Rakesh Chappal Store vs Cce, Delhi-I

(Arising out of OIA No. 157/CE/DLH/2013 dated 7.10.2013 passed by the CCE(Appeals), Delhi-I)

Date of Hearing: 12.08.2015

Date of Order:04.09.2015

For approval & Signature:

Honble Smt.Sulekha Beevi C.S., Member (Judicial)

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? No 3. Whether their Lordships wish to see the fair copy of the order? seen 4. Whether order is to be circulated to the Department Authorities? Yes

Rakesh Chappal Store Appellant

Vs.

CCE, Delhi-I Respondent

Appearance:

Present for the Appellant: Shri A.K.Mishra, Advocate

Present for the Respondent: Shri R.K.Mishra, DR

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

Final Order No.52756/2015

Per: Sulekha Beevi C.S.

The appellant is aggrieved by the imposition of penalty under Rule 26 of Central Excise Rules, 2002.

2. The appellant is a partnership firm and distributor of Guys & Dolls brand footwear manufactured by M/s.B.S. Enterprises. The officers of Anti-Evasion, Central Excise, Delhi-I inspected the shop premises of the appellant in connection with information received against M/s.B.S. Enterprises. That out of total stock lying at the premises of the appellant, the visiting officers detained Guys & Dolls brand footwear valued at Rs.7,68,256/- (MRP) for the reason that the invoices issued by M/s.B.S.Enterprises did not contain MRP details. The statement of Shri Virender Kumar, partner of the appellant firm was taken and thereafter show cause notice dated 17.9.2010 was issued to M/s.B.S.Enterprises and others including the appellant, inter-alia, proposing confiscation of the goods seized at the premises of the appellant and also for imposing penalty under Rule 26 upon the appellant firm and separate penalty upon partner Shri Virender Kumar. The SCN finalized in the order dated 7.7.2011 which directed release of the goods seized from the appellants shop premises, and imposed penalty of Rs.5,000/- on Shri Virender Kumar under Rule 26 of Central Excise Rules, 2002. Revenue filed appeal challenging release of the seized goods and against the penalty imposed being very low. The Commissioner (Appeals) vide Order dated 13.10.2013 set aside the order to release the seized goods (footwear) and ordered confiscation of the same and levied redemption fine of Rs.80,000/-. Further penalty of Rs.80,000/- was imposed upon the appellant firm. Aggrieved the appellant has filed this appeal.

3. At the time of hearing, learned Counsel for the appellant fairly submitted that as M/s.B.S.Enterprises had not paid duty, the goods seized were liable for confiscation and that the appellant is not challenging the order of confiscation of the goods. However, he is challenging the levy of redemption fine and imposition of penalty upon the appellants firm which according to him is not only high but also unjustified.

4. The issue in the case revolves round the question whether the appellant has any conscious involvement in the act of evading duty committed by M/s.B.S.Enterprises. The G & D brand footwear were manufactured and then supplied to appellants by M/s.B.S.Enterprises. The footwears below Rs.250/- are not excisable to duty. The invoices did not contain MRP details. The goods seized from the shop of the appellant could not be tallied with invoices as the invoices did not reflect the MRP details.

5. Learned Counsel for the appellant submitted that Shri Virender Kumar, partner of the appellant firm paid the penalty only because of being a nominal amount of Rs.5,000/-. But the Revenue thereafter filed appeal and the Commissioner (Appeals) vide impugned order has imposed a heavy penalty of Rs.80,000/- separately on the firm. Learned Counsel contended that the appellant had no knowledge whether M/s.B.S.Enterprises had paid duty on the goods or not as they were only dealers/distributors of the goods. Learned Counsel strongly urged for reduction in redemption fine as the levy of fine has not taken into account the abatement. He submitted that as per MRP, the goods seized valued at Rs.7,68,256/-. The assessable value of these goods after abatement would be only Rs.5,18,573/-. The duty liability of the same would then be Rs.21,365/- only. That therefore levy of redemption fine of Rs.80,000/- is unjustified.

6. Against this, learned DR submitted that the MRP affixed on the goods was more than Rs.250 which were excisable goods. M/s.B.S.Enterprises cleared the goods without payment of duty, and that the appellant is deliberately involved in the act of evasion of duty. Learned DR contended that penalty imposed upon Shri Virender Kumar, partner of the appellant herein by the primary adjudicating authority was paid by him. The fact that Shri Virender Kumar paid the penalty would establish that the appellant firm was involved in the act of evasion of duty.

7. Apart from levy of redemption fine, penalty of Rs.80,000/- is imposed under Rule 26 of the Central Excise Rules, 2002 on the appellant. Rule 26 speaks about imposition of penalty in the case where a person has knowledge or reason to believe that the goods are liable for confiscation. There are no documents or record to establish that the appellant had knowledge that M/s.B.S.Enterprises was evading duty. M/s.B.S.Enterprises sold goods to M/s.G & D Incorporation from where the appellants procured the products. Some of the G&D brand footwears were above Rs.250/- and were excisable goods. The Commissioner (Appeals) has vaguely concluded that the appellant has abetted the omission and commission of act in contravention of provision of Central Excise Act and has proceeded to impose penalty. The participation of the appellant firm is not established by cogent evidence. There is no evidence to link the appellant firm with the clandestine activities of M/s.B.S.Enterprises. Penalty was imposed upon the partner Shri Virender Kumar which was paid by him. Shri Virender Kumar did not file appeal. Counsel for appellant submitted that he opted to pay the fine being nominal and to avoid the burden of litigation. This is a plausible explanation. Further Gujarat High Court in the case of CCE,Surat-II vs. Mahindra Kumar Kapadia-2010 (260) ELT 51 (Guj.) has held that no separate penalty can be imposed on partner and the partnership firm. In the facts of the present case, evidence placed and the judicial decisions, the penalty of Rs.80,000/- imposed on the appellant under Rule 26 is unsustainable and the same is set aside. Taking into consideration, the argument of the learned counsel for appellant that after abatement the duty liability of the seized goods would only come to Rs.21,365/-, the levy of redemption fine of Rs.80,000/- in my view, is on the higher side. The same is reduced to Rs.40,000/-.

8. Given the above, the impugned order is modified to the extent of setting aside the penalty imposed upon the appellant firm and reducing the redemption fine to Rs.40,000/-.

9. The appeal is partly allowed in the above terms.

(pronounced in the open court on 04/09/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

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