above, the decision of the High Court under whose jurisdiction the assessee is located is required to be adopted. Inasmuch as the appellants are located in Delhi, the decision of Honble High Court of Delhi in the case of K P Pouches would be applicable.
6. As regards penalty on the partner, the learned advocate has drawn our attention to the following decisions:
1. B.C. Sharma vs. CCE, Jaipur
[2000 (122) ELT 158 (Tri)];
2. Kamdeep Marketing Pvt. Ltd. vs. CCE, Indore
[2004 (165) ELT 206 (Tri-Del)];
3. Moontex Dyeing & Printing Works
[2007 (215) ELT 46 (Tri-Ahmd)];
4. Sai Synthetics Processor vs. CCE Surat II
[2008 (225) ELT 267 (Tri-Del)];
5. Sai Metal Industries Ltd. vs. CCE Hyderabad
[2010 (256) ELT 631 (Tri-Bang)]; and
6. Ratnamani Metals & Tubes Ltd. vs CCE Ahmedabad
[2012 (285) ELT 274 (Tri-Ahmd)]
The ratio of all the above decisions is that when partnership firm has already been imposed penalty, there is no justification for imposition of separate penalty on the partner.
7. Having declared the law as above, we find that though the appellants submits that they have deposited the entire duty but particulars of such payment are not available on record. As such, we deem it fit to set aside the impugned order and remand the matter to the Commissioner for reconsideration of penalty on the partnership firm along with the option to be extended to them for payment of reduced penalty subject to the condition of deposit of duty and interest. He would also reconsider the penalty imposition on the partner, in the light of the above referred decisions.
8. Both the appeals are allowed by way of remand.
(Pronounced in the open court on )
( Archana Wadhwa ) Member(Judicial)
(Manmohan Singh) Member(Technical)
ss
Universal Auto Industries.
Shri S.K. Kukreja, Partner
Appeal No. E/402/2010-EX(DB)
E/433/2010-EX(DB)
Per: Manmohan Singh
9. I have gone through the draft order recorded by Learned Member (Judicial) in respect of above appellants that Member (Judicial) has taken the view that option for deposit of 25% of penalty has to be given by Adjudicating Authority on the basis of plethora of judgements of various High Court quoted in Para 2 of her order and has propose remanding the matter to the Adjudicating Authority to ascertain the fact of deposit of duty and penalty and subsequent grant of option. I concur with the above findings relating to option for deposit of 25% of penalty.
10. Honble Member (Judicial) has also held that separate penalty on the partner could not be imposed as there was no justification for imposition of separate penalty on the partner where firm has been subjected to penalty. I am not in agreement with the above findings.
11. Regarding imposition of penalty on the partner Shri S.K. Kukreja, Learned Member in her draft order after relying upon various judgements as quoted in para 6 of the draft order has held that there was no justification for imposition of separate penalty on the partner once penalty was imposed on the firm. In this regard, I have perused the facts on record. I find that Shri S.K. Kukreja was managing partner in the firm. Other partner was her wife Smt. Jyoti Kukreja. It is clear that day to day operations of the firm were planned, executed and looked after by Shri S.K. Kukreja and he was in total control of the affairs of the firm.
12. From detailed findings in Commissioners order, issue of fraudulent procurement of invoices and willful availment of illegal credit amounting to Rs.51,95,406/- has clearly come up indicating intentional suppression of the material facts from the department. Illegal cenvat credit has been availed on invoices under which no goods were received in the factory. Finding of the Ld. Adjudicating Authority clearly indicates that SS Flats were shown to have been received were actually not received in the factory as they were no facility in the factory to convert SS Flats to SS sheets which was necessary to produce components of head light, tale light, blinkers and other light products. Shri Suresh Kumar Kukreja in his various statements has admitted that there was no facility/machinery required for converting SS Flats to SS Sheets. He also admitted they have not got any job work done on these goods. This fact was also confirmed by the counsel during hearing of the appeal in tribunal. Further enquiry by department with the experts of the field clearly manifested the SS Flats have not been used in the factory as these flats could not have been used.
12. It is also observed that appellants not only fraudulently availed the Cenvat credit and mis-utilized the same they also claimed rebate of duty on exported good on which duty was paid through illegally availed Cenvat credit, thus, resulting in fraudulent mis-utilization.
13. In view of the fraudulent activities surfacing and a well designed fraudulent availment and subsequent utilization taking place which could not have been executed without the active involvement of Shri S.K. Kukreja,
14. I find that Adjudicating Authority has brought out the activities clearly in para 25 to para 31 of his order. Accordingly separate penalty becomes imposable on Shri S.K. Kukreja, Partner under rule 26 of Central Excise Rules 2002 as fraudulent activity has clearly surfaced and manipulation has taken place resulting in illegal availment of Cenvat credit on paper transactions and further misutilisation for payment of duty on exports for claim of rebate.
15. I have further examined the issue of imposition of penalty under rule 26 in the following paras. I have examined Rule 26 of Central Excise Rules, 2002 which reads as under:
RULE 26. Penalty for certain offences. [(1)] Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or [two thousand rupees], whichever is greater.
[(2) Any person, who issues
(i) any excise duty invoice without delivery of goods specified therein or abets in making such invoice; or
(ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has been any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater.]
16. It is observed that an amendment was made in Rule 26 of Central Excise Rules, 2002 vide Notification No. 8/2007-CE(NT) dated 1.3.2007 inserting a sub-clause to Rule 26. From the above it is clear that issue of fake invoices without supply of goods has also been made chargeable to penalty under Rule 26 (2). Thus judgments cited by learned Counsel cannot come to their rescue for the period after 1.3.2007.
17. For this, I also get support from the decision of Punjab & Haryana High Court in the case of M/s. Vee Kay Enterprises vs. CCE, reported in 2011 (266) ELT 436 (P&H) wherein it has been held that penalty on dealers is leviable on invoices issued without actually delivering goods. It was held that penalty was leviable under Rule 25(1)(d) and Rule 26()1). However, penalty under Rule 26(2) was not imposable as provisions of Rule 26(2) were introduced on 1.3.2007. Relevant Para is extracted below:-
Inspite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purpose to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty.
18. The Tribunal in the case of V.K. Enterprises Vs. CCE, Panchkula reported in 2010 (249) ELT 462 (Tri.-Del.), has also come out very clearly on the premise of fraudulent availment of credit on the fake invoices issued by dealers without supply of goods which reads as under:
9.3?The dealers were not registered with excise authorities to deal in cenvatable invoices but to deal in duty paid excisable goods and, in the process, to issue cenvatable invoices while selling the said duty paid goods. The dealers are required to buy duty paid goods from the manufacturer along with duty paying documents and take credit. When the registered dealer issues invoices enabling the buyer to take credit, it goes without saying that the goods have to be supplied.
10.1?The role of the dealers in not supplying the goods and, at the same time, issuing of cenvatable invoices is a fraud committed on the Revenue. It is not the case of the dealers who have taken credit, that there was no purchase of duty paid goods by them. The duty paid goods, in this has admittedly, originated from SAIL. If the duty paid inputs were purchased and no credit was taken, then the obligation for accounting receipt and disposal for central excise purposes may not be strict. Having purchased the inputs (whether by the manufacturer or by dealer) and having taken credit in their cenvat accounts, they cannot escape from their statutory obligation to account for the goods. To account for the goods does not merely mean making entries in their book of accounts as receipt but to account for its disposal. The person to whom they invoiced having not received the goods, the persons who have issued cenvatable invoices have concealed the direction and destination and actual disposal of the goods on which they took cenvat credit and passed it on further.
10.2?If as a first stage dealer, he received the invoices only from the manufacturer or the godown/branch office of the manufacturer and he did not receive the goods, he was not entitled to take the credit. The important conditions which have to be fulfilled for taking the credit are that the duty paid goods should be received and the duty paying documents should also be received and both the conditions should be fulfilled before taking the credit. It should be remembered that inputs may emanate from exempted sector, in which case mere receipt of the goods will not entitle the recipient to credit. If any one of these conditions is not fulfilled, the dealer is not entitled to take the credit.
10.3?Once he is not entitled to take the credit, he is not entitled to pass on the credit. The role of the dealer issuing invoices without supplying the goods, receiving money in cheque and returning the same to the receiver of the invoices after retaining dealers commission is a fraud played on the exchequer. The issue of invoice by the dealer and passing on the credit to the manufacturer/second stage dealer is the invisible foundation for the edifice of evasion. The dealer who has taken the registration solely for the purpose of dealing in with excisable goods and passing on credit is having the knowledge of the implication of issuing cenvatable invoices. When such a dealer has issued invoices without actually supplying the goods, the intention to evade duty by the buyer of the invoices from him is evident. Without actually supplying the goods and by merely supplying the invoice, when the dealer has received the commission of 3% it is out of cenvat credit which is sought to be availed by the recipient of the invoices. It is a case of looting the treasury and sharing the booty by the dealers, the brokers and the procurers of invoices who actually utilised the credit. They have worked at tandem and in unison knowingly and with intention to evade the duty.
10.4?The submission that the supplier of goods is not concerned as to what the manufacturer does with the goods supplied by the dealer is a proposition which cannot be doubted. This applies to a bona fide supplier of goods. However, when the registered dealers have merely supplied the invoices enabling the recipient of said invoices to take the benefit of cenvat credit, the same have been undertaken with a view to unlawfully avail and utilise cenvat credit by the recipient of the invoices.
14.4?Penalties have been imposed on other appellants namely, S/Shri Praveen Chandra, Director in M/s. Kay Iron Works (Jorian) Pvt. Ltd., Yash Pal Sharma, DGM in M/s. Pasondia Steel Profiles and Arun Ghai, Director of M/s. Bhupendra Steels (P) Ltd. under Rule 26 of the Central Excise Rules.
Prior to amendment Rule 26 provided for imposition of penalty on any person who acquires possession of, or in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe or liable to confiscation under the Act or these rules. The roles of these persons are in relation to the dealing in the goods as discussed earlier. The submission that there was no provision similar to 173Q (bbb) in the Central Excise Rules, 2002 till the amendment by Notification 8/2007-C.E. (N.T.), dated 1-3-2007 is true. Provisions enabling imposition of penalty on any person issuing invoice/document without of delivery of goods or abetting in making such documents has been specifically inserted in Rule 26 with effect from 1-3-2007 as Rule 26(2). With this amendment issue of invoices, without any goods being involved, to enable taking credit by the recipient of such invoices are also covered. When the goods are dealt with, as in the present case, then the provision under unamended Rule 26 (i.e. Rule 26(1) in the present form) shall have application even before amendment with effect from 1-3-2007. Penalty on these persons under Rule 26 before amendment is sustainable. As we have already held that these persons were concerned in dealing with the goods with the knowledge that the diverted goods were liable for confiscation, they are liable for penalty. However, considering the entire facts and circumstances into account and also taking in to account that penalties have been imposed on the companies and firms, we are of the opinion that there is scope for reducing the penalties imposed on these persons.
19. Ahmedabad Bench of the Tribunal has also distinguished the Larger Bench decision in the case of Steel Tubes and held as under:
5.?After considering the issue and relevant rules the Honble High Court observed as follows in Para 10 of the decision in the case of Vee Kay Enterprises :-
10.?In spite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty.
20.?The view taken by the Honble High Court of Punjab & Haryana was that when a person was concerned in selling and dealing with the goods which were liable to confiscation under Rule 25(1)(d), Rule 26(1) is also applicable. In this case also, as in the case of M/s. Vee Kay Enterprises, the appellant claimed to have sold goods in respect of which cenvat credit was taken fraudulently deceiving revenue. The Honble High Court observed that a person, who makes sale of the goods, cannot say that he was not a person concerned with selling of goods and merely issued the invoices. In view of the decision of Honble High Court of Punjab & Haryana, the decision of the Larger Bench of the Tribunal does not hold the filed of law. The Honble High Court has clearly held that penalty is imposable even prior to amendment of Rule 26 where sub rule (2) to the rule 26 of Central Excise Rules, 2002 was inserted.
21. Once it is held that once there is fraud against revenue, no leniency could be shown and contention that no penalty is imposable shall frustrate interest of justice and run counter to the ratio laid down by the Honble High Court of Punjab & Haryana High Court in the aforesaid case. Fraud nullifies everything. Commissioner has rightly analyzed in para 41 of her order that separate penalty in imposable under rule 26 of Cenvat credit Rule 2002.
22. Accordingly I uphold the imposition of penalty of Rs.10 lakhs (Rupees Ten lakhs) on the partner Shri S.K. Kukreja by the Adjudicating Authority.
23. Order accordingly.
(MANMOHAN SINGH)
MEMBER (TECHNICAL)
Difference of Opinion
Whether separate penalty is not imposable on the partner once penalty has been imposed on the firm as held by Member (Judicial)
Or
Whether separate penalty is imposable on the partner even though penalty has also been imposed on firm as held by Member (Technical)
(MAMMOHAN SI NGH) (ARCHANA WADHWA)
MEMBER (TECHNICAL) (MEMBER (JUDICIAL)
K. Gupta
CUSTOMS EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
West Block No.2, R.K.Puram, New Delhi
COURT-I
Date of hearing/decision:15.4.2014
Central Excise Appeal Nos.433 of 2010 and 402 of 2010
Universal Auto Industries .. Appellants/applicants
S.K. Kukreja, Parnter
Vs.
C.C.E., Delhi I . Respondent
Appearance:
Present Ms. Shikha Sapra, Advocate for the applicant/appellant
Present Shri R.K. Mishra , A.R. for the respondent
Coram: Honble Mr. S.S. Kang, Vice President
O R D E R
Per Mr. S.S. Kang:
The following difference of opinion has been referred to the Honble Vice President:
Whether separate penalty is not imposable on the partner once penalty has been imposed on the firm as held by Member (Judicial) Or Whether separate penalty is imposable on the partner even though penalty has also been imposed on the firm as held by Member (Technical).
2. I have gone through the order passed by ld. Honble Member (Judicial) as well as ld. Member (Technical).
3. In the present case, the demand of duty of Rs.51,95,506/- is confirmed with interest and penalties imposed on the partnership firm as well as on the partner. The partnership firm as well the partner are in appeal before this Tribunal challenging imposition of penalties. Ld. Member (Judicial) after taking into consideration the contention of the appellant regarding imposition of penalties on the partnership firm as well as partner remanded the matter to the adjudicating authority to reconsider the penalties imposed on them. Ld. Member (Judicial) remanded the matter to the adjudicating authority to take into consideration the contention of the applicants regarding deposit of entire duty in respect of consideration of penalty imposed on the partnership firm along with option extended to them for payment on reduced penalty subject to condition of deposit of duty and interest. Ld. Member (Technical) after taking into consideration of the decision of High Court of Punjab and Haryana High Court in the case of M/s Vee Kay Enterprises vs. C.C.E. reported in 2011 (266) ELT 436 (P & H), ld. Member (Technical) agreed with the view taken by the ld. Member (Judicial) regarding the option for of deposit 25% of penalty. Ld. Member (Technical) further held that separate penalty can be imposed on the partner and upheld the penalty imposed by the adjudicating authority.
4. Ld. A.R. appearing for the Revenue relied upon the following decisions
(a) Prakash Metal Works vs. C.C.E., Ahmedabad - 2007 (216) ELT 660 (SC)
(b) C.C.E., Daman vs. Md. Amin A.S. Lakha - 2012 (275) ELT 465 ) Textoplast Industries vs. Add. Comm., Customs - 2011 (272) ELT 513 (Bom.) in support of his contention that penalties can be imposed on the partner also.
5. I find that ld. Member (Judicial) in the order simply remanded the matter to the adjudicating authority to reconsider the penalty imposed on the partner in view of the decisions relied upon by the appellants. As the issue regarding imposition of penalty on the partnership firm is remanded to the adjudicating authority and both the ld. Members agreed, there is no difference of opinion on this issue. Therefore, on the issue regarding imposition of penalty, there is no difference of opinion on this issue. Therefore, the regarding imposition of penalty on the partner also requires reconsideration afresh. Hence I agree with the ld. Member (Judicial). All the appeal papers be placed before the regular Bench for further orders.
(S.S. Kang) Vice President scd/ Final Order No. 51913-51914 /2014-Ex(DB) In view of the majority order, the impugned orders are set aside and the matter remanded to the original adjudicating authority for re-deciding the issue of penalty upon both the appellants.
(Pronounced in the Court on 29.04.2014 )
( Archana Wadhwa ) Member(Judicial)
( Manmohan Singh )
Member(Technical)
ss
??
??
??
??
13