Naresh Kumar vs C.C.E. Delhi-Iv

Date of Pronouncement: 21/08/2015

Appeal No. E/53477/2014-EX(SM), E/53478/2014-EX(SM)

(Arising out of OIA No. 32-33/CE/Appeal/DLH-IV dated 21.3.2014 passed by Commissioner (Appeal) Central Excise, Delhi-IV)

1. Whether Press Reporter may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it would 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 Department Authorities?

Skypack Indian Pvt. Ltd.,

Naresh Kumar Appellant

Vs.

C.C.E. Delhi-IV Respondent

Appearance:

Present for the Appellant: Shri S.C. Jain, Advocate

Present for the Respondent: Shri G.R. Singh, DR

Coram: Honble Ms. Sulekha Beevi C.S., Member (Judicial)

Final Order No.52637-52638/2015

Per: Sulekha Beevi C.S.

Brief facts are as under:-

2. The appellants, inter alia, are engaged in the manufacture of Flexible Packaging for Pharmaceuticals and Foods, and are registered with Central Excise Department. They are availing Cenvat Credit, and also export their final product. In order to meet their export requirements, appellants placed order of Plain Plastic CPP Film with domestic manufacturer viz, M/s Vinay Wires & Poly Products (P) Ltd. (VWPPPL) through M/s Deal. The raw material received by this order was properly accounted. Apart from this no other consignment was ever received by appellants from M/s VWPPPL. In pursuance of investigations conducted by Anti Evasion Wing, search was conducted in the premises of VWPPL and officers visited the premises of the appellants factory also. A show cause notice was issued to VWPPL which alleged that VWPPL was engaged in receipt of unaccounted raw materials used for manufacture of final products which were removed in a clandestine manner. From the records kept in appellants premises it was found that only a single consignment was received by appellant from VWPPL and that appellant had properly accounted the transaction. According to the officers, the materials gathered from VWPPL showed that a further consignment dated 24.12.2008 for 3686 Kg. of the value of Rs.3,65,909/- was also supplied to appellants by VWPPL. This entry received from the search conducted in VWPPL did not tally with the accounts of the appellant. It is the appellants case that then they were asked by the officers to pay the duty of the said second consignment (Rs. 47,680/-) and appellants were assured that they could apply for a refund later. To their surprise, they were issued a Show Cause Notice dated 27.4.2012 alleging clandestine activities in connivance with VWPPL. The proceedings finalized in the order which confirmed the demand and also imposed penalty besides interest. The appeal filed was rejected by Commissioner (Appeals) upholding the demand. Hence this appeal.

3. The learned Counsel for appellant advanced a detailed argument highlighting the grievance that the appellant has been inculpated without any evidence or basis. He further pointed out that the adjudicating authorities have traveled beyond the show cause notice. In the SCN the allegation was clandestine removal of goods without payment of duty. Whereas in the Order-in-Original the demand is confirmed under Rule 14 of Cenvat Credit Rules and equal amount penalty is imposed under Rule 15 of the Cenvat Credit Rules. That there was no allegation of wrongful availment of Cenvat credit of Rs.47,677/- in the show cause notice. That the whole allegation is based on an entry in the documents received from the premises of VWPPL. That the appellant paid the amount only on pursuation by the officers.

4. The learned DR reiterated the findings in the impugned order. According to him the materials recovered from the premises of VWPPL would establish the role of the appellants. Further that appellant paid the duty during investigation itself.

5. Heard both sides. The genesis of the allegation is based upon the discovery of details regarding supply of one consignment to the appellants by VWPPL during the search conducted in premises of VMPPL. Investigations were conducted and it was found that VWPPL was not maintaining proper accounts, and was removing finished products clandestinely. In pursuance to the materials discovered from premises of VWPPL the premises of the appellant was also searched. On inspection of records of the appellant, the officers could not tally the entry found in VWPPL with the accounts of the appellant. This has led to the initiation of proceedings against the appellant. Apart from the material received from VWPPL, that a second consignment was also supplied to appellants, there is nothing to connect the appellant with the alleged clandestine activities. The officers do not have a case that there was any irregularity in the accounts maintained by the appellants. According to appellants they paid the duty only because the officers assured them that there would be no action against them and that they could apply for refund. The facts presented by the case reveal that after making the appellants pay the duty, the payment of duty has been taken as the basis for issuing the Show Cause Notice. There is no iota of evidence to establish that the appellants had in any manner connived with VWPPL. Only because they had taken one consignment from VWPPL they have been put into the whole ordeal. The learned counsel for appellants submitted that the appellants have a good reputation and maintain records and pay duty. There has been no instance of allegations. That even though the amount involved may be small, it affects their reputation. These submissions do have substance. Further, the SCN is issued alleging evasion of duty and clandestine removal of goods. Whereas the order passed confirms the demand under wrongful availment of Cenvat Credit. Such an order at the outset in unsustainable. The first appellate authority ought to have considered these aspects without putting the appellant to further hardships of litigation. I find that the appellants have been able to establish a case in their favour.

6. From the foregoing, the impugned order is set aside. The appeals are allowed.

(Pronounced on 21/08/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta

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