Ram Lal Agarwal, Director vs C.C.E.-Delhi-I

Date of Pronouncement: 03/08/2015

Appeal No. E/52938/2014-EX(SM), E/52939/2014-EX(SM)

(Arising out of OIA No. 69-CE/2013 dated 21.02.2014 passed by CCE, Delhi-1)

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?

Shiva Alloys Pvt. Ltd

Ram Lal Agarwal, Director Appellant

Vs.

C.C.E.-Delhi-I Respondent

Appearance:

Present for the Appellant: Shri Jitender Singh, Advocate

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

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

Final Order No. 52427-52428/2015

Per: Sulekha Beevi C.S.

The appellants are aggrieved by the penalty imposed under Rule 26 of Central Excise Rules, 2002.

1. Appellants are manufactures of Steel Product viz SS Flats. Appellants were supplying raw materials to one M/s Pawan Jain & Sons (M/s PJS) who were engaged in production of stainless steel utensils and also exported the same. M/s PJS also claimed rebate of duty paid on excisable raw materials used in the manufacture of such utensils. The appellants along with M/s PJS and other noticees were issued show cause alleging that M/s PJS was actually not receiving duty paid raw materials from suppliers like the appellant, but was only receiving the bills/invoices for supply and on the basis of these documents M/s PJS claimed rebate of duty as shown in the invoices. The Show Cause Notice finalized in the Order-in-Original where penalty under Rule 26 of Central Excise Rules, 2002 was imposed upon the appellants and other co-noticees also. Penalty of Rs.5,000/- was imposed upon the appellant M/s Shiva Alloys (P) Ltd. and Rs.5,000 upon Shri Ram Lal Aggarwal, Director of the Company. It is also to be mentioned that penalty of Rs.2,00,000/- was imposed on M/s Duggar Fiber (P) Ltd. and Rs.1,00,000/- on Shri Ashok Chauhan, Director of Duggar Fiber (P) Ltd who were co-noticees.

2. The Revenue filed appeal against the imposition of low penalty of Rs.5,000/- upon the appellants and other co-noticees (M/s Parvathi Ltd. and its director) on the ground that the penalty imposed does not commensurate with their acts of omission and commission. The Commissioner (Appeals) vide the impugned order dated 21.2.2014 enhanced the penalty imposed upon the appellant, M/s Shiva Alloys (P) Ltd. to Rs.1,85,767/- and Rs.92,880/- upon the Director, Shri Ram Lal Aggarwal. Aggrieved the appellants have preferred this appeal.

3. The allegation against the appellants is that they facilitated M/s PJS to avail fraudulent rebate of excise duty by issuing bogus invoices. According to Department the raw materials supplied by certain invoices have not been physically received by M/s PJS because the vehicles pertaining to these invoices had maximum loading capacity of 9.5 MT only whereas, larger quantity has been shown to be supplied by the invoices.

4. The learned counsel appearing on behalf of appellants urged that the vehicle had a fitness certificate valid upto 10.02.2009 and merely because the vehicles carried more load than the loading capacity as mentioned the Registration Certificate it would be highly erroneous to conclude that appellants have not supplied the consignments. He also submitted that over loading is a common phenomenon in transportation of goods. Further, that the invoices were issued in 2006, where as the show cause notice is dated 5.12.2011 by invoking extended period. That there are no grounds for invoking the same and therefore no penalty can be imposed. Moreover that the relevant provision by which the penalty has been imposed came into existence only w.e.f. 1.03.2007 and therefore imposition of penalty is wholly unsustainable.

5. The ld. DR assailed the impugned order reiterating the findings of the authorities below. He submitted that as there was suppression of facts and willful mis-statement the extended period is invokable.

6. Heard both sides and perused the records. The allegation against the appellants is that they issued bogus invoices. Such act has been made punishable by imposition of penalty under sub clause (2) of Rule 26 w.e.f. 1.03.2007 only. Admittedly during the period when the appellants issued the invoices the said provisions were not in existence. Needless to say that penalty cannot be imposed upon the appellants under a provision which was not in existence when the alleged act was not made punishable. The appellants also relied upon the decisions of their co-noticee Duggar Fiber (P) Ltd in Final Order No. A/51174-51175/2015-SM/BR dated 7.4.2015 which is held in favour of the assessee on the ground that sub clause (2) of Rule 26 was introduced only w.e.f. 01.03.2007.

7. From the forgoing, the penalty imposed on the appellants under Section 26 by the impugned order is unsustainable and therefore set aside. The appeal is allowed, with consequential reliefs if any.

(Pronounced on 03/08/2015)

(Sulekha Beevi C.S.)

Member (Judicial)

K. Gupta