M/S.Shri Durga Laghu Udyog vs Cce, Noida

(Arising out of OIA No.183-184-CE/NIODA/2010 dt.29.6.10 passed by the CCE (Appeals), Noida)

Date of Hearing/Decision: 07.05.2015

For Approval & signature:

Honble Mr.Ashok Jindal, Member (Judicial)

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 would be released under Rule 27 of the 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 Department Authorities? Yes

M/s.Shri Durga Laghu Udyog Appellant

Vs.

CCE, Noida Respondent

Present for the Appellant: Shri Rajesh Chhibber, Advocate

Present for the Respondent:Shri Devender Singh, AR

Coram: Honble Mr.Ashok Jindal, Member (Judicial)

FINAL ORDER NO.51601/2015

PER: ASHOK JINDAL

The appellant is in appeal against the impugned order imposing penalty under section 11AC of Central Excise Act ,1944.

2. The facts of the case are that the appellant was availing SSI exemption under Notification No.8/03 dt.1.3.2003. On 14.03.2005, a team of Central Excise officers visited the factory premises as well as head office of the appellant and found that the appellant has exceeded SSI exemption limit of Rs.1 crore and having not registered and cleared the goods without payment of duty. In view of these set of facts, after knowing that the turnover of the appellant has exceeded exemption limit, they immediately paid duty on their clearance which exceeded the exemption limit on 23.4.2006. Thereafter a show cause notice was issued to the appellant on 20.10.2008 by invoking extended period of limitation for appropriation of duty paid by the appellant alongwith interest and imposition of penalty under section 11AC. The adjudicating authority after considering the submissions made by the appellant observed that they were not aware of the fact that from the records that they have exceeded exemption limit. Therefore, the adjudicating authority held that as per section 11A (2B) of the Act, the show cause notice is not required to be issued and dropped the penalty. Against that order, the Revenue preferred an appeal before the Commissioner (Appeals) who examined the provisions of section 11A (2B) of the Act. The Commissioner (Appeals) observed that the provisions of section (2B) shall not be applicable in cases of suppressions, and fraud, etc. Relying on the judgement of Supreme Court in the case of Rajasthan Spinning & Weaving Mills- 2009 (238) ELT 3 (SC), the Commissioner (Appeals) confirmed the penalty against the appellant. Aggrieved with the said order, the appellant is before me.

3. Learned Counsel for the appellant submits that this is inadvertent mistake committed by the appellant during the impugned period that they could not maintain record of their clearance and that they were not aware that they have exceeded exemption limit as per Notification No.8/03. When the investigation was conducted in the factory of premises by the investigating officers and pointed out by them that they have exceeded the exemption limit, they have paid duty on the clearances alongwith interest. He further submits that the appellant was entitled for cenvat credit on the inputs which have gone into the manufacture of final products. If it was in the knowledge of the appellant that they have exceeded the exemption limit, they would have taken registration and availed credit on the inputs. Cenvat credit available with the appellant during the impugned period was more than the duty demand. Therefore, inference cannot be drawn that they have malafide intention to evade payment of duty.

4. Further on account of suppression, it is submitted by the learned Counsel that it was not knowledge of the appellant that they have exceeded exemption limit. Therefore, the penalty under section 11AC is not imposable on them. As the appellant has already paid duty and not claiming refund of the same. Further they are entitled for cevnat credit on inputs, the credit is available more than the duty payable as held by the adjudicating authority the penalty is not imposable. To support this contention, he relied on the decision of the Tribunal in the case of R.R.Comerbhoy Pvt.Ltd. vs. CCE, Aurangabahd-2009 (243) ELT 346 (Tri.-Mum.).

5. On the other hand, learned AR strongly opposed the contention of the learned Counsel that this is clear-cut case of suppression of facts and if the departmental officers did not visit the factory premises of the appellant, they could not unearth non payment of duty by the appellant during the impugned period. Payment of duty before issuance of show cause notice cannot be the defence for non imposition of penalty as held by the Supreme Court in the case of Rajasthan Spinning & Weaving Mills. He also relied on the judgement of Karnataka High Court in the case of CC, Bangalore vs. M/s. American Power Conversion (India) Pvt.Ltd.-2014 ((1) ECS 78 (HC-Kar) and Union of India vs. Dharamendra Textile Processors-2008-TIOL-192-SC-CX-LB. He submits that ignorance of law cannot be an excuse while availing value based exemption. They should have been careful of exceeding of their turnover.

6. Heard the parties and considered the submissions.

7. It is fact on record that investigation was conducted on 14.03.2005 wherein it was found that turnover of the appellant exceeded from the exemption limit during the period 2003-04. It is also a fact that if the appellant has taken registration they were entitled for cenvat credit on the inputs and the credit was available with them more than the duty payable. Therefore, by suppressing the facts, the appellant was not going to get any gain. In the circumstances, I find that it was only a mistake of the appellant of not paying duty during the relevant period. Accordingly, I hold that the charge of suppression against the appellant is not sustainable. As the charge of suppression is not sustainable, consequently, mandatory penalty under section 11AC is not imposable on them. With these terms, I set aside penalty equal to the duty and allow the appeal.

(Dictated & Pronounced in the open court)

(ASHOK JINDAL)

MEMBER (JUDICIAL)

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