M/S Shree Ram Synthetics vs Commissioner, Central Excise & Service ...

Appeal No.E/26,27/2008 [Arising out of OIO No.15/MP/VAPI/2007, dt.08.08.2007, passed by Commissioner of Central Excise & Service Tax, Vapi]

1. M/s Shree Ram Synthetics, 2. Shri Pawan Kumar Bansal Appellants

Vs

Commissioner, Central Excise & Service Tax, Vapi Respondent

Represented by:

For Appellant: Shri S. Suriyanarayanan, Advocate For Respondent: Shri Jitendra Nair, Authorised Representative

For approval and signature:

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

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

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

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. P.K. DAS, MEMBER (JUDICIAL) HONBLE MR. P.M. SALEEM, MEMBER (TECHNICAL)

Date of Hearing/Decision: 14.09.2015

Order No.A/11319-11320/2015, dt.14.09.2015

Per: P.K. Das

These appeals are arising out of a common order and therefore, both are taken together for disposal.

2. After hearing both the sides and on perusal of the records, we find that M/s Sree Ram Synthetics, a partnership firm and Shri Pawan Kumar Bansal, Partner of M/s Sree Ram Synthetics filed these appeals against imposition of penalty of Rs.5 lakhs each under Rule 26 of Central Excise Rules, 2002.

3. One M/s Enkay Tex-O-Foods Industries Ltd, (in short M/s Enkay) 100% EOU was engaged in the manufacture of Texturised Yarn. They cleared duty free Partial Oriented Yarn (POY) under CT3 Certificate. The Adjudicating authority observed that M/s Enkay diverted the duty free raw material in the open market without payment of duty. It has further been observed that the present Appellants had a role for selling of duty free material in the open market. The learned Authorised Representative on behalf of the Revenue submits that the appeal filed by M/s Enkay was dismissed by the Tribunal for non-compliance of the stay order.

4. The learned Advocate on behalf of the Appellants submits that the impugned order was passed in gross violation of principles of natural justice. He submits that they have requested the Department to provide the relied upon documents to file reply to the Show Cause Notice. He drew the attention of the Bench to the letter dt.26.07.2006 addressed to the Additional DGCEI for providing documents. He further submits that he has requested the Adjudicating authority to grant adjournment and to supply the documents, which were not considered. It is submitted that the Appellants were not involved in any manner in this case. The Appellants had no knowledge that the goods were of duty free nature. There is no material available in the record that the goods were diverted by the Appellants and therefore, imposition of penalty under Rule 26 is not warranted.

5. The learned Authorised Representative on behalf of the Revenue submits that the Adjudicating authority had given sufficient opportunity to the Appellants to present their case and nobody turned up on behalf of the Applicants. He further submits that the Adjudicating authority had given a detail finding in respect of imposition of penalty. He particularly drew the attention of the Bench to Para 63.3 and 63.4 of the Adjudication order.

6. The learned Advocate also submits that imposition of penalty on the partner and partnership firm cannot sustain. He relied upon various decisions, on the issue of violation of principles of natural justice and, penalty on the partner and partnership firm cannot sustain, as under:-

i) Wooden Industries Vs CCE Patna 2004 (164) ELT 339 (Tri-Kolkata)

ii) Micro Polyester Pvt.Ltd Vs CCE Ahmedabad 2007 (211) ELT 297 (Tri-Ahmd)

iii) Laxmi Impex Vs CCE Rajkot 2009 (235) ELT 833 (Tri-Ahmd)

iv) Al-Amin Exports Vs CCE Surat 2009 (248) ELT 347 (Tri-Ahmd)

v) Euro Cotspin Ltd Vs CCE Meerut 2005 (186) ELT 213 (Tri-Del)

vi) Pravin N. Shah Vs CESTAT 2014 (305) ELT 480 (Guj.)

vii) CCE Vs Jai Prakash Motwani 2010 (258) ELT 204 (Guj.)

7. On perusal of the records, we find from the impugned order that the Adjudicating authority had fixed personal hearing on different dates 06.02.2007, 20.02.2007 & 27.02.2007. At the request of the learned Advocate of the Appellant the personal hearing was again fixed on 21.03.2007, 24.04.2007 and 14.05.2007. So, sufficient opportunities of hearing were allowed to present their case. There is no violation of principles of natural justice. That the Adjudicating authority proceeded on the basis of documents and corroborative evidences found at the residence of the Appellant and imposed penalty on the basis of these documents. It is seen from the records that Shri Pawan Kumar Bansal, Partner of the firm is directly involved in selling of the duty free material in the market. There is a force in the submission of the learned Advocate that penalty cannot be imposed on both partnership firm and the partner.

8. The learned Advocate submits that Shri Pawan Kumar Bansal, at the most, earned the commission which would be amounting to Rs.1 lakh. On the other hand, the learned Authorised Representative on behalf of the Revenue submits that they have not stated this fact before the Adjudicating authority and therefore, this submission cannot be sustained. However, considering the submission of learned Advocate that the Appellant is a mere broker, the quantum of penalty is excessive. In our considered view, as the penalty was imposed on the partner, and therefore, the imposition of penalty on the firm is not warranted.

9. In view of the above submission, we set aside the penalty on M/s Sree Ram Synthetics and allow the appeal filed by the Appellant. The penalty imposed on Shri Pawan Kumar Bansal is reduced to Rs.2.5 lakhs (Rupees Two Lakhs and Fifty Thousands only) and the appeal is disposed of.

(Dictated & Pronounced in Court)

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

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