M/S Nachmo Humidifiers Pvt Ltd vs Commissioner Of Central Excise

[ Arising out of OIA-321-324/AI/2007/AHD-I dtd 23/11/2007 Passed by Commissioner of Central Excise (Appeals) -AHMEDABAD-I ]

1. M/s Nachmo Humidifiers Pvt Ltd 2. Shri Bhargavbhai H Jain 3. Shri Jaswantbhai Jagjivandas Bhadreshwara 4. M/s Wasteomat Air Engineers - Appellant(s)

Vs

Commissioner of Central Excise- (Appeals) AHMEDABAD-I - Respondent (s)

Represented by :

For Assessee : Shri P P Jadeja, Consultant For Revenue : Shri T K Sikdar, Authorised Representatives

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, 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. P.K. Das, Hon'ble Member (Judicial) Mr. P.M. Saleem, Honble Member (Technical)

Date of Hearing / Decision : 16/9/2015

ORDER No. A/11374-11377/2015 dtd 16/9/2015

Per : Mr.P.K. Das,

After hearing both the sides and on perusal of the records, we find that M/s Nachmo Humidifiers Pvt Ltd (herein after referred to as NHPL) were engaged in the manufacture of Parts of Humidifier and Humidifying Plants. On 4.2.1997, Central Excise Officers visited the factory premises of NHPL. It was found that since 1995-96 M/s NHPL and the other appellant M/s Wasteomat Air Engineers (hereinafter referred to as WAE) were situated at the adjoining premises in the same compound and were manufacturing parts and components of Humidification system. It was found that the goods were initially manufactured at the premises of WAE and such semi-finished goods were further processed at the premises of NHPL. The finished goods were delivered under the cover of Bills of NHPL, WAE and in the name of another firm M/s Shree Gayatri Engineers (herein after referred to as M/s SGE). After thorough investigation, it was found that the firm M/s WAE and M/s SGE were dummy units of M/s NHPL and formed with an intent to irregular availment of SSI exemption benefit under Notification No 1/93-CE dtd 1.3.1993. A show cause notice dtd 11.8.1998 was issued to NHPL proposing demand of duty alongwith interest and to impose penalty by clubbing clearance of the other units for the period from 1995-96 and 1996. The Adjudicating authority confirmed the demand of duty of Rs 4,16,775/- and also imposed a penalty of Rs 1,50,000/- under Section 11AC of the Central Excise Act 1944 and also a penalty of Rs 50,000/- under Rule 173Q of the Central Excise Rules 1944 on M/s NHPL. A penalty of Rs 1,50,000/- each was imposed on M/s WAE and Shri Jaswantbhai Jagjivands Bhadreshwara, proprietor of M/s SGE and also a penalty of Rs 2,00,000/- was imposed on Shri K Bhargavbhai J Jain, Director of M/s NHPL under Rule 209A of the Central Excise Rule 1944. The Commissioner (Appeals) upheld the adjudicating order.

2. The Learned Counsel on behalf of the appellants submits that there is no dispute M/s WAE was in existence and therefore the said unit cannot be treated as dummy unit. He further submits that the appellant had already paid an amount of Rs 6,23,000/- during investigation and therefore in order to buy peace they are not contesting the demand of duty. In any event, the penalty imposed on the other appellant cannot be sustained. On the other hand, the Learned Authorised Representative for the Revenue reiterates the findings of the Commissioner (Appeals).

3. We find that the Learned Counsel for the appellants are not seriously contesting the demand of duty alongwith interest and imposed penalty under Section 11 AC of the Act on M/s NHPL. The main grievance of the Learned Counsel is in respect of the imposition of penalty under Rule 173Q of the erstwhile Rule on M/s NHPL and imposed penalties on other appellants. We find that according to Revenue, M/s WAE and SGE are dummy units. In our view, imposition of penalties on the dummy units cannot be warranted. So, the penalty imposed on WAE and proprietor of SGE cannot be sustained. The Learned Authorised Representative on behalf of the Revenue submits that the Director of the Company was involved for irregular availment of exemption notification. We find that there is a factual dispute on this issue, but, the appellant had already paid the duty alongwith interest and penalty, therefore they are not contesting on merit. Prima-facie, there is an evidence of existence of M/s WAE. In any event, as the appellants are not contesting on merit, there is no need to go into the facts of the case. In overall consideration of facts and circumstance of the case, as the appellant already paid the duty alongwith interest and penalty under Section 11AC of the Act, during investigation, imposition of penalty on Shri Bhargavbhai H Jain is not warranted. It is seen that that Adjudicating authority already imposed penalty under Section 11AC of the Act and therefore, the penalty of Rs 50,000/- under Rule 173Q on M/s NHPL is not justified. The Learned Counsel submits that the appellant is entitled to get the benefits of cum-duty benefit.

4. In view of the above discussions, we modify the impugned order in so far as the demand of duty alongwith interest and imposition of penalty of Rs 1,50,000/- under Section 11AC on M/s NHPL is upheld. Penalty imposed under Rule 173Q on NHPL is set aside. The penalty imposed on the other appellants are set aside and the appeals filed by the other appellants are allowed. The appeal filed by M/s NHPL is disposed of in the above terms. We direct the Adjudicating authority to requantify the demand of duty after extending the cum-duty benefit.

(Dictated and pronounced in the Court)

(P.M. Saleem) (P.K. Das) Member (Technical) Member (Judicial)

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