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2006 (3) TMI 734 - AT - Central ExciseDemand of duty - Seizure of cash vans - Mis-declared the goods under Ch. Heading 8703 and Chapter Heading 8707 - Interest - confiscation - Penalty - activity of fabrication of bodies for and on vehicle chassis - HELD THAT - The appellants relied upon the fact that the confiscation of vehicle being ordered by the present order of confiscation without notice to the owners of the vehicle was not legal nor permissible rely on the case of Veritas Exports v. Union of India 2004 (6) TMI 48 - HIGH COURT OF JUDICATURE AT BOMBAY . We find force in this submission since both sides agree that the order in not legal and proper in law. The confiscation of vehicles therefore cannot be sustained. Nor they be liable to confiscation and duty demands on grounds of classification and duty demand on clubbing which is not being upheld. We cannot find any reason to impose and arrive at any such reasons to call for a penalty. The penalty under Rule 26 are also not attracted as the same are attracted only in a situation where any person who knows or has reason to believe that the goods in question dealt with him are liable to confiscation under the Central Excise Act 1944 and since there is no proposal for confiscation of the goods and the appellants have dealt with the goods after due declaration of penalty by Central Excise Act and in a bona fide manner penalty under Rule 26 is not attracted. Since the bar of limitation is to be upheld in favour of the appellants. Penalty liability u/s 11AC cannot be arise in the facts of this case. From the issue framed for adjudication by the learned Commissioner it is evident that no issue for confiscation liability for any goods was framed and therefore the present proposals in the Revenue appeal as regards to confiscation of the goods and also corrigendum issued by the Commissioner to be typographical arithmetical mistake cannot be upheld. We find no reason to uphold the duty demand on merits and on limitation. The penalties cannot be sustained therefore there is no question to arrive at any such liability. The confiscation of the goods cash delivery vans as arrived at by learned Commissioner is not being upheld. In this view of the matter the Order-in-Original of the learned Commissioner are set aside and the appeals of Nicholas D souza Garage Sigma Auto craft Pvt. Ltd. and Mr. Selin D souza are allowed and the appeal of revenue is rejected. Ordered accordingly.
Issues Involved:
1. Classification of motor vehicle bodies and cash vans. 2. Clubbing of clearances for SSI exemption. 3. Non-registration and non-compliance with Central Excise regulations. 4. Duty demands and interest. 5. Penalty imposition. 6. Confiscation of goods. Issue-wise Detailed Analysis: 1. Classification of Motor Vehicle Bodies and Cash Vans: The appellants, engaged in fabricating motor vehicle bodies, claimed classification under different headings. The department argued for classification under CH 87.03 and CH 87.07. The tribunal found that the classification of cash delivery vans (CDVs) under CH 87.03 was incorrect. CDVs, designed for transporting cash with security features, were more appropriately classified under CH 87.04. The tribunal noted that the chassis used for CDVs were duty-paid under Heading 87.06.42, which did not align with the classification under CH 87.03. Therefore, the classification under CH 87.07 was erroneous, especially after the amendment in April 2001. 2. Clubbing of Clearances for SSI Exemption: The tribunal examined whether the clearances of M/s. Sigma Autocraft Pvt. Ltd. (SAPL) and M/s. Nicholas D'souza Garage (NDG) could be clubbed for SSI exemption purposes. The tribunal found that SAPL and NDG, though operating from the same premises and sharing resources, were distinct entities. The clearances of SAPL in 2002-03 were minimal, and the assumption of SAPL being a dummy unit was baseless. Thus, clubbing the clearances for denying SSI exemption was not justified. 3. Non-registration and Non-compliance with Central Excise Regulations: SAPL had not registered with the Central Excise authorities nor filed necessary declarations. The tribunal noted that NDG was registered and had been fabricating bodies since 1986. The tribunal found that the activities of both units were within the department's knowledge, negating the invocation of the proviso clause to Section 11A(1) for extended demand periods. 4. Duty Demands and Interest: The tribunal addressed various duty demands raised by the department. The demand of Rs. 30,12,074 on NDG for the period 1998 to February 2001 and Rs. 8,79,840 for 2001-2002 was confirmed. However, the tribunal found that the invocation of the extended period for demands was unsustainable due to the department's prior knowledge of the activities. Consequently, demands for periods beyond the normal limitation were not maintainable. 5. Penalty Imposition: Penalties under Section 11AC and Rule 209A were imposed on NDG and its partner, Mr. Selin D'souza. The tribunal found no clear proposal for confiscation in the show cause notice, rendering the penalties unsustainable. Penalty provisions, being of a quasi-criminal nature, required strict interpretation. Since the duty demands were not upheld on merits and limitation, the penalties were also set aside. 6. Confiscation of Goods: The tribunal examined the confiscation of eight cash vans valued at Rs. 20,00,500. The confiscation was based on erroneous classification under CH 87.03 and CH 87.07. The tribunal found that the confiscation was not legal, as there was no clear proposal in the show cause notice. The tribunal relied on the case of Veritas Exports v. Union of India, which held that confiscation without notice to the owners was impermissible. Consequently, the confiscation order was set aside. Conclusion: The tribunal set aside the duty demands, penalties, and confiscation orders against NDG, SAPL, and Mr. Selin D'souza. The appeals of NDG, SAPL, and Mr. Selin D'souza were allowed, and the revenue's appeal was rejected. The tribunal emphasized the need for clear proposals in show cause notices and strict adherence to legal provisions for penalties and confiscation.
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