M/S. Vma Enterprises P. Ltd vs C.C.E.&S.T., Noida

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? Yes 3. Whether Lordships wish to see the fair copy of the order? Seen 4. Whether order is to be circulated to the Department Authorities? Yes

Appeal No.E/52204/2014-EX[SM]

[Arising out of Order-in-Appeal No.NOI/EXCUS/000/APPL/ 225/13-14, dated 29.11.2013 passed by the C.C.E.(Appeals), Noida]

M/s. VMA Enterprises P. Ltd. Appellant

Vs.

C.C.E.&S.T., Noida Respondent

Appearance

Mr. Prabhat Kumar, Advocate

Mr. R.P. Singh, Advocate - For Appellant

Mr. D Singh, DR - For Respondent

CORAM: Honble Mr. S.K. Mohanty, Member (Judicial)

Final Order No.54201/2015, dated 01.07.2015

Per Mr. S.K. Mohanty :

This appeal is directed against the impugned order dated 29.11.2013 passed by the Commissioner (Appeals), Central Excise, Noida, upholding the penalty amount imposed under Rule 25 of the Central Excise Rules, 2002 in the Adjudication order.

2. Brief facts of the case leading to this appeal are that the factory of the appellant was visited by the Central Excise Officers on 24.11.2011. During course of inspection of the factory premises, it was detected by the Central Excise Officers that daily stock account as per Rule 10 of Central Excise Rules, 2002 was not available in the factory. Consequently, the Central Excise Officers seized the goods lying in the factory. Thereafter, Show Cause Notice dated 23.05.2012 was issued, seeking confiscation of the seized goods and imposition of penalty under Rule 25 of Central Excise Rules, read with Section 11AC of the Central Excise Act, 1944. The Show Cause Notice was adjudicated, confiscating the goods and also imposing penalty of Rs.3,33,490/-, vide order-in-original dated 02.07.2013. Being aggrieved with the said order, the appellant preferred appeal before the Commissioner (Appeals), which was disposed of vide impugned order dated 29.11.2013, confirming the penalty imposed in the adjudication order. Hence, this present appeal before this Tribunal.

3. The Ld. Advocate Sh. Prabhat Kumar, appearing for the appellant submits that the allegation of the Department that no records as contemplated under Rule 10 ibid has not been maintained by the appellant, is factually incorrect, inasmuch as the appellant maintained the daily production account, entering the particulars of manufactured goods. According to him, on the date of visit of the Central Excise Officers, the daily stock account was available in the office of Chartered Accountant, who took the said register for the purpose of preparation VAT returns. He further submits that the fact of maintenance of records by the appellant has also been accepted by the Commissioner (Appeals) in the impugned order at para 4.3, wherein it has been observed that the stock register was produced before the Central Excise Officers on the next date. According to the Ld. Advocate, since the appellant has maintained the daily stock account, confiscation of goods and imposition of penalty under Rule 25, read with Section 11AC of the Central Excise Act, 1944, by both the authorities below is not justified. He further referred to the impugned order in page 5 at paragraph 3.2 wherein the Commissioner (Appeals) has categorically recorded that there is no clandestine clearance of the goods from the factory of the appellant. To substantiate his stand that imposition of penalty is not justified in the facts of this case, ld. Advocate has relied on the following judgments/ decisions of the Judicial Forums:-

* CCE Kanpur Vs. Pioneer Glass Indus, [2013 (298) ELT 730 (Tri. Del)]

* CCE Kanpur Vs. Trela Footwear Exports (P) Ltd., [2013 (295) ELT 316 (Tri. Del)]

* CCE Hyderabad Vs. Srinivasa Frozen Foods Ltd., [2010 (262) ELT 594 (Tri. Bang)]

* A Kumar Industries Vs. CCE Daman Vapi, [2010 (261) ELT 486 (Tri.-Ahmd.)]

* CCE Vs. Saurasthra Cement Ltd, [2010 (260) ELT 71 (Guj)]

* Supreme Industries Ltd. Vs. CESTAT, New Delhi, [2007 (214) ELT 187 (MP)]

* CCE Lucknow Vs. BMW Steels Ltd, [2010 (272) ELT 315 (Tri. Del)]

* CCE, BBSR-I Vs. Pentagon Steel (P) Ltd, [2013 (288) ELT 271 (Tri.-Kolkata)]

* CCE, Lucknow Vs. Subh Metals, [2015 (318) 282 (Tri. Del)]

4. Per Contra, Sh. Devender Singh, ld. Departmental Representative appearing for the Revenue Respondent reiterated the findings recorded in the impugned order and further submitted that imposition of penalty and confiscation of goods under Rule 25 of the Central Excise Rules, 2002 is legal and proper.

5. I have heard the Counsel for both the sides and perused the records.

6. It is an admitted fact that there is no allegation of clandestine removal of goods from the factory by the appellant. The only allegation levelled against the appellant by the authorities below is that daily stock account as provided under Rule 10 of the Central Excise Rules, 2002 has not been maintained by the appellant. Since the goods in question were not removed from the factory and in view of the fact that the stock accounts were duly maintained by the appellant, which at the material time, was available with the Chartered Accountant of the appellant company, the allegation levelled against the assessee for confiscation of goods and imposition of penalty are not legal and proper.

7. I find support from the judgments/ decisions cited by the Ld. Counsel for the appellant. In the case of CCE Vs. Saurasthra Cement Ltd. (supra) while interpreting the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944, the Honble Gujarat High Court has held as follows:

17. It is also to be borne in mind that Rule 25 starts with the word Subject to the provisions of Section 11AC...... Section 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rules made thereunder with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any wilful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules.

8. In view of the settled position of law, confiscation of goods and imposition of penalty are not in conformity with the statutory provisions and thus the impugned order is set aside and the appeal is allowed in favour of the appellant.

[Operated portion pronounced in the open court]

(S.K. Mohanty)

Member (Judicial)

SSK

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