Custom, Excise & Service Tax Tribunal
) M/S. Rachana Rubbers Pvt. Ltd vs The Commissioner Of Central Excise, ... on 14 March, 2013
CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT BANGALORE
Bench - Division Bench
Court - I
Date of Hearing: 14.03.2013
Date of decision: 14.03.2013
Stay Application Nos. 743 to 748/2012
Central Excise Appeal Nos. 1100 to 1105/2012
(Arising out of Order-in-Original Nos. 01/CCE/2012 and 02/CCE/2012 both dated 31.01.2012 passed by the Commissioner of Central Excise, Customs and Service Tax, Mysore)
For approval and signature:
Honble Mr. P.G. Chacko, Member (Judicial)
Honble Mr. B.S.V. Murthy, 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 Lordship wish to see the fair copy of the Order?
Seen
4. Whether Order is to be circulated to the Departmental authorities?
Yes
1) M/s. Rachana Rubbers Pvt. Ltd.
2) Shri B.S. Siddalingaswamy. M.D.
3) Smt. Shashikala Swamy, Director
4) M/s. Surya Rubbers & Chemicals
5) Smt. Shashikala S. Swamy, Partner
6) Shri. B.S. Siddalinga Swamy, Partner
..Appellants
Vs.
The Commissioner of Central Excise, Customs & Service Tax
Mysore Respondent
Appearance Mr V.M. Doiphode, advocate for the appellants Mr Ganesh Haavanur, Additional Commissioner (AR) for the respondent Coram:
Honble Mr. P.G. Chacko, Member (Judicial) Honble Mr. B.S.V. Murthy, Member (Technical) FINAL ORDER Nos. 25184-25189/2013 [Order Per: P.G. Chacko] These applications filed by the appellants seek waiver of pre-deposit and stay of recovery in respect of the respective adjudged dues. The main applicants/appellants are M/s. Rachana Rubbers Pvt. Ltd. (hereinafter referred to as Rachana) and M/s. Surya Rubbers & Chemicals (hereinafter referred to as Surya), appellants in appeals E/1100 and 1103/2012. Rachana and Surya are aggrieved respectively by demands of duty of Rs. 2,50,06,267/- and Rs. 1,35,70,159/- and as also by the connected penalties imposed under Section 11AC of the Central Excise Act. The other appellants are aggrieved by the penalties imposed on them under Rule 26 of the Central Excise Rules 2002. The impugned demands of duty on Rachana and Surya are mainly based on suppression of clearances found by the adjudicating authority the penalties on them and co-appellants are in connection with such conduct of the assessees as found by the adjudicating authority.
2. The learned counsel for the appellants has stated numerous grounds in support of the appeals and the connected stay applications. At the outset, it is submitted that the impugned orders were passed by the learned Commissioner without even allowing the parties to reply effectively to the show-cause notices or to be personally heard. It is submitted that the orders were passed in a haste at a stage when the parties were keen to receive the documents relied upon in the show-cause notices, submit final replies to the said notices and produce records to substantiate their defence. In other words, the point sought to be made by the learned counsel is that the impugned orders are liable to be set aside on the sole ground of denial of natural justice. Secondly, the learned counsel submits that the duty liability of the assessees was not correctly worked out by the adjudicating authority. Even the documents filed with interim replies to the show-cause notices were not taken into account by the learned Commissioner while quantifying the demand. Though, in principle, the adjudicating authority allowed deductions in respect of freight, VAT and cash discounts, such deductions were actually not granted on the stated ground that the claim for such deductions was not substantiated with documentary evidence. According to the learned counsel, had a reasonable opportunity been given to the assessees to produce documents in support of the claim for various deductions, the adjudicating authority would have easily granted the deductions. Thirdly, the learned counsel refers to the Commissioners findings with regard to goods which were claimed by the assessees to be traded goods. The learned Commissioner considered such goods also to be manufactured goods and demanded duty thereon. He did so on the ground that any traded nature of the goods was not established by the assessees through correlation with purchase and sale invoices. It is submitted that the fact that such goods were cleared under the assessees own brand names was also considered as a ground for holding that the goods could not be considered as traded goods. The learned counsel contextually points out that neither any legal fiction nor any other firm ground was stated by the learned Commissioner for holding such goods to be manufactured and dutiable. Next, the learned counsel has raised the plea of limitation by submitting that most of the clearances were made to Karnataka State Road Transport Corporation (KSRTC) and that all the payments of the corporation were received by cheques. It is also pointed out that all necessary particulars of the clearances were resumable from KSRTC also and nothing was suppressed by the assessees. In the circumstances, according to the learned counsel, the extended period of limitation was not invocable in this case. Lastly, the learned counsel submits that, if admissible deductions from transaction value and certain excess payments of duty are taken into account, the net duty liability of Rachana would be to the extent of Rs. 6,89,233/- only for the entire period of dispute (2005-06 to 2009-10). In the case of Surya, in the same manner, the net duty liability would work out to Rs. 70,240/- only for the same period. The learned counsel has also endeavoured to show that both the assessees are in a bad financial position and may not be able to make any pre-deposit. It is submitted that Rachana is under BIFR proceedings.
3. The learned Additional Commissioner (AR) has contested each of the above arguments, mostly relying on the relevant findings of the adjudicating authority. He submits that the assessees filed replies to the show-cause notices accompanied by whatever documents were available with them. They have never raised a grievance that the documents relied upon in the show-cause notices were not supplied to them. It was not their grievance that opportunities of being personally heard were not granted by the adjudicating authority. In the circumstances, according to the learned Additional Commissioner (AR), it cannot be said that natural justice was denied to the parties. The learned Additional Commissioner also files work sheets in the cases of the two assessees. He submits that the net duty liability of Rachana, based on their own admissions, would be around Rs. 1.32 crores for the entire period of dispute. In respect of Surya, the duty liability based on their own admissions would be around Rs. 93.94 lakhs for the period of dispute. In each case, the worksheet provides the essential particulars yearwise. As regards each assessees claim of having paid excess duty, the work sheet says that this claim was not supported by any documentary evidence. No excess payment can be adjusted against the demand unless there is a proper refund claim not barred by unjust enrichment. With regard to the so-called traded goods also, it is stated that the claim of the assessees remains unsubstantiated. Even work sheets were not filed by them for the entire period during which the goods were claimed to have been purchased and sold. According to the learned Additional Commissioner (AR), both the assessees must be required to pre-deposit the entire amounts of duty as per admitted liability.
4. We have considered the rival submissions and have not been able to take a prima facie view that Rachana and Surya are eligible for full waiver of pre-deposit. It appears, while on the natural justice front, assessees have set up a good case for remand, they have not been able to successfully rebut the arithmetic estimation of duty liability done by the learned Additional Commissioner (AR) on the basis of admissions. However, the plea of limitation has been found to be debatable. The plea of financial hardships remains unsubstantiated inasmuch as the Balance Sheet as on 31.03.2011 filed by Surya reflects the comfortable financial condition of the party while Rachana is yet to receive BIFR order. Sensing the judicial bend of mind, the learned counsel, at this stage, intervenes to make an offer of Rs. 10 lakhs on behalf of Rachana and Rs. 6 lakhs on behalf of Surya. We appreciate this offer but consider it to be inadequate in the facts and circumstances of this case. Considering all aspects of the cases of the two assessees, we would expect them to pre-deposit Rs. 15 lakhs (Rachana) and Rs. 10 lakhs (Surya), for which the learned counsel for the appellants seeks at least 10 weeks time. We are inclined to accede to this request of the learned counsel.
5. Now that the two assessees will make reasonable pre-deposits, we would like to dispose of all the appeals finally by remanding the cases to the adjudicating authority for de novo adjudication in accordance with law and the principles of natural justice. We take this view after noting that both the assessees had requested for adjournment of personal hearing on 30.01.2012 on the ground that their counsel was no longer willing to represent them and hence a new counsel required to be appointed. These letters of the parties were received in the office of the Commissioner and acknowledged also. Nevertheless, the learned Commissioner chose to go ahead and pass ex parte orders on 31.01.2012. It is pertinent to note that many substantive findings were recorded against the assessees in these orders on the ground that the assessees could not substantiate their claims. The question that would immediately arise is why reasonable opportunity was not given to them to substantiate their claims. It is on record that the assessees had filed only interim replies to the show-cause notices. They wanted to file their final replies and produce more documents in addition to the documents supplied with interim replies. As their counsel was not willing to represent them, the assessees wanted to appoint new counsel and this intention was clearly communicated to the Commissioner in their letters dated 30.01.2012. Nevertheless, the orders were passed on the very next day and, that too, without even taking into account the documents produced with the interim replies. Thus, an element of negation of natural justice is writ large on the impugned orders. Such orders cannot be sustained and have to be set aside. In the interest of justice, we would like to enable the Commissioner to undertake de novo adjudication of the cases at the earliest. Accordingly, we would set aside the impugned orders and allow all the appeals by way of remand to the Commissioner. It is ordered accordingly. The learned Commissioner is requested to take up the cases for de novo adjudication in accordance with law, subject, however, to pre-deposit of Rs. 15 lakhs (Rupees Fifteen lakhs only) and Rs. 10 lakhs (Rupees Ten lakhs only) by Rachana and Surya respectively within 10 weeks from today. Needless to say that both the parties should pre-deposit the respective amounts within the stipulated time and report compliance without delay to the adjudicating authority to enable it to embark on de novo adjudication of the cases. Again, needless to say that the parties must be given a reasonable opportunity of filing final replies to the show-cause notices, producing documentary evidence and being personally heard. It is further made clear that, in case it is found that any of the document relied upon in the show-cause notices was not supplied to the parties concerned, copies of such documents shall be supplied to them.
6. The stay applications also stand disposed of.
(Pronounced and dictated in open Court)
(B.S.V. MURTHY) (P.G. CHACKO) MEMBER (TECHNICAL) MEMBER (JUDICIAL)
iss