Api Equipments & Engineers (P) Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1547 & 1549/11

(Arising out of Order-in-Original No.02/CEX/2011 dated 22/07/2011 passed by Commissioner of Central Excise, Pune-III)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

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 : Yes 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? ========================================

API Equipments & Engineers (P) Ltd., Appellants Atul Ashok Purandare

Vs. Commissioner of Central Excise, Respondent Pune

Appearance:

Shri.Prasad S Tendulkar, Consultant for appellant Shri.V.K.Agarwal, Addl. Comm. (AR), for respondent

CORAM:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing : 10/06/2015 Date of Decision : /06/2015

ORDER NO

Per: P. K. Jain

1. This appeal is directed against Order-in-Original No.02/CEX/2011 dated 22/07/2011 passed by Commissioner of Central Excise, Pune-III.

2. The brief facts of the case are that the appellant is manufacturing control panels and paying duty. During the month of February 2006 the appellant was liable to pay duty of Rs.7,84,666/-. They had Cenvat credit balance of Rs.4,20,129/-. They did not pay the balance duty in cash. In the subsequent month, ie. March 2006 no such duty was paid. Quarterly return ER-3 was also filed by the appellant. Thereafter for the next two years, i.e. from April 2006 to March 2008, the appellant continued to manufacture the goods and cleared the same without paying the duty. The appellant further collected the duty from their customers. Since the appellant did not deposit the duty, the case was investigated. Thereafter, a notice darted 22/06/2010 was issued. The same was adjudicated by the Commissioner vide impugned order. Aggrieved by the said order, the appellants are before us.

3. The learned Counsel for the appellant submitted that it was due to financial difficulties they could not pay the duty and their unit is now closed from 2008 onwards. The learned Counsel also submitted even the pre-deposit ordered by this Tribunal was arranged by them after a lot of difficulties. He further submitted that the interest amount may be allowed to be paid from the accumulated credit of duty. The learned Counsel also submitted that the Honble Gujarat High Court judgement in the case of Indsur Global Ltd., Vs. UOI reported in 2014 (310) ELT 833 (Guj) wherein the Honble Gujat High Court has held the provisions of Rule 8 (3A) as ultra virus. The learned Counsel also submitted that the Director did not know much about the excise rules and regulations hence no penalty is imposable on him.

4. The learned AR opposed the contention and submitted that it is not a case of default but continuous clearance of goods for a period of two years two months without payment of duty. In the invoices, they were showing the payment of duty and the amount of duty was collected from their customers. Thus, the appellants were clearing the goods without payment of duty for a period of two years two months and no returns were filed. It was only when the DGCEI started investigations that the details were known and even after that the appellants did not pay the duty. They did not obey the Tribunals stay order and they have paid the duty only after the High Courts directive.

5. Heard both sides and considered the submissions.

5.1 It is not under dispute that the appellants cleared the goods from February 2006 to March 2008 without payment of duty. They did not file any quarterly/monthly returns. The only explanation given by them that they have financial difficulties. It is not in dispute that the said amount of duties were collected from their customers. It was their duty to deposit the duty after clearance of the goods on the due date.

5.2 In view of these facts, we do not find any merit in the arguments of the appellant. The case law quoted in the case of Indsur Global Ltd., (supra) does not help the case of the appellant as the case herein is clearing the goods continuously for over two years and two months without payment of duty. It is not a case of default and thereafter payment made from Cenvat credit, etc. 5.3 Under these circumstances, we do not find any merit in the appeal either for duty, interest or penalty. Cenvat credit can be used only for the purpose specified in the Cenvat Credit Rules. Interest payment cannot be made from Cenvat Credit account. As far as the penalty on the Director is concerned, we find from the records that he was also concerned with the central excise as also other financial matters. The fact that they had collected duty but not deposited the duty is not disproved. He cannot absolve himself from the penalty. However, keeping in view the overall facts and circumstances of the case, we reduce the penalty on the Director Shri Atul Ashok Purandare from Rs.10 lakhs to Rs.2 lakhs, except the above modification, both the appeals are dismissed.

(Pronounced in Court on .)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

pj

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