2011 (4) TMI 897 - AT - Central Excise

Shifting premises - Confiscation - redemption fine & Penalty - Held that - No evidence has been produced on behalf of the respondent firm to support the claim that they have intimated the change of proprietary concern into partnership firm. It is not merely a case of shifting premises of manufacturer to another premises of same manufacturer after following the procedure prescribed. Clearance without payment of duty/reversal of credit on the inputs is clearly in violation of Cenvat Credit Rules. Therefore, the Commissioner (Appeals) upholding confiscation is justified. The Commissioner (Appeals) has set aside the penalty imposed under Rule 15(1) of Cenvat Credit Rules, 2004 on the ground that the said rule was not invoked in the show cause notice, thus involving claim of the change of premises and claim of change in the constitution of the firm, the leniency shown by the Commissioner (Appeals) in reducing penalty from Rs.50,000/- to Rs.20,000/- and reduction in redemption fine are reasonable and calls for non interference.

Summary

Issues:
1. Appeal by the department against the order of the Commissioner (Appeals) and connected cross objection.
2. Appeal challenging penalty imposition sustained by the Commissioner (Appeals).

Analysis:

Issue 1: Appeal by the department and connected cross objection
The appeal by the department was against the order of the Commissioner (Appeals) regarding the confiscation of goods and imposition of penalties. The respondent firm, a proprietary concern, claimed a partnership was constituted with one of the partners being the authorized signatory. The premises were shifted to another location, leading to the removal of finished goods, raw materials, and machinery. The original authority confiscated goods and imposed penalties under various rules. On appeal, the Commissioner (Appeals) upheld confiscation but reduced the redemption fine and penalties imposed. The department argued that penalties should not have been reduced, citing a Supreme Court decision. The respondent contended that the change in premises and firm constitution was duly intimated, justifying no penalties. The Tribunal found no evidence of intimation to excise authorities and upheld confiscation due to violations of Cenvat Credit Rules. The Commissioner's reduction of penalties was deemed reasonable, and the cross objection challenging confiscation and penalties was dismissed.

Issue 2: Appeal challenging penalty imposition
The second appeal was by an individual challenging the penalty imposed and sustained by the Commissioner (Appeals). The appellant was the authorized signatory of the firm and a partner in another entity dealing with the confiscated goods. The Tribunal affirmed that penalties were warranted as the removal of goods without duty payment and credit reversal violated Cenvat Credit Rules. The penalty on the appellant was considered justified, and the Commissioner's decision to reduce penalties was deemed appropriate. Consequently, the appeal seeking to set aside the penalty was rejected.

In conclusion, the Tribunal rejected the department's appeal, dismissed the cross objection by the respondent firm, and rejected the appeal challenging the penalty imposition. The decision emphasized compliance with excise rules and upheld penalties for violations, maintaining the Commissioner (Appeals)'s reduced penalties as reasonable in the circumstances.