M/S.Victor Component Systems Pvt. Ltd vs Cce, Delhi-Ii

IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI

Date of Hearing/decision:30.01.2015

Excise Appeal No. E/2909, 2910 and 2911 of 2005-EX(DB)

[Arising out of Order-in-Original No.27/2005 dated 31.05.2005 passed by the Commissioner of Central Excise (Appeals), New Delhi].

M/s.Victor Component Systems Pvt. Ltd. Appellant

Harpreet Oberoi and Pawan Sharma, Directors

Vs.

CCE, Delhi-II Respondent

For approval and signature:

Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial)

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?

Appearance: Rep. by Shri L.P. Asthana, Advocate for the appellant.

Rep. by Ms.Tuhina Sinha, Advocate for the appellant.

Rep. by Shri R.K. Grover, DR for the respondent.

Coram: Honble Shri Rakesh Kumar, Member (Technical)

Honble Shri S.K. Mohanty, Member (Judicial).

Final Order No.50791-50793/2015 /30.01.2015

Per Rakesh Kumar:

The appellants are manufacturers of inductors, transformers, degaussing coil, etc. chargeable to central excise duty under Chapter 85 of the Central Excise Tariff. On 31.03.2003, their factory located at B-86, Okhla Industrial Area, Phase-I, New Delhi and also the residence of Shri Pawan Sharma, Director of the appellant company, was searched. In course of search of the factory, a diary/writing pad was found, which contained certain figures regarding sale. After examining diary entries and inquiry with the Directors of the appellant company, a show cause notice dated 19.01.2004 was issued to the appellant for demand of differential duty amounting to Rs.88,25,182/- by denying the SSI exemption during the period from 1999 to January 2002 along with interest thereon under Section 11 AB and also for imposition of penalty on the appellant company under Section 11 AC and imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on its Directors. The show cause notice was issued by alleging that entries in the diary recovered from the factory represented clandestine removals made without payment of duty and if the value of those clearances is included, the appellant during the period 1999-2000 and 2000-2001 would not be eligible for SSI exemption .

2. The show cause notice was adjudicated by the Commissioner vide order-in-original dated 31.05.2005 by which the Commissioner dropped the duty demand of Rs.70,65,182/- in respect of the allegation and clandestine removals based on the entries in the diary seized from the factory. He, however, confirmed the duty demand of Rs.8,70,402/- against the appellant on the basis of denial of SSI exemption alongwith interest thereon under Section 11 AB and besides this, imposed penalty of equal amount on the appellant company under Section 11 AC and also penalty of Rs.1,00,000/- each under Rule 209 A of the Central Excise Rules, 1944 read with Rule 26 of the Central Excise Rules, 2001/2002 on the Directors of the appellant company, Shri Pawan Sharma, and Shri Harpreet Oberoi. Against this order of the Commissioner, these three appeals have been filed.

3. Heard both the sides.

4. Ms.Tuhina Sinha, Advocate, ld. Counsel for the appellant, pleaded that the Commissioner has dropped the duty demand of Rs.70,65,182/-based on the allegation of clandestine removal which, in turn, is based on the entries in the diary recovered from the factory, referred to as private records in the impugned order, that once the entries in the diary recovered from the factory are ignored, there would not be any justification for denying the SSI exemption, as, if figures in the diary are not considered, the clearances of the goods by the appellant during each financial year would be within the threshold limit for the eligibility for the SSI exemption, that as is clear from the calculation at page-43 of the impugned order, the Commissioner has compared the total value of the clearances of the branded/unbranded goods, as declared in RT-12 Returns during each year, plus duty paid with the higher of the sales figures as declared by the appellant company during that period in the sales tax returns and the sales figures as per the diary entries during that period, and the duty had been demanded on the difference, that once the duty demand based on the diary entries has been dropped, the figures in the diary entries cannot be adopted, that as regards the slight difference between the value of the clearances in the RT-12 Returns and the value as declared in the sales tax returns, the appellant had given explanation for the same , that in some cases, the difference is on account of counting of the value of the returned goods twice or also counting the export sales but these pleas have not been considered by the Commissioner and that in view of this, the impugned order is not correct.

5. Shri R. K. Grover, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner.

6. We have considered the submissions from both the sides and perused the records.

7. The Commissioner has dropped the duty demand of Rs.70,65,182/- in respect of the allegation of the clandestine removal which is based on the entries in the diary recovered from the factory premises. Once the diary entries are not found reliable and on this basis, the duty demand of Rs.70,65,182/- has been dropped, the Commissioner cannot consider those diary entries for calculation of the differential duty by denying SSI exemption as has been done by him in para-43 of the impugned order. On perusal of the calculation of differential duty of Rs.8,70,402 confirmed by him in para-43 of the impugned order, it is seen that he has compared the higher of the two figures - sales value declared by the appellant during the financial year in the sales tax returns and the sales figures as per diary entries and has compared the higher of these two figures with the value of the sales figures including duty in the RT-12 Returns and, the duty has been demanded on the difference. Once the diary entries have not been found reliable, the Commissioner can compare only the sales value including duty as declared in the RT-Return and the sales figures in the Sales Tax Return. Though these is some small difference in the sales figures declared in the Sales Tax Return and the figures declared in the RT-12 Return, according to the appellant, there are valid reasons for the same like the sales tax return figures also includes the export sales and in some cases, the value of the returned goods has also been included twice. It is seen that in respect of the explanation given by the appellant for difference between the sales value as per the RT-12 Return Figures and as per Sales Tax Return figures, there are no findings in the impugned order on this point.

8. In view of this, the impugned order is not sustainable. The same is set aside and the matter is remanded to the Commissioner for de novo adjudication. In the de novo proceedings, he should compare the total sales value of the goods including the duty as declared in the RT-12 Returns with the sale value as declared in the ST-3 Returns and if the explanation given by the assessee for the difference between the two figures is found satisfactory, there would no differential duty demand. The appeals stands disposed of as above.

( Rakesh Kumar )

Member (Technical)

( S.K. Mohanty )

Member (Judicial)

Ckp.

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