Custom, Excise & Service Tax Tribunal
Cce, Chandigarh vs M/S.Deepak Spinners Ltd on 20 March, 2009
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,
WEST BLOCK NO.II, R.K. PURAM, NEW DELHI-110066.
BENCH-Excise (DB)
Appeal No.E/5000/04-Ex.
[Arising out of Order-in-Appeal No.531/CE/CHD/2004 dated 14.07.2004 passed by the Commissioner of Central Excise, Chandigarh].
Date of Hearing:20.03.2009
Date of decision:20.03.2009
For approval and signature:
Honble Mr. Justice R.M.S. Khandeparkar, President
Honble Mr.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) 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 of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
CCE, Chandigarh Appellant
Vs.
M/s.Deepak Spinners Ltd. Respondent
Present for the Appellant : Shri C.S. Rajput, DR
Present for the Respondent : None
Coram: Honble Mr.Justice R.M.S. Khandeparkar, President
Honble Mr. Rakesh Kumar, Member (Technical)
ORAL ORDER NO. _______________ DATED:20.03.09
PER: JUSTICE R.M.S.KHANDEPARKAR Shri S.C. Rajput, ld. Departmental Representative is present for the Revenue. None present for the respondent. Perused the records. 2. This appeal arises from order dated 16th Jan., 2004 passed by the Commissioner (Appeals) Chandigarh. By the Original Order dated 16th Jan 2004, the Additional Commissioner, Chandigarh had confirmed the demand of Rs.8,02,691/- against the respondent under section 11A of the Central Excise Act 1944 by invoking extended period of limitation and had directed to pay the interest as also personal penalty of Rs. 1.00 Lakh under Rule 173 Q of the Central Excise Rules 1944 and personal penalty of Rs.8,02,691/- under section 11AC of the said Act. The Commissioner (Appeals) by the impugned order set aside the penalty.
3. According to DR the ground on which the penalty imposed by the lower authority has been set aside by the Commissioner (Appeals) is not born out from the record as also that the lower appellate authority has totally ignored the fact that the respondent had failed to comply with the mandatory requirement of the Notification No.5/1999 in order to enable the party to avail the benefit there-under.
4. Taking us through the record he submitted that the findings arrived at by the lower authority were based on assessment of materials on record and the same clearly disclose that respondents had failed to fulfil the condition in relation to the certificate to be filed in order to enable them to claim the exemption under the said Notification and no such certificate was filed even in the course of the hearing before the Original Authority. The Lower Appellate Authority having totally ignored this aspect, proceeded to pass the order of penalty on a totally extraneous grounds.
5. As nobody has appeared on behalf of the respondent, we have gone through the entire records with the assistance of the ld. DR and we find that the records clearly revealed that though the respondent sought to avail the exemption under Notification No.5/99, undisputedly the respondent failed to comply with the pre-condition which was required to be complied with by the respondent in order to avail the benefit under the said exemption notification. Undoubtedly, the yarn of polyester staple fibre containing cotton, not containing another textile material and in which the proportion of polyester staple fibre is less than 75% if purchased by the registered Apex Handloom Co-operative Society and the payment is made by cheque drawn by such society on its own bank account, then such a party would be entitled to avail the exemption from Excise duty, subject, however, that he produces, at the time of clearance itself, a certificate from the authorized officer of such society that yarn would be used only on handlooms. It is a matter of record that the respondent had failed to produce such certificates from the authorized officer of the society in terms of the said requirement of the Notification either at the time of clearance of the goods or even during the course of hearing of the matter before the lower authority. There is a clear finding to the effect in the order passed by the lower authority and the records nowhere disclose any material to doubt veracity of the said finding nor the lower appellate authority has set aside the said finding in the order of the lower authority.
4. The Commissioner (Appeals) has proceeded to set aside the order passed by the lower authority solely on the ground that if the consumer has not made the proper utilization of the input, the supplier cannot be penalised for that and no penal action could be warranted against the supplier. We failed to understand, on what basis the said finding has been arrived at by the Commissioner (Appeals). Once the lower authority has passed the order in relation to the imposition of penalty on the basis that manufacturer had failed to comply with the pre-condition under notification to avail benefit thereunder, and the finding in that regard of the lower authority remains undisturbed, one fails to understand as to how the appellate authority could jump a conclusion that the manufacturer cannot be blamed for non-utilization of the product sold to the consumer, even in the absence of the certificate from the consumer. It would be a mere inference without any basis. No such inference without any basis could be sufficient to interfere in a well justified order passed by the lower authority. In that regard, therefore, the ld. DR is justified in contending that the reasons given by the lower appellate authority to interfere with the order of the imposition of penalty are extraneous to the records and not born out there from.
5. It was nobodys case that subsequent use of the product could warrant imposition of penalty. Rather the lower authority has levied the penalty on the ground that the manufacturer has failed to comply with the precondition under the notification. The lower appellate authority totally ignoring the ground on which the penalty was imposed, and totally for extraneous reasons, proceeded to interfere with the said order and therefore the same cannot be sustained
6. It is also seen from the records as rightly pointed out by the ld. DR that one of the consignment which was supplied to the society was of poly-viscose blended yarn having composition of 80% Polyester and 20% viscose and weighing 2,000 Kgs. valued at Rs.2,13,260/- vide invoice No.1710 dated 14th Jan., 1998 and the benefit was sought to be claimed even in respect of such yarn. As seen above, the exemption under notification No.5/99 is available only when yarn of polyester staple fibre contains cotton and not any other textile material, besides the proportion being less than 70% by weight of total fibre contained would only be entitled to claim the benefits under the said notification and not any other yarn. Apparently it disclosed lack of bonafide on the part of the manufacturer in claiming benefit under the said notification in respect of the products not covered by the said notification and therefore, the lower authority was justified in imposing the penalty. The lower appellate authority has not considered this aspect of the matter and in a very casual manner has interfered with the said order and has set aside the penalty. Being so, the order of the lower appellate authority i.e. Commissioner (Appeals) cannot be sustained and is liable to be set aside and the order of the lower authority to be restored.
7. The ld. DR is justified in drawing our attention to the decision of the Tribunal in the case of Commissioner of Central Excise, Indore Vs. Deepak Spinners Ltd. reported in 2005 (179) E.L.T. 93 (Tri.-Del.). as the ruling therein squarely applies to the facts of the case in hand.
8. In the result, the impugned order passed by the Commissioner (Appeals) is hereby set aside and order passed by the lower authority dated 16th Jan., 2004 is hereby restored. The respondent to comply with the said order within eight weeks from the date of communication of the order to the respondent.
Appeal accordingly stands disposed of.
(JUSTICE R.M.S.KHANDEPARKAR) PRESIDENT (RAKESH KUMAR) MEMBER (TECHNICAL) Anita