M/S. Ketan Plastic Industries Pvt. ... vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-SRP/73-74/DMN/SDMN/2012-13 dated 09.08.2012, Passed by Commissioner (Appeals) Central Excise, & S.T., Daman )

M/s. Ketan Plastic Industries Pvt. Limited : Appellant (s) Shri Dhanesh Jhunjhunwala

VERSUS

Commissioner of Central Excise & S.T., Daman : Respondent (s)

Represented by :

For Appellant (s) : Shri Nimesh Mehta, Advocate For Respondent (s) : Shri Lalatendu Patra

For approval and signature :

Mr. H.K. Thakur, Honble Member (Technical)

1 Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

No 2 Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

No 3 Whether their Lordships wish to see the fair copy of the Order?

Seen 4 Whether Order is to be circulated to the Departmental authorities?

Yes

CORAM :

Mr. H.K. Thakur, Honble Member (Technical)

Date of Hearing / Decision : 10.06.2015

ORDER No. A/10790-10791/2015 Dated 10.06.2015

Per : Mr. H.K. Thakur;

These appeals have been filed by the main appellant M/s. Ketan Plastic Industries Pvt. Limited and its Director against OIA No. SRP/73-74/DMN/SDMN/2012-13 dated 09.08.2012.

2. Shri Nimesh Mehta, (Advocate) appearing on behalf of the appellants argued that factory premises of the main appellant was searched by the officers of Central Excise and a shortage was found in the finished goods stocks i.e. Unlaminated Fabrics. That appellant admitted the said shortage and debited an amount of Rs. 4,72,278/- towards duty involved on such shortage of finished goods. That in the statement of Shri Dhanesh Jhunjhunwala, Director of the main appellant it was admitted that 28050.4 Kgs of HDP/PP unlaminated fabrics were cleared without payment of duty and without preparing any Central Excise documents. That the statement was recorded on 24.08.2008 and was immediately retracted on the next date by an affidavit dated 25.08.2008. It was his case that there is no documentary evidence other than the statement of the Director recorded by the department. That the another amount of Rs. 5,48,824/- was denied as cenvat credit to the appellant under Order-in-Appeal, on the ground that inputs were received from 100% EOU and that credit admissible was not taken as per the formula prescribed under Cenvat Credit Rules. That this credit amount involved cenvat credit taken with respect to BCD also but at this stage appellant has not challenging the credit taken with respect to BCD. That out of total cenvat credit availed, the credit of Rs. 60,291/- is the credit taken on the education cess which is now held to be admissible as per the order of CESTAT Mumbai, in the case of Emcure Pharmaceuticals Limited vs. CCE, Pune  [2008 (225) ELT 513 (Tri. Mum.)]. That another cenvat credit of Rs. 2,02,993/- with respect to SAD paid by the 100% EOU was not allowed. It was his case that this duty is a category of CVD and cenvat credit is admissible under Cenvat Credit Rules, 2004. With respect to duty liability on the clandestine removal of goods, learned Advocate relied upon the judgment of Honble Gujarat High Court in the case of CCE & ST, Daman vs. Nissan Thermoware Pvt. Limited  [2011 (266) ELT 45 (Guj.)]. It was also argued by the learned Advocate that penalty on the Director is excessive and is required to be reduced as the main appellant has already paid the entire duty amount along with 25% penalty and interest.

3. Shri Lalatendu Patra, (AR) appearing on behalf of the Revenue defended the order passed by the first appellate authority. So far as duty demand of Rs. 4,72,278/- towards shortage of finished goods is concerned, it was argued that after recording first statement of the Director on 24.08.2008, another statement dated 30.12.2010 of shri Dhanesh Jhunjhunwala, Director of the main appellant was also recorded and he has again confirmed the clandestine removal of the goods found short at the time of visit of the departmental officers. That in the statement dated 20.12.2010 also no mention of affidavit retracting the original statement has been made by the Director of the main appellant.

4. Heard both sides and perused the case records. The issue involved in these appeals is regarding duty demand on shortage of finished goods found in the factory premises of the appellant during visit of the departmental officers and admissibility of cenvat credit on duty paid on the inputs received from 100% EOU. So far as admissibility of cenvat credit of education cess of Rs. 60,291/- is concerned, the appellant has relied upon the judgment of CESTAT Mumbai in the case of Emcure Pharmaceuticals Limited vs. CCE, Pune (supra). No contrary judgment has been brought on record by the learned AR with respect to non admissibility of cenvat credit of education cess paid during the relevant period. Respectfully following the case law of Emcure Pharmaceuticals Limited vs. CCE Pune, I hold that cenvat credit of education cess of Rs. 60,291/- is admissible to the appellant.

5. The appellate authority has also rejected cenvat credit of SAD to the appellant on the ground that such credit was only admissible with effect from 07.09.2009 when suitable amendment was carried out in Rule 3(7)(a) of the Cenvat Credit Rules. It has been observed by the first appellate authority that decisions of Emcure Pharmaceuticals Limited and Shreya Pets Pvt. Limited vs. CCE, Hyderabad  [2009 (240) ELT 408 (Tri. Bang.)] are not applicable as the same were delivered before insertion of second proviso to Rule 3(7) (a) of Cenvat Credit Rules, 2004. A view is also possible that amendment to proviso added to Rule 3(7)(a) of the Cenvat Credit Rules, 2004 will have respective effect so that admissible credit is not denied to the appellant. Accordingly, I hold that credit of Rs. 2,02,993/- with respect to SAD is admissible to the appellant. It is also observed from the case records that appellant has paid the entire amount of duty/ cenvat credit demanded in the show cause notice along with 25% of penalty. In view of the cenvat credit allowed with respect to education cess and SAD, the amount of remaining cenvat credit disallowed and quantum of 25% penalty is required to be reworked out. The same should be carried out by the adjudicating authority within a month from the date of receipt of this order under intimation to the main appellant.

6. So far as imposition of penalty on Shri Dhanesh B. Jhunjhunwala is concerned, it is the argument of the appellant that penalty is excessive. Looking to the facts and circumstances of the case, it is held that penalty of Rs. 25,000/- will be sufficient to meet the ends of justice. Accordingly, penalty of Rs. One lakh imposed on Shri Dhanesh B. Jhunjhunwala is reduced from Rs. One lakh imposed by the first appellate authority to Rs. 25,000/- (Rupees twenty five thousand only).

7. Appeals filed by the appellants are allowed to the extent indicated hereinabove.

(Order dictated and pronounced in the Court)

(H.K. Thakur) Member (Technical) .KL

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