) Veerappan Steels (P) Ltd vs Commissioner Of Central Excise

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal Nos.E/221/2007, E/222/2007 & E/228/2007

[Arising out of Order-in-Appeal No. 180/2006 to 182/2006-CE (SLM) dt. 29.11.2006 passed by the Commissioner of Central Excise (Appeals), Salem]

1) Veerappan Steels (P) Ltd. 2) C. Krishnamurthi 3) N.K.Gopalan Appellant

Versus

Commissioner of Central Excise, Salem Respondent

Appearance:

Ms.Minchu Mariam Punnoose, Advocate For the Appellant

Ms. Indira Sisupal, AC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member

Date of Hearing/Decision : 24.3.2015

FINAL ORDER No.41067-41069/2015

All the three appeals are taken up together for disposal as the issues are common arising out of common adjudication order and common OIA.

2. The present appeals have been filed only for waiver of penalty imposed on the appellants. An offence case was registered against the main appellant, M/s.Veerappan Steels (P) Ltd. where they have fraudulently availed credit of duty of R.10,99,000/- in PLA register on three occasions without actually depositing the amount in the government account under T.R.6 challans by showing false entries in the PLAs. Subsequently, the said unpaid credits have been utilized for payment of duty for clearance of excisable goods which resulted in non-payment of duty on the goods cleared by the appellant. After detailed investigation and SCN dt. 23.1.2006 issued to the main appellant-assessee and also to the co-noticees, the adjudicating authority in his order dt. 31.7.2006 confirmed the demand and also imposed penalty of Rs.9,99,000/- on the main appellant (assessee) and also imposed penalty of equal amount on the second and third appellants under Rule 26 of the Central Excise Rules. On appeal, the Commissioner (Appeals) in the common order rejected the assessees appeal and reduced the penalty imposed on the co-noticees to Rs.5 lakhs each. Hence the present appeals.

3. Ld. Advocate appearing for the appellant submits that they have already paid the entire demand. She further submits that the unit is defunct and the property, plant and machinery including weigh bridge has already been attached by the department valued at Rs.47 lakhs for recovering the dues. She submits copy of Section 142 order. She submits that the Directors of the main appellant-assessee have no personal knowledge and no role played by either the Managing Director or the Director. When penalty is imposed on the company, no penalty can be imposed on its Managing Director/Director.

4. On the other hand, Ld. AR reiterates the findings of the adjudication order and the appellate order.

5. After hearing both sides, we find that the short issue in this case is imposition of penalty under section 11AC on the main appellant and penalty imposed on the co-noticees. I find from the adjudication order as well as the Commissioner (Appeals) order, it has been clearly brought out forgery and fraud committed by the main appellant by deliberately making false entries in the PLA Register deliberately on three occasions wherein they have shown false entries of T.R. 6 challan No.13 dt. 20.1.2003, No.15 dt. 20.2.2003 and T.R.6 challan No.3 dt. 5.11.2003 totalling to Rs.10,99,000/- without depositing any amount in the bank, which has been clearly confirmed and admitted by the appellant-assessee. Not only they have shown false entry in the PLA and also used that false entry to debit excise duty in the PLA towards clearance of excisable goods. Statements recorded and invoices clearly established the case of fraud against the assessee. Therefore, I do not find any merit in the appeal of main appellant and penalty imposed under Section 11AC on the appellant-assessee is liable to be upheld. In this regard, I rely on the decisions of Honble High Court of Madras in the case of CCE Vs Tube Investments of India Ltd.  2014 (307) ELT 510 (Mad.) wherein the Hon'ble High Court has upheld the penalty under Section 11AC. Similarly, in the case of Jaiswal Steel Processing Vs CCE  2014 (306) ELT 159 (Chhattisgarh), the Hon'ble High Court ruled that if there is a case of intention to evade payment of duty established by Revenue, Section 11AC penalty is imposable. Accordingly, the appeal of M/s. Veerappan Steels (P) Ltd. is dismissed.

6. As regards penalty imposed on the co-noticees Shri C.Krishnamurthi, Managing Director and Shri N.K. Gopalan, Director of the appellant-company, I find that Commissioner (Appeals) in his order has already reduced the penalty to Rs.5 lakhs each. However, taking into overall facts and circumstances of the case, the appellant being M.D and Director of the company not involved in day-to-day operations of the plant, reduction of penalty merits consideration. Accordingly, penalty imposed on Shri C. Krishnamurthi is reduced from Rs.5 lakhs (as reduced by LAA) to Rs.2,00,000/- (Rupees Two lakhs only) and penalty of Rs.5 lakhs (as reduced by LAA) is reduced to Rs.1,00,000/- (Rupees One lakh only). Accordingly, appeals of 2nd & 3rd appellant (co-noticees) are partly allowed by reduction in penalties on them.

7. In the result, Appeal No. E/221/2007 is dismissed. Appeal No. E/222/2007 & E/228/2007 are partly allowed.

(Operative part of the order pronounced in open court on 24.3.2015)

(R. PERIASAMI) TECHNICAL MEMBER

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