Custom, Excise & Service Tax Tribunal
M/S. Metro Enterprises vs Cce Thane Ii on 5 January, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, WEST ZONAL BENCH AT MUMBAI
COURT NO. II
APPEAL NO. E/2024, 2832/03 Mum
(Arising out of Order-in-Original No. 12/NRN/T-II/2003 dated 25.4.2003 passed by the Commissioner of Central Excise, Thane II)
For approval and signature:
Shri. Ashok Jindal, Member (Judicial)
Shri. P.R. Chandrasekharan, Member (Technical)
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the :
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
M/s. Metro Enterprises
Poly Dye-Chem Corporation
:
Appellant
Versus
CCE Thane II
Respondent
Appearance Shri Mayur Shroff, Advocate for appellant Shri S.S. Katiyar, SDR For Respondent CORAM:
Shri. Ashok Jindal, Member (Judicial) Shri. P.R. Chandrasekharan, Member (Technical) Date of Hearing : 05.01.2011 Date of Decision : 05.01.2011 ORDER NO.
Per : Ashok Jindal The appellants are in appeal against the impugned order imposing penalty of Rs.1,00,000/- under Rule 173Q of the Central Excise Rules, 1944.
2. Brief facts of the case are that the appellants who are co-noticees in the proceedings initiated against M/s. Gosalia Emultech Pvt. Ltd. (in short GEPL) for recovery of duty. On 01.10.1999, Central Excise Officers visited the factory premises of M/s. GEPL and conducted verification of raw material/duty paid inputs and found shortages in the inputs on which modvat credit has been taken and finished goods were also found short. Show-cause notice was issued to GEPL as well as to the appellants alleging that the appellants have knowingly aided and abetted GEPL for contravention inasmuch as they have prepared and issued invoices to GEPL directly from their respective offices without selling the goods to the GEPL. These dealers sent invoices separately which were not accompanied by the goods. Thus they have passed the MODVAT credit to GEPL without actually selling the goods mentioned in the invoices and have facilitated GEPL in diverting the goods. The statement of the appellants were recorded and matter was adjudicated by imposing penalty of Rs.1,00,000/- each on both the appellants. Aggrieved from the said imposition of penalty, the appellants are before this Tribunal.
3. Shri Mayur Shroff, learned Advocate for the appellants submitted that the appellants supplied the goods to the GEPL under various invoices and in only one invoice of each of the appellants it was found that duplicate and quadruplicate copy of the invoice does not match as in both the date, time of removal and vehicle No. did not match. On that ground merely it was imputed that the appellants have aided and abetted the GEPL in taking MODVAT credit without receiving the goods. He submitted that the appellants are having their registered office at Thane and godown at Bhiwandi. They maintain their central excise records in their registered office and on receipt of the order, they use to prepare central excise invoice. In quadruplicate copy keeping the space for date and time for removal and vehicle No. blank and the said invoices in duplicate were sent for authentication/countersigning by the Range authority as prescribed under appropriate Trade Notices No. 80/96 dtd. 31.8.1996 and after verification made by the Range Superintendent, necessary entries on the reverse of the duty paying document under which the goods were received and indicate the details of the total quantity reads, date-wise and invoice wise quantity issued till date and quantity amount of modvat involved in the goods covered under the particular invoice. As the vehicle Nos. were obtained from the buyer on telephone and same has been mentioned in the quadruplicate of the invoice but at the time of delivery the actual vehicle No. was entered in the invoice and date and time of delivery was also entered by the person who made the delivery of the goods from the godown of the appellants. The said facts have been explained by the appellants during the course of investigation but no consideration to these explanations was given. He further submitted that in the case of Metro Enterprises (1st appellant) out of 7 invoices, only in one invoice (No. 87) was found such discrepancy and the duty involved is about Rs.9,000/- and in the case of 2nd appellant, the duty is about Rs.13,000/-. Moreover in both the cases, penalties have been imposed under Rule 173Q (1) of Central Excise Rules, 1944 on the appellants without mentioning any specific sub-clause either in the show-cause notice or in the adjudication order. Hence, no penalty can be imposed on the appellant as has been held by the Honble apex court in the case of Amrit Foods vs. CCE U.P 2005 (190) ELT 433 (S.C.) and CCE vs. Nakoda Textile Industries Ltd. 2009 (240) ELT 199 (Bom.). He also relied on the decision of CCE vs. Max G.B. ltd. 2008 (221) ELT 491 (P&H). He further submitted that the invoice under which the discrepancy was observed during the course of investigation, no shortages of the goods cleared under these invoices were found at the premises of GEPL. He further submitted that as the goods has been cleared from the premises of the appellants and the delivery has been taken by GEPL at the premises of the appellant, thereafter the appellants are not liable for any act of GEPL after delivery of goods to GEPL. There is no allegation against the appellant that these goods have not been cleared from the premises of the appellants. Hence no penalties are leviable on the appellants. In alternate, he submitted that, in case of M/s. Metro Enterprises amount of duty involved under the said invoice is only approximately Rs.9,000/- and for that amount a penalty of Rs.1,00,000/- has been imposed which is not permissible under the law and in the case of M/s. Poly Dye-Chem Corpn. the duty involved is approximately Rs.13,000/- and penalty of Rs.1,00,000/- imposed on them are highly excessive. He finally prayed that in view of the above submissions, the impugned order is to be set aside.
4. On the other hand, Shri S.S. Katiyar, learned SDR submitted that in this case both the appellants issued invoices in the name of GEPL and it is admitted by the appellants themselves that in some of the invoices the goods were found short at the end of GEPL. Hence, it cannot be said that the only one invoice is involved. He further submitted that as the goods were found short at the premises of their buyers it can be diverted and the transportation has been arranged by the supplier. In that event, goods have been diverted by the appellants themselves to some other places, only invoices has been issued to the GEPL to avail inadmissible Modvat credit. He further submitted that in case of Commissioner of Customs (Import), Mumbai vs. Jagdish Cancer & Research Centre 2001 (132) ELT 257 (S.C.) the apex court has held that if the allegation is clear from the body of the show-cause notice, no specific clause of contravention of provision is required to be imputed in the show-cause notice. He also relied on Dalmia Industries Ltd. vs. Collector of Central Excise, Jaipur 1995 (79) ELT 120 (Tri.) wherein it was held non-mentioning of Section 11A of the Act in the show-cause notice, will not vitiate the proceedings and demand. He also submitted that in case of Twenty First Century Wire Rods Ltd. 2010 (250) ELT 94 (Tri. Mum) this Tribunal has held that the act of the person is to be considered and it was also held that in the case of Steel Tubes of India Ltd. vs. CCE Indore 2007 (217) ELT 506 (Tri. LB) has not considered the decision of Aggarwal Trading Corpn. 1983 (143) ELT 146 (SC). He finally submitted that as the goods were found short at the premises of GEPL against the invoices issued by the appellants, hence the appellants have aided and abetted GEPL to avail fraudulent Modvat credit. Hence the penalties have rightly been imposed on the appellants.
5. Heard and considered.
6. After hearing we find that in this case the penalty under Rule 173Q (1) of Central Excise Act, 1944 has been imposed on both the appellants of Rs.1,00,000/- each. As per Annexure C-2 of the show-cause notice in the invoices issued by the appellants it was found that the duplicate copy of the invoice and quadruplicate copy of the invoice differd with date and invoice time or removal and vehicle No. As per Annexure B of the show-cause notice, the invoices issued by the appellants were not found with any discrepancy. From the show-cause notice, it is also clear that the shortage of inputs found at the premises of GEPL is not of the goods mentioned in the invoices in which the discrepancy was found. Moreover, the investigating authority has not recorded the statement of the person who was the owner of the vehicle mentioned in the invoices in which the discrepancy was found. If this exercise had been done by the investigating authority, it would have been clear whether these goods have been transported and delivered to the GEPL or not. Further, while replying to the show-cause notice, the appellants has clearly mentioned that for their bonafide act, no penalty under clause (bbb) to sub-rule (1) to Rule 173Q be imposed on the appellants. After taking note of that, although no specific rule was mentioned in the show-cause notice for imposing penalty on the appellants, the adjudicating authority without giving any finding under which sub-clause of the main rule wants to impose penalty, imposed penalty under Rule 173Q(1). As per Clause (bbb) of sub-Rule (1) of Rule 173Q, the penalty can be imposable when a registered dealer enters willfully any wrong or incorrect particulars in the invoice issued for excisable goods dealt by him with intent to facilitate the buyer to avail the credit of duty of excise or additional duty under Section 3 of the Excise Tariff Act, which is not permissible under the Rules. While adjudicating, the adjudicating authority has not given any finding against the appellant about their willful act. The decision relied upon by the learned DR in the case of Jagdish Cancer & Research Centre (supra) and Dalmia Industries Ltd. (supra) are of no help to him as in both those cases are for construing show-cause notice only. In this case, although it was pointed out to the adjudicating authority by the appellants themselves that no penalty can be levied on them for their bonafide act under such clause (bbb) of sub-rule 1 of Rule 173Q, without giving any finding, the adjudicating authority without specifying particular clause of Rule 173Q (1) has imposed the penalty. For that, the decision of the Honble apex court in the case of Amrit Foods (supra) is applicable wherein the apex court has held neither show-cause notice nor the order of Commissioner has specified which particular clause of Rule 173Q (1) or erstwhile Central Excise Rules, 1944 has been allegedly contravened by the appellant, assessee is to put on notice as to exact nature of contravention for which under provision of Rule 173Q, penalty is imposable,
7. Accordingly, following the ratio laid down by the apex court in the case of Amrit Foods (supra), we are not inclined to confirm the penalty on the appellants. Hence the impugned order, imposing penalty, is set aside and the appeals are allowed.
(Pronounced in open Court) (P.R. Chandrasekharan) Member (Technical) (Ashok Jindal) Member (Judicial) nsk 8