M/S.Bisen Engineering Pvt. Ltd vs Cce, Bhopal

[Arising out of Order-in-Appeal No.168/BPL/2008 dated 21.10.2008 passed by the Commissioner, Central Excise, Bhopal]

For approval and signature:

HONBLE MR. S.K. MOHANTY, 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 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?

__________________________________________________

M/s.Bisen Engineering Pvt. Ltd. Appellant

Vs.

CCE, Bhopal  Respondent

Present for the Appellant : Shri A.K. Mishra, Consultant

Present for the Respondent: Shri M.R. Sharma, DR

Coram: HONBLE MR. S.K. MOHANTY, MEMBER (JUDICIAL)

Date of Hearing/Decision: 27.05.2015

FINAL ORDER NO. 52203/2015

PER: S.K. MOHANTY

This appeal is directed against the impugned order dated 21.10.2008 passed by the Commissioner (Appeals), Customs, Central Excise and Service Tax, Bhopal.

2. Brief facts of the case, leading to the present appeal, are as follows:-

2.1 The appellant is a manufacturer of Tractor Parts and supplies the same on job work basis to M/s.Eicher Tractors Ltd. (Now, TAFE Motors & Tractors Ltd.). In the initial period, the appellant had entertained the bonafide belief that manufacture of tractor parts on job work basis will not attract payment of central excise duty, and accordingly, while removing the tractors parts to M/s. TAFE Motors & Tractors Ltd., the appellant did not collect the central excise duty attributable to the removal of tractor parts. However, subsequently, central excise duty attributable to the removal of tractor parts for the disputed period alongwith interest was paid by the appellant. So far as leviability of Central Excise duty on job worked goods is concerned, the appellant is not contesting the same in this appeal. The appellants only grievance is with regard to imposition of penalties by the authorities below under Section 11AC of the Central Excise Act, 1944. Hence, this present appeal has been filed before this Tribunal.

3. The ld. Consultant Shri A.K. Mishra appearing for the appellant submits that there is no involvement of mensrea on the part of the appellant in defrauding the Government Revenue. The ld. Consultant further submits that the information regarding manufacture of tractor parts on job work basis was known to the Central Excise Department from the ER-I return filed by the appellant and also from the invoices issued by the appellant to the consignee, wherein the description of the goods supplied on job work basis have been clearly reflected. He further submits that the manufacturing details of the tractor parts on job work basis have been duly reflected in the Daily Stock Account (RG-I Register) maintained by the appellant in terms of Rule 10 of the Central Excise Rules, 2002. It is his further submission that when the ingredients mentioned in section 11AC of the Act i.e. fraud, collusion, wilful mis-statement etc. are absent in the case of the appellant, imposition of penalty by invoking the provisions contained therein is not just and proper. He further submits that the factory of the appellant having been regularly visited by the audit wing of the Central Excise Department, the charges contemplated in section 11AC of the Act cannot be levelled against the appellant for imposition of penalty.

4. Per contra, Mr. M.R. Sharma, the ld. DR appearing for the respondent submits that the ER-I return for the month of April 2006 was submitted before the Range Office on 05.07.2006 and since, the investigation process started prior to the date of submission of the ER-I return, it cannot be said that the facts intimated by the appellant in the ER-I Return were known to the Department beforehand. Thus, according to the ld. D.R., there was ample justification for invocation of the provisions of section 11AC of the Act for imposition of equal amount of penalty.

5. I have heard the ld. Counsel for both the sides and perused the records. The short question involved in this appeal for determination by this Tribunal is, as to whether, the authorities below are justified in invoking the provisions of section 11AC of the Central Excise Act, 1944 for imposition of equal amount of penalty, considering the facts involved in the present case.

6. I find from the available records that though, the appellant did not discharge the Central Excise duty liability at the time of removal of the job worked goods from the factory to M/s TAFE Motors & Tractors Ltd, but subsequently, the duty amount was paid along with interest. Upon furnishing the information regarding such payment to the jurisdictional Central Excise officials, show cause proceedings were initiated by the Department for recovery of the short paid duty and for appropriating the amount already paid by the appellant towards such duty liability.

7. Since the manufacturing activity of the appellant was known to the Department through maintenance of various records and Audit conducted by the Central Excise officers from time to time, it cannot be alleged that the appellant has indulged in suppression of facts with intent to evade payment of central excise duty. The invoices issued by the appellant in favour of its buyers clearly indicate that they are undertaking manufacture of tractor parts on job work basis, which according to the appellant falls under the purview of taxable service, on which they had discharged the service tax liability. Payment of service tax proves the bonafides of the appellant that they had no intention to evade payment of central excise duty and accordingly, upon detection of mistake that job work activity will not be consider as service and will fall under the purview of manufacture, the appellant appropriately discharged the central excise duty liability alongwith interest.

8. In view of above, I am of the considered opinion that there is no element of suppression, wilful misstatement, fraud etc. involved in the present case, justifying invocation of the extended period of limitation for issuance of the show cause notice and for adjudication of the proceedings, especially for the purpose of imposition of mandatory penalty. I am also of the view that since, the entire duty liability alongwith interest has been paid by the appellant before issue of show cause notice, the appellant should get the benefit of provisions of section 11A (2B) of the Central Excise Act 1944, according to which, there was no requirement of issuance of show cause notice, once the duty alongwith interest has been paid. Further, since the ingredients mentioned in the proviso to section 11 A and section 11AC of the Central Excise Act are absent in the present case, the question of imposition of penalty does not arise.

9. In view of above, the impugned order is set aside and the appeal is allowed in favour of the appellant.

(Dictated and pronounced in the open Court)

(S.K. MOHANTY)

MEMBER (JUDICIAL)

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