M/S. Ganpati Rollings Pvt. Ltd vs Commissioner Of Central Excise

[Arising out of Order-In-Original No. 15 /2009 dated 27.3.2009 passed by Commissioners of Central Excise, New Delhi)]

For approval and signature:

Honble Mr Ashok Jindal, 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. Ganpati Rollings Pvt. Ltd. Appellants

M/s. Bombay Metal Industries

Vs.

Commissioner of Central Excise Respondent

New Delhi

Appearance:

Shri Jitender Singh and B L Narasimhan, Advocate for the Appellants

Shri M R Sharma, AR for the Respondent

CORAM:

Hon'ble Shri Ashok Jindal, Member (Judicial)

Date of Hearing /decision: 27.10.2015

ORDER NO. FO/ 53392-53393/2015-Ex (SM)

Per Ashok Jindal :

The appellants are in appeals against the impugned order holding the goods liable for confiscation. Consequently, the redemption fine and penalties were imposed.

2. The facts of the case are that the appellants before me are job worker and are engaged in the activity of conversion of copper ingots into copper wire rods. They are procuring goods or raw materials job worker challan under Rule 4(5) A of Cenvat Credit Rules, 2004 and after processing, the goods were cleared to the principal manufacturer. On 27.6.2007, a search was conducted in the premises of both the appellants. Stock taking was done, on eye estimation, it was revealed that certain copper ingots were found in excess and certain copper wire rods were also found in excess. Therefore, it was alleged that appellant has not recorded the said goods in their statutory records. In these circumstances, these goods are liable for confiscation and consequently redemption fine and penalties can be imposed. In these circumstances, Show cause notices were issued to the appellants. Same were adjudicated holding that appellant has contravened the provisions of Rule 15 of Cenvat Credit Rules, 2004 read with Rule 25 of the Central Excise Rules, 2002. Therefore, the goods are liable for confiscation and consequently, the redemption fine and penalty were imposed. Aggrieved from the said order appellant is before me.

3. Learned Counsel for the appellant submits that facts of the case are not in dispute. He submits that the provisions attracted for confiscation for the goods found in excess i.e. raw material /finished goods are not applicable to their case. Therefore, confiscation is not sustainable. Consequently, redemption fine and penalty are not imposable. To support his contention, he drew my attention to the corresponding provisions under which the goods were held liable for confiscation i.e. Rule 15 of Cenvat Credit Rules, 2004 and Rule 25 of the Central Excise Rules, 2002. Thereafter he took support of the judicial pronouncement of this Tribunal in the case of Pepsi Foods vs. CCE [2002 (139) ELT 658 (Tri-Del)]; CCE vs. BMW Steels Ltd. [2011 (272) ELT 315 (Tri-Del)]; and CCE vs. Sadashiv Ispat Ltd. [2010 (255) ELT 349 (P&H).

4. On the other hand, learned AR reiterated the finding of the impugned order and submits that it is not in dispute that at the time of investigation raw material as well as finished goods were found in excess and not recorded in the statutory records. Therefore, the provisions of Rule 25 of Central Excise Rules, 2002 are rightly invoked.

5. Heard the parties. Considered the submissions.

6. In these cases, the facts are not in dispute that certain raw material were found in excess and certain finished goods were also found in excess and the appellants are job workers. As these raw material and finished goods were found in excess, therefore, provisions of Rule 15 of Cenvat Credit Rules, 2004 were attracted along with the provisions of Rule 25 of Central Excise Rules, 2002. Therefore, I have to examine whether these Rules are applicable to the facts of this case or not. For better appreciation, Rule 15 of the Cenvat Credit Rules, 2004 is extracted herein below:-

[RULE 15.?Confiscation and penalty.  (1) If any person, takes or utilises CENVAT credit in respect of input or capital goods or input services, wrongly or in contravention of any of the provisions of these rules, then, all such goods shall be liable to confiscation and such person, shall be liable to a penalty not exceeding the duty or service tax on such goods or services, as the case may be, or two thousand rupees, whichever is greater.

(2)?In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of the Excise Act, or of the rules made thereunder with intent to evade payment of duty, then, the manufacturer shall also be liable to pay penalty in terms of the provisions of section 11AC of the Excise Act.

(3)?In a case, where the CENVAT credit in respect of input or capital goods or input services has been taken or utilised wrongly by reason of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of these rules or of the Finance Act or of the rules made thereunder with intent to evade payment of service tax, then, the provider of output service shall also be liable to pay penalty in terms of the provisions of section 78 of the Finance Act.

(4)?Any order under sub-rule (1), sub-rule (2) or sub-rule (3) shall be issued by the Central Excise Officer following the principles of natural justice.]

7. On plain reading of the said Rule, the Rule is applicable when the assessee takes Cenvat Credit on inputs/ capital goods. The facts of the case are such that the appellants have not taken cenvat credit on inputs. Therefore, Rule 15 of the Cenvat Credit Rules, 2004 is not applicable to the facts of the case as appellant have not taken any cenvat credit either wrongly or in contravention of the provisions of any Rule. Therefore, I hold that goods in question are not to be held liable for confiscation under Rule 15 of the Cenvat Credit Rules, 2004.

8. The provisions of Rule 25 of Central Excise Rules, 2002 were also attracted for confiscation of the goods in question. The provisions of Rule 25 of Central Excise Rules, 2002 are extracted hereinbelow:-

RULE 25.?Confiscation and penalty.  (1) Subject to the provisions of section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse [or an importer who issues an invoice on which CENVAT credit can be taken] or a registered dealer, -

(a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or

(b) does not account for any excisable goods produced or manufactured or stored by him; or

(c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or

(d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty,

then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse [or an importer who issues an invoice on which CENVAT credit can be taken] or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [two thousand rupees], whichever is greater.

(2)?An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice.

9. On going through the said provision, I find that provisions of Rule 25 are attracted if there is violation of provisions of section 11AC of the Central Excise Act, 1944. In the impugned order, no finding is given by the adjudicating authority whether the appellants have violated the provisions of section 11 AC of the Act or not? In these circumstances, I hold that provisions of Rule 25 of Central Excise Rules 2002 cannot be invoked for confiscation of the goods in the subject matter as held by this Tribunal in the case of BMW Steels Ltd. (supra) and in the case of Sadashiv Ispat Ltd. (supra). Therefore, I hold that the provisions of Rule 15 of Cenvat Credit Rules, 2004 and Rule 25 of Central Excise Rules, 2002 are not applicable to the facts of cases in hand, consequently, the confiscation of the goods in question is set aside, hence no redemption fine and penalty are imposable on the appellants. In these terms, I do not find any merit in the impugned order, the same is set aside. Appeals are allowed with consequential relief.

(dictated and pronounced in the open court )

( Ashok Jindal ) Member(Judicial)

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