2010 (10) TMI 203 - AT - Central Excise

Clandestine removal clearance of plastic granules in guise of lay flat tubings appellants also have produced three purchase orders and corresponding invoices which show that Eastern Group Companies had ordered for lay flat tubing, contrary to the claim of the department and the response of the appellant was to supply lay flat tubing only. Therefore the benefit of doubt has to be extended to RIP Demand based on statement - cash sales - the confirmation of demand would amount to discarding of a portion of the statement of the various persons and in the absence of cross-examination of Shri Lalit Agarwal and in view of the fact that only one invoice has been admitted and no other invoices have been investigated as regards existing customers - this demand cannot be sustained. Removal on parallel challans - there is a clear admission of the offence by Shri Hetal Patel and Shri D.P. Vyas duly accepted and endorsed by the partner. Further the transporter has not retracted his statement till date. Further parallel challan book was recovered. Under these circumstances it has to be held that department has been able to make out a case of removal without proper documents. - demand sustained. Cum Duty Price - It is an accepted principle that when a transaction value is available, we need not require a Chartered Accountant to certify that the price charged includes all the elements. Only in the case of refund claim, assessee is required to show that the duty liability has not been passed on. This is not a case of claiming refund. In any case in the absence of any evidence of collection of extra amount and also in view of the fact that the department s demand of duty is based on the very same invoice and the correctness thereof, the same invoices cannot be ignored for the purpose of treating it as cum duty price. Extended period of limitation - extended period would be invocable in this case in view of the fact that parallel challans were maintained, plastic granules were cleared in the guise of lay fiat tubings, non-existent vehicles numbers were shown in the documents, payments were received in cash and details of buyers were suppressed. Therefore the submission that extended period could not have been invoked is not acceptable. Therefore penalty under Section 11AC equal to duty is imposable.

Summary

Issues Involved:
1. Clearance of plastic bags as lay flat tubings.
2. Clearance of plastic granules as lay flat tubings.
3. Clearance of granules under parallel challans.
4. Treatment of amount received as cum duty price.
5. Invocation of the extended period for demand.
6. Penalty on individuals involved.

Issue-Wise Detailed Analysis:

1. Clearance of Plastic Bags as Lay Flat Tubings:
The Commissioner concluded that the appellants cleared plastic bags but showed them as lay flat tubings in 63 clearances to Eastern Group companies. This conclusion was based on six purchase orders showing bags while invoices showed lay flat tubing, and statements from Shri K. Prabhakar and Shri K.B. Nair. The appellants argued that cross-examination of Shri K. Prabhakar was not allowed, and three purchase orders indicated lay flat tubing, contradicting the department's claim. The Tribunal found a conflict between statements from Shri D.P. Vyas and Shri K. Prabhakar, and in the absence of reconciliation and cross-examination, the benefit of doubt was extended to the appellants for clearances covered by Annexure A.

2. Clearance of Plastic Granules as Lay Flat Tubings:
The demand under Annexure B1 relied on the statement of Shri Lalit Agarwal, admitting purchase of plastic granules invoiced as lay flat tubings. The appellants contended that existing customers were not contacted, and cross-examination requests were denied. The Tribunal noted the lack of corroboration between statements and the absence of notice to Deepak Chemoplast, leading to the conclusion that the demand under Annexure B1 could not be sustained.

3. Clearance of Granules Under Parallel Challans:
The demand under Annexure B2 involved 741 clearances based on admissions from company officials and transporters, indicating granules were cleared as lay flat tubings. The appellants argued against the legal requirement to specify consignee addresses and sought cross-examination of their employees. The Tribunal found the statements of Shri Hetal Patel and Shri Vyas, supported by transporters' statements, credible. The demand of Rs. 66,05,123/- was upheld.

4. Treatment of Amount Received as Cum Duty Price:
The appellants argued that the amount received should be treated as cum duty price. The Commissioner rejected this claim, citing a Supreme Court decision requiring detailed pricing structure. The Tribunal found no evidence of additional consideration and upheld the appellants' claim for cum duty price, reducing the duty demand to Rs. 56,98,763/-.

5. Invocation of the Extended Period for Demand:
The Tribunal found that the extended period was invocable due to the maintenance of parallel challans, clearance of granules as lay flat tubings, use of non-existent vehicle numbers, cash payments, and suppression of buyer details. The extended period for demand was justified.

6. Penalty on Individuals Involved:
A penalty of Rs. 10,00,000/- on Shri Anil Agarwal was deemed harsh and reduced to Rs. 2,00,000/-. Shri K.B. Nair, being an employee, had his penalty reduced to Rs. 25,000/-. The Tribunal considered the maximum penalty under Section 11AC of the Central Excise Act, 1944, and allowed the option to pay 25% of the duty as penalty within thirty days.

Conclusion:
The duty demand was confirmed at Rs. 56,98,763/-. The appellants were liable to a penalty equal to the duty amount under Section 11AC, with an option to pay 25% of the duty as penalty within thirty days. Penalties on Shri Anil Agarwal and Shri K.B. Nair were reduced to Rs. 2,00,000/- and Rs. 25,000/-, respectively. Appeals were disposed of accordingly.