Custom, Excise & Service Tax Tribunal
Sh. Vijay Kumar Gupta- Managing ... vs C.C.E- Chandigarh-Ii on 6 June, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX
APPELLATE TRIBUNAL
COURT NO. IV
Date of Hearing/Dercision:06.06.2013
E/266-267/2011- EX[SM]
M/s.Triveni Casting Pvt. Ltd.
Sh. Vijay Kumar Gupta- Managing Director Appellants
Vs.
C.C.E- Chandigarh-II Respondent
[Arising out of the Order-in-Appeal No. 144-145/CE/CHD-I/2010 Dated 15.10.2010, passed by the Commissioner (Appeals), Customs & Central Excise Chandigarh-II] Honble Shri Rakesh Kumar, Member (Technical)
1. Whether Press Reporters may be allowed to see the :
Order for publication as per Rule 27 of the CESTAT (Procedure) Rule, 1982?
2. Whether it would be released under Rule 27 of :
the CESTAT (procedure) Rule, 1982 for publication in any authoritative report or not?
3. Whether their Lordships wish to see the fair :
Copy of the order?
4. Whether order is to be circulated to the Department :
Authorities?
Appearance:-
Sh. Hrishikesh, Advocate - for the Appellant Sh. Sanjay Jain, DR - for the Respondent Final Order:56658-56659/2013 Per Rakesh Kumar :-
1.1 The appellant are manufacture of Steel Castings. The Allegation against them is that during the scrutiny of the ER-I Returns in for the period from July06 to Dec.06, it was found that though during this period the appellant had enclosed TR-6 Challans showing payment of duty of Rs. 3,79,500/-, on verification, those challans were found to be bogus, as no duty had been deposited in any bank under those challans. The appellant on being so discovered, paid the duty along with interest on 26.02.2007 and 28.02.2007. In fact Sh. Vijay Kumar Gupta, Director of the Appellant Company in his statement dt. 28.02.2007 owned up the responsibility for the fabrication of bogus TR-6 Challans. After issue of Show Cause Notice, the Jurisdictional Assistant Commissioner vide Order-in-original dtd. 22.07.2009 confirmed the above duty demand along with interest and imposed equal amount of penalty on the appellant company under Rule 25(1) of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act and on the Director Sh. Vijay Kumar Gupta under Rules 26 of Central Excise Rules 2002. The amount already deposited, was appropriated towards duty demand. This order of the Deputy Commissioner was upheld by the Commissioner (Appeals) vide order-in-appeal dtd. 15.10.2010 against which these two appeals have been filed.
2. Heard both the sides.
3. Sh. Hrishikesh, ld. counsel for the appellant, pleaded that while he does not dispute the allegation of non-payment of duty as he does not contest the duty demand along with interest, which has been paid before the issue of Show Cause Notice along with interest, penalty on the Appellant company may be reduced to 25% of duty demand as the duty and the interest had been paid before the issue of Show Cause Notice and penalty on the Director, under Rule 26 may be waived and that in this regard, he relies upon the decision of the Tribunal in case of B.K.Electricals Ltd. reported in 2010 (259) ELT-292 and also the judgment of Honble Delhi High Court in case of Malbro Appliances P. Ltd. Vs. Commissioner of Central Excise reported in 2007 (208) ELT-503 (Del.)
4. Sh. Sanjay Jain, ld. Departmental Representative, defending impugned order, pleaded that this is a case of fraud committed by the appellant in discharge of their monthly duty liability under Rule 8, that the appellant without payment of duty had shown payment of duty in ER-1 Returns by enclosing fake TR-6 challans and that in view of this, there is no justification for waiving or reducing the penalty.
5. I have considered the submissions from both the sides and perused the records.
6. Rule-8 of the Central Excise Rules, 2002 requires payment of duty self assessed by a manufacturer under Rule 6 ibid in respect of the goods cleared by him during a month, by 5th of the next month and if the duty is not paid by the due date, he is liable to pay interest thereon at the notified rate. Sub-Rule3(A) of Rule 8 provides that if default in discharge of monthly duty liability in respect of goods cleared during a month, continues beyond the period of one month from the due date, the assessee during the period of default shall forfeit the facility to pay duty on monthly basis and shall pay duty consignment wise and shall also forfeit the facility to utilize the Cenvat Credit for payment of duty and pay duty through PLA consignment wise, and in the event of failure, it shall be deemed that such goods have been cleared without payment of duty and consequences and penalties as provided in their Rules shall follow. Rule 25(i)(a) provides for penalty on a manufacture or registered person who removes any excisable goods in contravention of the provisions of these Rules or the notifications issued under these Rules. Rule 25(i)(d) provides for imposition of penalty on a manufacturer, registered person etc. who contravenes the provisions of these rules or of the notification issued there under with intent to evade the payment of duty. The penalty imposable under Rule 25(1) is the amount, not exceeding the duty involved as the goods in respect of which the contravention has been committed or Rs. 2000/-, whichever is greater. No payment of duty by due date and enclosing bogus TR-6 Challans with ER-1 Returns to show the duty payment, which had not been paid at all, is obviously contravention of the provision of Rule 8 with intent to evade the duty and would attract penalty under Rule 25(1)(d).
7. In this case it is not disputed that during the period from July06 to Dec.06, every month the appellant not only defaulted in payment of duty to the Department but also hoodwinked the Department by claiming payment of duty in ER-1 Returns and enclosing fake TR-6 challans without depositing the duty in any bank. Thus, this case of default in discharge of monthly duty liability by the due date is contravention of the provisions of Rule 8 with an element of fraud also involved therein. Therefore penalty would be imposable on the Appellant company under Rule 25(1)(d) and looking to the nature of contravention, penalty equal to the duty not paid would be justified.
8. This is a case of fraudulent and deliberate failure to discharge the monthly duty liability for which the penalty would be imposable under Rule 25(1)(d) Section 11AC is attracted, in case of non levy, short levy, short payment or erroneous refund of duty involving fraud etc. for which duty demand is required to be confirmed under Section 11A(2). In term of Sub-Rule (4) of Rule 8 of Central Excise Rules, 2002, the duty self assessed under Rule 6 ibid along with interest for the period of delay payment can be recovered by the Department from the assessee under Section 11 of the Central Excise Act, 1944 and, thus, no notice under section 11A (1) is required to be issued. Since in the case of default covered by Rule 8(3) even if involving fraud, neither any Show Cause Notice under section 11A(1) is required to be issued, nor any order under section 11A(2) is required to be passed, the provisions of Section 11AC and its provisos would not be attracted and as much, the judgment of Honble Delhi High Court in case of Malbro Appliances P. Ltd.(Supra)cited by the learned counsel for the Appellant would not be applicable.
9. As regards the penalty under Rule 26 on Sh. Vijay Kumar Gupta, Director of the appellant company, since admittedly he is involved in clearance and sale of excisable goods without discharge of duty liability, penalty has been correctly imposed on him and looking to the nature of the fraud committed by him, there is no merit in his plea for setting aside the penalty.
10. In view of the above discussions, I do not find any infirmity in the impugned order. The appeals are dismissed.
(Order dictated in the open court) (Rakesh Kumar) Member (Technical) S.Kaur 6