Custom, Excise & Service Tax Tribunal
M/S Prabhat Rotopack (P) Ltd vs Cce, Lucknow on 22 February, 2013
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. IV Excise Appeal No. 467-468 of 2011 (SM) [Arising out of the Order-in-Appeal No. 375-376/CE/LKO/2010 dated 15/11/2010 passed by The Commissioner (Appeals), Central Excise & Service Tax, Lucknow.] For Approval and signature : 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) Rules, 1982? 2. Whether it would 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 : Department Authorities? M/s Prabhat Rotopack (P) Ltd. ] Appellant Mr. Umesh Kumar Agarwal, Director] Versus CCE, Lucknow Respondent
Appearance Shri Raj Kumar, C.A. for the appellant.
Ms. Shweta Bector, Authorized Representative (DR) - for the Respondent.
CORAM : Honble Shri Rakesh Kumar, Member (Technical) DATE OF HEARING : 22/02/2013.
Final Order No. 55695-55696/2013 Dated : 22/02/2013 Per. Rakesh Kumar :-
The appellant are manufacturers of printed flexible packing material in roll and pouches chargeable to Central Excise duty. Their raw material is plastic granules and metalized film. Their factory was visited by the officers on 12/9/08 and the stock of finished goods, intermediate products as well as raw material was checked. No discrepancy was found in the stock of finished goods. However, there was excess stock of plastic granules and metalized film. Beside this, there was also excess stock of 10,785 kg. of printed film valued at Rs. 10,35,360/- vis-`-vis the balance in the RG-1 register. The printed film was emerging as a intermediate product made from plastic granules for further use in the manufacture of printed flexible packing material. The excess stock of plastic film as well as plastic granules and metalized film were placed under seizure. Subsequently, after issue of show cause notice, the Jurisdictional Assistant Commissioner vide order-in-original dated 22/12/09 ordered confiscation of the polyester film under Rule 25 of the Central Excise Rules, 2002 for contravention of the provision of Rule 10 with an option to be redeemed on redemption fine. He ordered confiscation of plastic granules and metalized film under Rule 15 of the Cenvat Credit Rules with option to be redeemed on payment of redemption fine of Rs. 50,000/-. Beside this he also imposed penalty of Rs. 1,30,000/- on the appellant company and penalty of Rs. 50,000/- Director of the appellant company under Rule 26 of Central Excise Rules. On appeals being filed to the Commissioner (Appeals), the above order of the Commissioner (Appeals) was upheld against which these two appeals have been filed.
2. Heard both the sides.
3. Shri Raj Kumar, C.A., the learned Counsel for the appellants, pleaded that Rule 10 of the Central Excise Rules provides for maintaining account of the finished products manufactured, not the account of raw material and, hence, there was no justification for confiscation of the raw material, that since no Cenvat credit had been taken in respect of the raw material, the same could also not be confiscated under Rule 15 of the Cenvat Credit Rules, that in view of this, the confiscation of the raw material and redemption fine imposed in respect of the same is not sustainable, and that as regards plastic film, the same was an intermediate product and there was no intention to clear the same without payment of duty and, hence, its confiscation under Rule 25 is not sustainable. He also pleaded that in the circumstances of the case, there was no justification for imposition of the penalty on the appellant company or its Director and, as such, impugned order upholding the Cenvat credit demand and penalty is not correct.
4. Ms. Shweta Bector, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner (Appeals) in it.
5. I have carefully considered the submissions from both the sides and have perused the record.
6. So far as confiscation of the raw material is concerned, the same has been ordered under Rule 15 of the Cenvat Credit Rules, 2004. However, under Rule 15 of the Cenvat Credit Rules, the inputs can be confiscated only if wrong Cenvat credit has been availed in respect of the same. On going through the impugned order, I find that there is no finding that the appellant have availed Cenvat credit wrongly in respect of the metalized film and plastic granules. In view of this, just for non-accountal of the plastic granules and metalized film as per the provisions of Rule 9 (5) of the Cenvat Credit Rules, the same could not be confiscated under Rule 15 and, as such, the confiscation of plastic granules and metalized film and redemption fine imposed, in respect of the same is not sustainable.
7. As regards plastic film, the same admittedly, is a product manufactured by the appellant, though it is for captive use. The appellant admittedly were maintaining its account in the RG-1 register by treating the same as goods manufactured, though for captive consumption. In view of this, to the extent the stock of plastic film was not accounted for in the RG-1 register, the same would be liable for confiscation. There is also no explanation as to why in respect of the plastic granules used for the plastic film found unaccounted Cenvat credit has not been availed while admittedly the appellant were availing the Cenvat credit in respect of the plastic granules. In view of this, the confiscation of plastic film and the penalty on this count is upheld. However, looking to the nature of the contravention, the quantum of redemption fine and penalty on the appellant on this count is higher side. Accordingly, the redemption fine is reduced to Rs. 50,000/- and penalty imposed on the appellant company is reduced to Rs. 20,000/-.
8. The impugned order does not give any finding as to how the provisions of Rule 26 are attracted in the case Shri Umesh Kumar Agarwal, Director, as this Rule is applicable in respect of person who knowingly deals with the excisable goods which he knew or had reason to believe are liable for confiscation. In view of this, the penalty on Shri Umesh Kumar Agarwal, Director is set aside.
9. In view of the above discussion, while the appeal of Shri Umesh Kumar Agarwal, Director, is allowed, the appeal of the appellant company is partly allowed.
(Pronounced in the open court.) (Rakesh Kumar) Member (Technical) PK ??
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