M/S. United Chain Industries vs Commissioner Of Central Excise
- CitationExcise Appeal No. 1381-1383 of 2009
Ratio decidendi
The rule this decision rests on
Where a demand of Cenvat credit has been confirmed and the full amount of the duty involved, together with the 25% penalty deposited under the stay order, has been paid before the appeal is decided, the assessee is entitled to the reduced penalty of 25% of the confirmed demand under the proviso to section 11AC of the Central Excise Act, 1944, notwithstanding that the payment was not made within the period prescribed by that section. Where the appellant's entire transactions were only on paper, with no receipt of inputs and no clearance of final products, and the irregular credit has been recovered from the buyers who availed it, the recovery of the full credit amount is treated as satisfying the statutory object of the reduced-penalty proviso.
Written by Miss Lucy from the judgment below, not taken from a headnote.
Judgment
As delivered
[Arising out of Order-in-Original No. 14/Commr/PKL/2008-09 dated 7.1.2009 passed by the Commissioner of Central Excise, Panchkula (Haryana)]
For approval and signature:
Hon'ble Shri Ashok Jindal, Member (Judicial)
Hon'ble Shri B. Ravichandran, Member (Technical)
1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
M/s. United Chain Industries Appellants
M/s. Kay Iron Works (Jorian) Pvt. Ltd.
M/s. Praveen Chandra
Vs.
Commissioner of Central Excise Respondent
Panchkula
Appearance:
Shri P K Mittal and Shri Naveen Bindal, Advocates for the Appellants
Shri M S Negi, DR for the Respondent
CORAM:
Hon'ble Shri Ashok Jindal, Member (Judicial)
Hon'ble Mr. B Ravichandran, Member (Technical)
Date of Hearing /decision: 13.08.2015
FINAL ORDER NO. 52847 -52849/2015-EX(DB)
Per B Ravichandran:
There are three appeals taken up together for decision as the issue involved is same. Appeal No. E/1381/2009-Ex(DB) and E/1382/2009 -Ex(DB) were filed by M/s. United Chain Industries and M/s. Kay Iron Works (Jorian) Pvt. Ltd. Appeal No. E/1383/2009 Ex(DB) was filed by M/s. Praveen Chandra deals with only penalty.
2. The brief facts of the case are that the appellants were engaged in the manufacture of machinery for sugar and paper mill and registered with the Central Excise authorities. They used raw materials like angles and channels for manufacture of machinery. Further investigations were carried out against the appellants and the Revenue found that they were availing cenvat credit fraudulently. Various invoices were received without actually receiving any material from the dealers. Proceedings were initiated against them resulting in the impugned order dated 7.1.2009. The original authority confirmed the demand of Cenvat Credit and imposed equal amount of penalty. He also imposed penalties on various persons including Shri Praveen Chandra (Rs.50 lakhs). The appeals against the impugned order were decided by this Tribunal vide order dated 4.9.2009. The appellants challenged the above said order before Honble Punjab and Haryana High Court by way of writ petition. The Honble High Court vide order dated 6.10.2009, after considering the appellants grievance regarding disposal of appeals themselves at the time of hearing stay petitions directed the appellants to file application for recalling the earlier orders of this Tribunal. Accordingly, on the applications filed by the applicants this Tribunal vide order dated 5.1.2012 restored the appeals after recalling the final order dated 4.9.2009.
3. In the appeals, appellants have taken various grounds, like they are not the manufacturers and they have not issued any supplementary invoices and in any case recovery can be made only from the ultimate beneficiaries who availed the credit etc. However, during the arguments the learned Counsel for the appellants pleaded that since the full disputed amount involved in the case stands recovered / paid and penalty of 25% of the revenue has already been deposited in pursuance of said order of this Tribunal, he requested for closure of proceedings by allowing them to avail the benefit of 25% penalty under section 11AC of the Central Excise Act, 1944 and also wavier of penalty imposed on Shri Praveen Chnadra.
4. Learned AR, on the other hand, contested the plea of the appellants for reducing the penalty under section 11AC as they have not paid the full amount within the time prescribed under the said section.
5. Heard both sides. Examined the appeal records.
6. Admitted facts of the case are that the appellants company neither received the inputs nor cleared final products and the entire transactions were only on paper with an intention to pass on irregular modvat credit to their buyers. We find in the present case as the transactions are only on paper and as such, the credit availed without receipt of inputs and credit utilization without clearance of final products will only pass on the undue benefit or credit with reference to buyers from respondent for such fictitious clearance of final products who in turn could have availed cenvat credit. In other words, as the appellants admittedly have not manufactured any item relevant to the present case, the question of payment of such duty on final products does not arise. As such, the passover of credit by them to a third party becomes crucial for full compensation of revenue loss due to this illegal acts. In this situation, we find that the credit of duty utilized for purported clearance of final product by the appellants resulting in cenvat credit availment by buyers stands recovered at the buyers end as admitted by both the sides. The appellants in the written submissions submitted that the full amount of cenvat credit in the improper paper transactions stand recovered along with 25% of penalty in pursuance of stay order of the Tribunal. The plea of the appellants is that concessional penalty of 25% should be available to them as the full duty involved (irregular credit) stand recovered.
7. Considering the facts and discussions as narrated above, we find that the appellants are eligible for reduced penalty of 25% in terms of proviso to section 11AC . In this connection, we place reliance on the decision of Honble Delhi High Court in the case of CCE vs Malbro Appliances Pvt. Ltd. [2007 (208) ELT 503 (Del) ] and K P Pouches Pvt. Ltd. [2008 (228) ELT 31 (Del) and Tribunals order in Mona Dyeing and Printing Mills [2010 (254) ELT 141 (Tri-Ahmd]). Accordingly, we pass the following order :-
The demand and consequent interest against the appellant were confirmed. The amount already paid are appropriated towards the said demand. Penalty is reduced to 25% of the confirmed demand in terms of proviso to section 11AC. Penalty already deposited is appropriated towards this. Penalty imposed on Shri Praveen Chandra is reduced to Rs.5 lakh.
8. The appeals are disposed of in the above terms.
( operative part of the order pronounced in the open court )
( Ashok Jindal ) Member(Judicial)
( B Ravichandran )
Member(Technical)
ss
5
This page reproduces a public judgment and a summary of it. It is research material, not legal advice, and it is no substitute for advice from an advocate on your own facts.
Research this judgment with Miss Lucy
Ask what it holds, what has followed it, and what it means for your matter — in plain English, with the citations.
Try Miss Lucy free