Salasar Ispat Ltd vs Commissioner Of Central Excise

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.E/1387 to 1389/10

(Arising out of Order-in-Appeal No.P-III/VM/65-67/2010 dated 07/04/2010 passed by Commissioner of Central Excise (Appeals), Pune)

For approval and signature:

Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S. S. Garg, Member (Judicial)

1. Whether Press Reporters may be allowed to see :No 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 : Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

Salasar Ispat Ltd., Appellant Vs. Commissioner of Central Excise, Respondent Pune-III

Appearance: Shri.Ashok Kumar Singh, Advocate for appellant Shri.V.K.Agarwal, Addl. Comm. (AR) for respondent

CORAM: Honble Mr. P.K. Jain, Member (Technical) Honble Mr. S.S. Garg, Member (Judicial)

Date of Hearing : 30/06/2015 Date of Decision : 30/06/2015

ORDER NO

Per: P. K. Jain

1. Three appeals have been filed by the appellant against imposition of penalty of Rs.50,000/- each in three appeals under Rule 26 of the Central Excise Rules 2002. Brief facts of the case are that various places of the appellant including the office in Mumbai and factory in Nashik, etc. were searched, besides, certain places of brokers. Certain incriminating documents were recovered from the office of the present appellant. These documents indicated that the appellant has purchased clandestinely cleared MS Ingots and MS bars from various manufacturers. Based upon these documents, statement of Shri Pravesh Roshanlal Gautam was recorded who explained the documents and admitted the purchase of the goods which were clandestinely cleared. Based upon these documents statement of suppliers were also recorded besides that of the brokers. After investigation, a duty demand was raised against the original manufacturers along with interest and penalty. In addition, penalty was also proposed against the present appellant. The manufacturers in two cases paid the duty, interest and 25% of penalty within 30 days as per Section 11A (1A) and in third case part payment was made.

2. The learned Counsel for the appellant submits that out of three appeals, in two appeals No.E/1387/10 & E/1388/10, the manufacturers have paid duty, interest and 25% of penalties as required under Section11A (1A) and the matter has been closed in respect of two appeals. He further submitted that in view of the judgement of this tribunal in the case of CCE, Raipur (CG) Vs. Jay Prakash Agarwal reported in 2013 (297) ELT 554 (Tri-Del), no penalty is to be imposed on the present appeal and the matter should have been closed. As far as the appeal No.E/1389/10 is concerned, the learned Counsel submitted that the manufacturers have paid duty, interest and penalty. However, as per the order there were short payment and he is not sure whether the said payments have been made good later on within 30 days. In view of said factual position, the learned Counsel submitted that he would not press for the same.

3. The learned Additional Commissioner (AR) reiterated the points made in the order and submitted that there is no dispute that the present appellant has purchased clandestinely cleared goods without payment of duty and in view of the said fact, the appellants are liable to penalty, the penalty imposed is not on the higher side.

4. We have considered the rival submissions.

4.1 As far as the appeal No.E/1387/10 and E/1388/10 are concerned, we find that the matter is covered by this Tribunals judgement in the case of Jay Prakash Agarwal (supra). The period involved in the present case is prior to the amendment made in Section 11A (1A). In the said judgement, the Tribunal has observed as under:

8.?The first proviso to sub-section (2) use the words proceedings in respect of such person and other persons to whom notice are served under sub-section (1). The word such person is obviously the person referred to in sub-section (l) as person chargeable with the duty which has not been levied or paid or which had been short levied or short paid or to whom refund has erroneous been made i.e. the person who is liable to pay the duty. The question arises as to which persons are covered by the words other persons. Though the appellant have cited Division Benchs judgment in case of Sonam Clock Pvt. Ltd. (supra), on going through this judgment it is seen that the same is not on the issue involved in this case. The issue decided in this case is as to whether the benefit of 1st proviso to Section 11A(2) can be extended when the assessee could not exercise the option under Section 11A(1A) within 30 days of receipt of show cause notice for the reason that the show cause notice did not mention the option available to the assessee under Section 11A(1A) and the Tribunal has decided this question in the favaour of the assessee.

However a Coordinate Bench of this Tribunal (Single Bench) in the case of Anand Agrawal (supra) has held that since the words such person and other persons in proviso to sub-section (2) are qualified by the expression to whom Notice are served in sub-section (1), the words other person would not cover, those persons who have been show caused by the same show cause notice for imposition of penalty under Rule 26 and as such the words other persons would include only the persons from whom the duty not paid, short paid and erroneously refunded is to be recovered. With due respect, in my view, this view of the Tribunal in the case of Anand Agrawal (supra) cannot be treated as correct, as in term of Section 13 of General Clauses Act, 1897, in Central Acts and Regulations, unless there is anything repugnant in the subject or context, the words in singular shall include the plural and vice versa and, therefore, the words such person in first proviso of sub-section (2) would include more than one person also if show cause notice under sub-section (1) has been issued for recovery of duty to more than one person.

Therefore the words other persons in first proviso to sub-section (2) have to be given a meaning different from the words such person. Revenues contention would have been correct if the words other persons were not there in 1st proviso to Section 11A(2) and in that case, there would have been no scope for doubt that on compliance with the provisions of Section (1A), only the proceedings against the person chargeable with duty would stand concluded. But since the Legislature has used the words such person and other persons in 1st proviso to Section 11A(2), the words other persons have to be given a meaning, different from such 1st person. Adopting the Revenues stand would amount to adopting a construction of the proviso to Section 11A(2), which would make the words other persons redundant, which is not permissible.

8.1?In my view, therefore, the words other persons used in first proviso to sub-section (2) would cover the co-noticees/persons who face the allegations of contravention of Central Excise Rules, which are linked with the allegation of deliberate/fraudulent short payment, non-payment or erroneous refund of duty against the person chargeable with duty facing the duty demand i.e. the persons who are alleged to have knowingly dealt with the excisable goods, liable for confiscation in the manner mentioned in Rule 26(1) of the Central Excise Rules, 2002 and for this reason have been show caused for imposition of penalty under this Rule, either in the notice under Section 11A(1) issued to the person chargeable with duty or by separate notices issued in this regard. This interpretation would make sense, as when the proceedings against the manufacturer/assessee stand concluded on payment of disputed amount of duty plus interest plus 25% of the duty as penalty, there would be no sense in continuing the proceedings for imposition of penalty under Rule 26 against other persons like traders who had purchased the goods, transporters who had transported the goods cleared by manufacturer/assessee, the Directors/employees of the manufacturer/assessee company.

8.2?For the purpose of settlement of a case, Section 31(a) of Central Excise Act, 1944, defines assessee as any person who is liable for payment of excise duty assessed under this Act or any other Act and includes any producer or manufacturer of excisable goods or a registered person under the Rules made under this Act, of a private warehouse in which excisable goods are stored. Under Section 32E the assessee, in respect of a case relating to him, may make an application before the Settlement Commission for settlement of the case. Under Section 32M, every order of settlement passed under Section 32F(5) shall be conclusive as to the matters stated therein and no matter covered by said order shall, save as otherwise provided in this Chapter, can be reopened in any proceedings under this Act or under any other law for the time being in force. Tribunal in case of Shitala Prasad Sharma v. Commissioner of Central Excise, Mumbai-I, reported in 2005 (183) E.L.T. 21 (Tri.-Mumbai) relying upon Apex Courts judgment in case of Union of India v. Onkar S. Kanwar reported in 2002 (145) E.L.T. 266 (S.C.) and also the Tribunals judgment in case of D.P. Kothari reported in 2001 (135) E.L.T. 669 has held that when the matter has been settled by the Settlement Commission against the main party and Settlement Commission has granted immunity to him from penalty, the co-accused cannot be penalized under Rule 209A of Central Excise Rules, 1944 as he cannot face a penalty greater than the penalty on the main accused. Same view has been expressed by the Tribunal in case of S.K. Colombowala reported in 2007 (220) E.L.T. 492 (Tri.) with regard to settlement provisions in Customs Act, 1962. The view expressed in para 6.1 above would be in accordance with the ratio of the above-mentioned judgments of the Tribunal.

8.3?The intention of sub-section (1A) read with sub-section (2) of Section 11A, as is evident from Boards Circular No. 831/08/2006-EX., dated 26-7-2006, is to give opportunity to manufacturer/assessee to settle his tax dispute immediately after the receipt of issue of show cause and thereby avoiding the litigation. The interpretation of these provisions sought by the Revenue would be contrary to this objective.

4.2 The above judgement of the Tribunal is squarely applicable to the facts in Appeal No.E/1387/10 & E/1388/10 and the two appeals are therefore, allowed. As far as appeal No.E/1389/10 is concerned, it has admitted by the learned Counsel, the matter was not settled as the entire amount of duty, interest and penalty was not paid.

4.3 Coming to the merits of the case, we find that it is an admitted position that incriminating documents were recovered from the appellants office in Mumbai, which indicated that the appellant has purchased clandestinely cleared goods from the manufacturer. In his statement, both the manufacturers and brokers have admitted the position.

5. In view of the said factual position, the penalty imposed is in order. Further, penalty imposed is not on the higher side. We therefore, dismiss the appeal No.E/1389/10 filed by the appellant.

6. Appeal No.E/1387/10 & E/1388/10 are allowed and appeal No.E/1389/10 is dismissed.

(Pronounced in Court)

(S.S. Garg) Member (Judicial) (P.K. Jain) Member (Technical)

pj

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