Cce, Jaipur-I vs M/S.Continental Engine Ltd.(Foundry ...

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/ Decision:23.10.2015

Excise Appeal No.E/2850/2006-EX(DB)

[Arising out of common Order-in-Appeal No.188(MPM)CE/JPR-I/2006 dated 1.6.2006 passed by the Commissioner of Central Excise (Appeals), Jaipur]

CCE, Jaipur-I .Appellants

Vs.

M/s.Continental Engine Ltd.(Foundry Division) Respondent

Excise Appeal No.E/3880/2006-EX(DB)

M/s.Continental Engine Ltd.(Foundary Division) Appellant

Vs.

CCE, Jaipur-I .Respondent

Appearance:

Rep. by Shri Govind Dixit, DR for the Department.

Rep. by Shri Bipin Garg, Advocate for the parties.

For approval and signature:

Honble Smt.Sulekha Beevi C.S. , Member (Judicial)

Honble Shri B. Ravichandran, 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?

Coram: Honble Smt. Sulekha Beevi C.S., Member (Judicial)

Honble Shri B. Ravichandran, Member (Technical)

Final Orders No. 53256-53257/2015 dated:23.10.2015

Per B. RAVICHANDRAN:

Both Revenue and assessee are in appeal against order dated 1.6.2006 of Commissioner (Appeals), Jaipur.

2. The assessee are engaged in the manufacture of aluminium castings. Central Excise officers conducted a stock verification in the assessees unit on 15.03.2005. They found certain shortages in inputs received and goods which are part of work in progress. Some undervaluation of excisable goods cleared to sister unit and wrong availment of credit on tubes as inputs instead of capital goods were also noticed. Proceedings initiated resulted in the order dated 19.11.2005 of Joint Commissioner. On appeal, the ld. Commissioner (Appeals) vide the impugned order confirmed part of the demand and set aside the penalty imposed on the assessee.

3. The assessee is in appeal contesting the demand as upheld by the Commissioner (Appeals). Revenue is in appeal against dropping of penalty.

4. Ld. Counsel for appellant  assessee, Shri Bipin Garg submitted that there are serious errors and contradictions in the impugned order. He stated that the Commissioner (Appeals) in para-6 of the impugned order categorically held that there is no evidence regarding manufacture of such aluminum casting, consumption of extra power, receipt of sale proceeds and transportation of such goods and accordingly held allegation of clandestine removal of aluminum casting is not sustainable. However, in para-7 of the same order he held regarding work in progress, that demand is to be confirmed to the extent of cenvat credit available on aluminium ingots and not on aluminium castings. He accordingly confirmed demand of Rs.4,27,092/- with equal penalty. The ld. Counsel points out that this amount is actually duty demanded on castings as calculated in para 1 (d) of show cause notice dated 1.7.2005. Such demand, he submitted, is against Commissioner (Appeals) own finding that demand can not be made on castings in the absence of any supporting evidence of clandestine clearance. Regarding other two issues (undervaluation and wrong cenvat credit), the ld. Counsel stated that since the full amount has been paid before issue of show cause notice, there is no merit in appeal by Revenue to impose penalty on them. The Commissioner (Appeals) correctly set aside the penalty on this account.

5. Ld. Authorised Representative, Shri Govind Dixit argued that payment of disputed amount before show cause notice alone will not make the asesseee escape from the penal liability for contravention of legal provisions.

6. We have heard both the sides and perused appeal records. To consider assessees appeal first, we find that they are contesting the findings of the Commissioner (Appeals) in paras 6.1 and 7 of the impugned order. We find that apart from arriving at contradictory findings regarding work-in-progress, the Commissioner (Appeals) failed to consider the explanation offered by the assessee about the accounting process and clearance of all production to 100% EOU. No cross verification on recipients end or analysis of accounting process as explained by assessee has been done by the lower authorities. The stock of work-in-progress keeps on changing during the manufacturing process from one stage to another. A combined examination of items in various stages of processing is required. No finding has been recorded on this as well as on the claim of certain destructive tests carried out by assessee.

7. We find while the Commissioner (Appeals) held that no clandestine clearance of castings has been evidenced, he upheld demand of duty on castings (para-7 of order) without any reasoning. His finding that cenvat credit available on ingots is to be reversed is without any basis and, in any case, the final confirmation of demand of duty on castings using such finding is totally misplaced.

8. Accordingly, we find that assessee succeeds in contesting the impugned order. We allow the appeal filed by asssessee.

9. On Revenues appeal, we find that an amount of Rs.1,22,136/- was cenvat credit wrongly taken by assessee as inputs on tubes whereas the same are eligible for credit as capital goods. Hence, this 50% amount is to be taken in the next financial year. On being pointed out, the assessee reversed the amount. The said amount was lying un-utilised in assessees account. We find no reason to impose equal amount of penalty in this case. Similarly, regarding undervaluation of excisable goods cleared to sister unit, we find no reasoning or allegation for imposition of equal penalty in the show cause notice or in the original order. We find no merit in appeal filed by the Revenue. Accordingly, the appeal by Revenue is dismissed.

[Operative part of the order pronounced in the open Court]

( Sulekha Beevi C.S. )

Member (Judicial)

( B. Ravichandran)

Member (Technical)

Ckp.

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