M/S. Syam Steel Bars vs Commissioner Of Central Excise & S.T., ...

(Arising out of OIA-KRS/121-124/VAPI/2009 dated 31.03.2009, Passed by Commissioner (Appeals) C. Excise, S.T., & Customs, Vapi)

M/s. Syam Steel Bars : Appellant (s) Shri Praveen Singh Chauhan

VERSUS

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

Appeal No. : E/1200-1202/2009 [E/Cross/85-87/2009] [

Commissioner of Central Excise & S.T., Vapi : Appellant (s)

VERSUS

M/s. Syam Steel Bars : Respondent (s) M/s. Shyam Ingots Shri Sanjay Gupta

Represented by :

For Assesseet (s) : Shri K.I., Vyas, Advocate

For Revenue (s) : Shri K. Sivakumar, A.R.

For approval and signature :

Mr. P.K. Das, Hon'ble Member (Judicial)

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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)

Date of Hearing / Decision : 11.02.2015

ORDER No. A/10133-10137 / 2015 Dated 11.02.2015

Per : Mr. P.K. Das;

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

2. The relevant facts of the case, in brief, are that the assessee M/s. Shyam Steel Bars is engaged in the manufacture of TMT Bars, classifiable under Chapter 72 of the schedule of Central Excise Tariff Act, 1985. On 05.09.2005, the Central Excise officers visited the assessees factory. During the course of stock verification of the finished goods and raw materials, it was found shortage of 75.445 MT of finished goods and 14.575MT of raw materials and also seized the documents and recorded the statements of various persons.

3. A show cause notice dated 31.7.2007 was issued to the assessees and other persons proposing demand of duty alongwith interest and to impose penalties. The adjudicating authority confirmed demand of Central Excise duty of Rs. 29,24,793/-, as already deposited by them and to recover the balance amount of duty Rs. 5,51,292/- from the assessee alongwith interest and also imposed penalty of equal amount of duty, under Section 11AC of the Central Excise Act, 1944. It has also imposed penalty of Rs. 4 Lakh on M/s. Shyam Ingots Pvt. Limited, the supplier of raw materials and Rs. 1 Lakh each on Shri Sanjay Gupta, partner and Shri Praveen Singh Chauhan, Manager cum authorised signatory of M/s. Shyam Steel Bars. Commissioner (Appeals), by the impugned order, modified the adjudication order insofar as the penalties on Shri Sanjay Gupta, Partner of the assessee firm and M/s. Shyam Ingots Pvt. Limited were set-aside. The Commissioner (Appeals) also allowed the option to pay penalty of 25% of the duty amount subject to deposit of the amounts within 30 days from the date of receipt of the order, as per Section 11AC of the Central Excise Act, 1944. The assessees filed appeal against demand of duty alongwith interest and penalty and Shri Praveen Singh Chauhan filed appeal against imposition of penalty. Revenue has also filed appeals against setting aside the penalties and to allow option to pay penalty 25% of duty to the assessee.

4. Learned Advocate on behalf of the assessee fairly submits that they have paid the entire amount of duty alongwith interest and penalty of 25% of the duty, within 30 days from the date of receipt of the order of Commissioner (Appeals). He further submits that they have filed appeals to the extent that they are eligible to avail modvat credit of Rs. 5,15,000/- paid by the supplier of the raw materials. He also submits that imposition of penalty on the Manager-cum-Authorised signatory, who is an employee of the firm, is not justified. He relied upon on the decision of the Hon'ble Gujarat High Court in the case of CCE vs. Harish Maganbhai Patel  2010 (255) ELT 71 (Guj.). He also relied upon the decision of the Hon'ble Gujarat High Court in the case of Exotic Associates vs. CCE  2010 (252) ELT 49 (Guj.) in respect of exercising option of payment of penalty of 25% of the duty within 30 days from the communication of the adjudication order.

5. Regarding the appeal filed by the Revenue, the learned Advocate relied upon the decision Hon'ble Gujarat High Court in the case of Pravin N. Shah vs. CESTAT  2014 (305) ELT 480 (Guj.). He submits that the appeal against the supplier can not be maintained as the Revenue has not initiated proceedings against the supplier.

6. Learned Authorised Representative for the Revenue reiterates the grounds of appeal. He submits that there are various decisions of the Tribunal that penalty is imposable on the partnership firm as well as on the partner. He also relied upon the decision of this bench in the case of Shree Labdhi Prints vs. CCE, Surat  2014 (2) ECS 210 (Tri. Ahm.). He further submits that imposition of penalty on the supplier is justified on the ground that he had supplied the materials to the appellant.

7. After hearing both the sides and on perusal of the records, I find that the appellant has deposited the entire amount of duty along with interest and penalty of 25% of the duty within 30 days from the date of communication of the order of Commissioner (Appeals). It is seen that the adjudicating authority had not allowed the option of payment of penalty 25% of the duty as provided under Section 11AC of Central Excise Act, in the adjudication order. The Hon'ble Gujarat High Court in the case of CCE, Daman vs. R.A. Shaikh Paper Mills Pvt. Limited  2010 (259) ELT 53 (Guj.) had held this issue in favour of the assessee. So, the appeal of the Revenue on this issue is not sustainable.

8. The Learned Advocate submits that they are eligible to avail CENVAT credit on the duty paid by the supplier. On a query from the bench, learned Advocate placed order of the Settlement Commission, whereby the supplier of the raw material settled their case before the Settlement Commission. Learned Advocate submits that in that case, the supplier admitted the clandestine removal of the goods. Rule 9 (1) (b) of the Cenvat Credit Rules, 2004 provides that on supplementary invoices issued by a manufacturer would not be eligible for CENVAT credit for the reason of fraud, collusion or any wilful misstatement or suppression of facts or contravention of any provisions of the Excise Act, with intent to evade payment of duty. In the present case, the supplier paid the duty and issued supplementary invoices to the assessee whereby a short levy by reason of fraud, collusion or misstatement or suppression of fact with intent to evade payment of duty. So, the assessee is not eligible to avail CENVAT credit.

9. Regarding imposition of penalty on Shri Praveen Singh Chauhan, who is employee of a partnership firm, the Hon'ble Gujarat High Court in the case of CCE vs. Harish Maganbhai Patel (supra) held that the Respondent was an excise clerk and the appeal filed by the Revenue was dismissed. I find that adjudicating authority already invoked Section 11AC for imposition of penalty on the assessee and therefore, penalty on the employee is not warranted. It is seen that the Hon'ble Gujarat High Court in the case of Pravin N. Shah vs. CESTAT (supra) held that once the firm is penalised, separate penalty is not imposable upon partner of the firm, as the partner is not a separate legal entity and cannot be equated with employee of firm.

10. In view of the above discussions, all the appeals filed by the assessee as well as by the Revenue are dismissed except the appeal No. E/1056/2009 filed by Shri Praveen Singh Chauhan is allowed with consequential relief.

(Dictated and pronounced in the Court)

(P.K. Das) Member (Judicial) ..KL

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