Keva Flavours Pvt. Ltd vs Commissioner Of Central Excise

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

COURT No. II

Appln.No.E/CO/91161/13

APPEAL No.E/87260 to 87264/13

(Arising out of Order-in-Appeal No.BC/03/M-II/2013-14 dated 18/04/2013; BC/42/M-II/2013-14 dated 29/04/2013; BC/41/M-II/2013-14 dated 29/04/2013; BC/43/M-II/2013-14 dated 29/04/2013 & BC/44/M-II/2013-14 dated 29/04/2013 passed by Commissioner of Central Excise (Appeals), Mumbai-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? ========================================

Keva Flavours Pvt. Ltd., S.H.Kelkar & Co. Pvt. Ltd., Prakash Kalbhor Kedar Vaze Sunil Paranjape Appellants

Vs. Commissioner of Central Excise, Respondent Mumbai-III

Commissioner of Central Excise, Appellant Mumbai-III

Vs.

Keva Flavours Pvt. Ltd., Respondent

Appearance:

Shri.Yogesh S Patki, Advocate 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 : 22/06/2015 Date of Decision : /06/2015

ORDER NO

Per: P. K. Jain

1. The brief facts of the case are that the appellants are engaged in the manufacture of essence and other chemicals. At the relevant time, the main appellant had an unit at LBS Marg, Mulund (West), Mumbai-400 080. The appellant is a subsidiary company of S.H. Kelkar & Co. Pvt. Ltd., and the promoters of S.H. Kelkar & Co. Pvt. Ltd., as well as the appellant were the Vaze/Kelkar family members. There was a dispute between the promoters viz. the G.D.Kelkar faction, the S.V. Vaze faction and the R.V. Vaze faction. The dispute was finally settled and in terms of the settlement, the entire business consisting of S.H.Kelkar & Co. Pvt. Ltd. and all of its subsidiaries, including the appellant came under the control of the R.V. Vaze faction. In terms of this settlement, inter alia, the land on which the unit of the appellant at LBS Marg, Mulund (West), Mumbai-400 080 is located, was handed over to the G.D.Kelkar faction. However, the appellant was permitted to occupy that land till February 15, 2011 and this period could be further extended by another three months by mutual consent. Therefore, in terms of this settlement, the appellant continued operations in the unit located on the land at LBS Marg, Mulund (West), Mumbai-400 080. Being aware of the fact that the appellant would have to vacate this place, the appellant had started making alternate arrangements for construction of a factory at Vashiwali and expected the same to be ready by February 2011. However, there was some delay on account of which the factory at Vashiwali was not ready and hence a request was made for extension of time.

It was expected that extension would be granted to the appellant but the appellant was informed that by February 15, 2011 the land will have to be vacated. In other words, the unit of the appellant was to be entirely moved by February 15, 2011. The appellant was faced with the situation where its unit at Vashiwali was not ready and it had to vacate the land on which was located its unit at LBS Marg, Mulund (West), Mumbai-400 080. In case, the unit was not moved by February 15, 2011, the goods would have been forcibly removed from the unit. Faced with such a situation, as a last resort, the appellant immediately decided to shift its entire unit to the adjoining place which was owned by its holding company S.H. Kelkar & Co. Pvt. Ltd. The appellant therefore, started shifting the unit from February 10, 2011.

2. On 15/02/2011, the appellants themselves informed the department about the same and further applied for registration of new adjacent premises on 17/02/.2011. Consequent to the said intimation, an application for registration, the officials visited the site and seized the goods which were shifted from the old factory to the proposed factory (adjacent premises). Thereafter the matter was investigated and a show-cause notice was issued which was adjudicated and the original authority vide order dated 13/12/2012 ordered as under:

i) I confirm the demand of duty of Rs.2044/- in respect of the finished goods, valued at Rs.19,843/- under sub-section (2) of the then Section 11A of Central Excise Act, 1944.

ii) I confirm the demand of duty of Rs.19,46,355/- on work-in-progress goods, valued at Rs.1,86,63,930/- under sub-section (2) of the then Section 11A of Central Excise Act, 1944.

iii) I confirm the demand of Cenvat Credit of Rs.8,86,970/- valued at Rs.92,74,238/- under Rule 14 of the Cenvat Credit Rules, 2004 read with sub-section (2) of the then Section 11A of Central Excise Act, 1944.

iv) I order the confiscation of finished goods valued at Rs.19,843/- under Rule 25 (sub-rule (a) of the Central Excise Rules, 2002.

v) I order the confiscation of the work-in-progress goods valued at Rs.1,86,63,930/- under Rule 25 (sub-rule (a) of the Central Excise Rules, 2002.

vi) I order the confiscation of raw materials valued at Rs.92.74.238/- under Rule 15 (1) of the Cenvat Credit Rules, 2004

vii) I order that the interest, as applicable, is recoverable from KFPL under the then Section 11AB of Central Excise Act, 1944 on the amount of duty confirmed at serial No.1, ii and iii hereinabove.

viii) I impose a redemption fine of Rs.42,00,000/- under Section 34 of Central Excise Act, 1944 in lieu of confiscation of goods mentioned at serial No. (iv), (v) and (vi) herein above (Rule 25 of the Central Excise Rules, 2002 read with Rule 15 (1) of the Cenvat Credit Rules, 2004 has been wrongly mentioned in the SCN for imposition of redemption fine). As the seized goods were provisionally released to KFPL on executing a Bond and furnishing a Bank Guarantee, I order that the redemption fine of Rs.42,00,000/- be recovered by enforcing the terms of the Bond and encashing the Bank guarantee furnished by KFPL to the extent of the redemption fine.

ix) I impose a penalty of Rs.28,35,369/- (Rs.2044/- + Rs.19,46,355/- + Rs.8,86,970/-) on KFPL under Section 11AC of the Central Excise Act, 1944.

x) I impose a penalty of Rs.2,00,000/- on M/s.S.H.Kelkar & Co. Pvt. Ltd., (Noticee No.2) under Rule 26 of the Central Excise Rules, 2002.

xi) I impose a penalty of Rs.2,00,000/- on Shri Kedar R Vaze (Noticee No.3) under Rule 26 of the Central Excise Rules, 2002.

xii) I impose a penalty of Rs.1,00,000/- on Shri Prakash B Kalbhr (Noticee No.5) under Rule 26 of the Central Excise Rules, 2002.

xiii) I impose a penalty of Rs.1,00,000/- on Shri SV Paranjape (Noticee No.5) under Rule 26 of the Central Excise rules, 2002.

xiv) The Bank guarantee executed for an amount of Rs.69,89,503/- may be enforced towards recovery of the above dues mentioned at Sl.No. (i) (ii) & (iii) in addition to what has been ordered at Sl.No.(viii) above.

3. Aggrieved by the said order, the appellants filed appeals before the Commissioner (Appeals), who upheld the order of the original authority. Aggrieved by the said order, the appellants are before this Tribunal.

4. Heard both the sides.

5. The learned Counsel for the appellant submits that though technically there has been some procedural irregularities; however, the same happened due to shortage of time and pressure from the family members to shift the goods immediately and vacate the old factory. He further submitted that it is not as if the department was kept in dark they themselves have intimated to the department on 15/02/2011 and also applied for registration of new premises on 17/02/2011. The officials visited the site on 18/02/2011 and it is on their information that the visit had taken place. It was also submitted that at the time of shifting the goods they had PLA balance of Rs.26,267/- (+Rs.5490/- in EC, Rs.3345/- in SHEC). Further, they had balance of Cenvat credit amounting to Rs.24,37,449/- + Rs.33.487/- in education cess and Rs.596/- in higher education cess. The learned Counsel further submitted that balance available with them far exceeded the duty liability on raw material and finished goods. He also submitted the work-in-progress cannot be considered as excisable goods and therefore, no duty could be charged or can be claimed on the same. It was also submitted that they had no intention whatsoever either to evade the duty or not to follow any rules. He further submitted that the whole exercise was revenue neutral as duty debited would be available as credit on the same day in other unit. Only if the appellant would have applied for registration on 10/02/2011 instead of 17/02/2011, the objections of the department would have been over. Further, if they would have applied for storing the goods on or before 10/02/2011 in terms of CBEC Circular No.610/1/02-CX dated 01/01/2002, the objection would be over. In any case, Modvat and PLA balance was allowed to be shifted by department on their request of letter dated 11/03/2011.

6. The learned Additional Commissioner (AR) reiterates the various points made in the impugned order as also the original order.

7. We have carefully considered the submissions made by both the sides.

7.1 We find that technically there are some procedural irregularities committed by the appellants. However, the fact remains that the appellants themselves informed about the shifting of the raw materials, etc. within five days of the shifting, applied for registration within the next two days and they have sufficient balance in the Modvat credit/PLA account to take care of the liability while shifting the goods. Moreover, immediately on shifting the goods, the same amount would be available as credit of duty in the adjacent premises. Thus, though technically the confiscation of the goods is in order. However, keeping in view of overall circumstances, we do not see any reason to impose redemption fine of Rs.42 lakhs. In our view ends of justice will meet if the redemption fine of Rs.50,000/- (Rupees fifty thousand) is imposed. Further, we find that whatever demand has been made could have been paid from the Cenvat credit account/PLA and further the same was available as credit on the same date in the adjacent premises. Further, the revenue themselves have allowed the shifting of the accumulated PLA balance as well as Modvat credit was allowed based upon the appellants request letter dated 11/03/2011. Keeping in view the overall circumstances of the case, in our view there is no need to demand the duty. Finished goods were cleared on payment of duty from new premises. Work-in-progress goods were converted into finished goods and cleared on payment of duty. Keeping in view the peculiar circumstances of the present case, we therefore, set aside the demands made. Interest will automatically become zero. As far as the penalty on the appellants No.2, 3, 4 and 5 were concerned, we find Shri Kedar R Vaze was the Director in both the firms and it is on his instructions, the goods were shifted. However, keeping in view the overall facts and circumstances of the case, we reduce the penalty on him from Rs.2 lakhs to Rs.50,000/- (Rupees fifty thousand only) and also set aside the penalty on other three appellants. Appeals and cross objections are allowed in above terms.

(Pronounced in Court on )

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

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