M/S.Anish Industrial Corporation vs Cce-Kol-Iii

Appeal No.EA-92/11 (Arising out of Order-in-Appeal No.63/Kol-III/09 dated 30.11.2010 passed by the Commissioner(Appeal-I) of Central Excise, Kolkata.)

FOR APPROVAL AND SIGNATURE

HONBLE DR. D.M.MISRA, MEMBER(JUDICIAL)

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 Authorative report or not?

3. Whether Their Lordship wishes to see the fair copy of the Order?

4. Whether Order is to be circulated to the Departmental Authorities?

M/s.Anish Industrial Corporation Applicant (s)/Appellant (s)

Vs.

CCE-KOL-III Respondent (s)

Appearance:

Shri A.K.Bhattachariya, Consultant for the Appellant (s)

Shri K.Chowdhury, Supdt.(AR) for the Revenue (s)

CORAM:

Honble Dr. D.M.Misra, Member(Judicial)

Date of Hearing/Decision :- 16.10.2015 Date of Pronouncement :- 16.10.2015

ORDER NO.FO/A/75773/2015

Per Dr. D.M.Misra.

1. This is an appeal filed against Order-in-Appeal No.63/Kol-III/09 dated 30.11.2010 passed by the Commissioner(Appeal-I) of Central Excise, Kolkata.

2. Briefly stated the facts of the case are that on a visit of the factory of the appellant, who are engaged in the manufacture of excisable goods, namely, ACSR Aluminium Conductor falling under chapter 76 of CETA, 1985, shortage and excess in the finished goods as well as in the stock of inputs were found. Consequently, on completion of investigation, a show cause cum demand notice was issued for recovery of duty of Rs.74,941/- on the shortage of finished goods and Rs.2,75,562/- on shortage of inputs with a proposition for imposition of penalty. The demand was confirmed by the adjudicating authority and penalty equivalent to the duty on shortages was imposed. Aggrieved, the appellant preferred an appeal before the ld.Commissioner(Appeals), who, after analyzing the evidences on record set aside the demand of duty of Rs.2,75,562/-, interest and penalty with respect to shortage of inputs, however, he has confirmed the demand of duty, interest and penalty with respect to the shortage of finished goods. Hence, the present appeal.

3. The ld.Consultant for the appellant submits that ld.Commissioner has erred in confirming the demand on finished goods when on similar allegations relating to shortage on inputs, the demand was set aside by him. Therefore the order suffers from contradictions. He has submitted that the shortage in the stock of finished goods was explained before the ld.Commissioner(Appeals), however, he has not accepted. Further the ld.Consultant submits that in any case they are entitled to pay 25% of the duty confirmed as penalty which has not been allowed to them by the ld.Commissioner(Appeals).

4. Heard both sides and perused the records. I find that after analyzing the evidences on record ld.Commissioner has dropped the allegation of shortage of inputs which has not been challenged by the Revenue by filing Appeal. In the present appeal, the appellant had challenged the observation of the ld.Commissioner(Appeals) confirming the demand on the shortage of finished goods. It is the contention of the Appellant that since the ld.Commissioner has set aside the demand and penalty accepting the evidences on shortage of inputs, on the same analogy he ought to have dropped the proceedings in relation to shortage of finished goods confirmed by the adjudicating authority. The ld.Commissioner(Appeals) recorded his finding while accepting the explanation of the appellant in relation to shortage of inputs, and because insufficient evidences upheld the demand on the shortage of goods as follows:-

As proof of removal of inputs, the department has relied on the slips, but the department has not put forth any evidence to show that the appellants had taken Modvat credit on those particular consignments of inputs, which were removed through slips No.RG-23A Part-I and Part-II were relied upon to cross verify the origin of the consignment, neither any private Challan copy was recovered to suggest clearance beyond the main gate. The case is claimed to have been initiated against intelligence, but no investigation appears to have been made to find the buyers of the consignments vis-`-vis the monetary transactions involved therein. In view of this, the demand on removal of inputs cannot stand based on the slips alone, hence the appellants argument that the slips were for pass out gate passes for part consignment meant for consignees located elsewhere out side the gate, stands.

Regarding the demand on finished goods the appellants did not put forth substantial argument in their defence. These goods in question cannot be residue or part of incoming consignments since these were not inputs. As the goods were similar to the products they make and since the appellants could not produce any valid argument to nullify the charge, the charge against them gets established and they are liable to pay the duty, penalty and interest on these finished goods.

5. In the same para the ld.Commissioner(Appeals) confirmed the demand on shortage of finished goods observing that the appellant could not place sufficient evidences to explain the shortage of goods noticed by the department. I do not find any discrepancy in the aforesaid observation of the ld.Commissioner(Appeals). However, there is force in the contention of the appellant on the imposition of equivalent penalty under section 11AC without providing an option to pay 25% of the penalty by the ld.Commissioner(Appeals) in the impugned order. I find force in the said contention of the ld.Advocate for the appellant. Accordingly in view of the decision of the Gujarat High Court in the case of Commr. of Central Excise & Customs, Surat-I vs. Krishnaram Dyeing & Finishing Works  2013 (298) ELT 376(Guj.) are entitled to pay 25% of penalty imposed under section 11AC of the Central Excise Act, 1944 once they comply the conditions of said provisions. In the present case undisputedly the appellant was not given an option to pay 25% of the penalty, in view of the aforesaid position. Since the appellant had paid Rs.3,50,503/- against liability of Rs.75,941/- they are entitled to pay 25% of the penalty of Rs.74,941/- under section 11AC of Central Excise Act, 1944. To that extent the impugned order is modified and Appeal is partly allowed.

(Operative part of the order was pronounced in the open court.)

SD/

(D.M.MISRA) MEMBER(JUDICIAL) sm

5 Appeal No.EA-92/11