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2014 (4) TMI 260 - AT - Central ExciseShortage of finished goods - Clandestine removal of goods - benefit of Cum Duty price - Duty demand - Penalty u/s 11AC - Commissioner allowed credit holding that inputs corresponding to this credit were actually used in the manufacture of clandestinely cleared goods - Held that - Revenue has not given detailed reasons for rejecting the respondent s plea. The probable reasons could be that the quantity 5,735.550 Kg. (value Rs. 7,85,770/-) of finished goods DASA did not tally with any combination of parallel invoices on record. There is also nothing on record to show that the respondent failed to correlate these details when called upon to do so by the Range Superintendent. The period of dispute is from December, 1999 to 23.03.2001, and in the absence of any documentary evidence total shortage of finished goods detected in the factory on 23.03.2001 has to be attributed to the finished goods removed under the cover of parallel invoices issued up to May, 2000. Input for which credit of Rs 2,27,220/- has been claimed by Shree Chem have also been admitted to be used in the manufacture of the finished goods cleared clandestinely. Onus of proving that goods cleared on parallel invoices were different from the shortages found in the factory lies with the department. So far as the benefit of Cum-duty-price to be extended to Appellant Shree Chem is concerned, it is relevant to mention that this quantification was not agitated before the lower authorities and has been raised only before this bench. Therefore, for allowing the benefits of Cum-duty-price the case is required to be remanded to the Adjudicating Authorities - The allowance of MODVAT Credit of Rs. 2,27,220/- by the lower appellate authority vide impugned Order in Appeal is upheld. Penalty equivalent to the total duty quantified by the Adjudicating Authority after allowing cum-duty benefit, if any; will be impossible upon Appellant Shree Chem under Sec. 11AC of the Central Excise Act 1944. However, if the entire duty, interest and penalty is paid within 30 days from the date of communication of quantified duty by the Adjudicating Authority, the penalty imposed under Sec 11AC will be reduced to 25% of the penalty imposed as per the provisions of Sec 11AC of the Central Excise Act 1944 - Decided partly in favour of assessee.
Issues Involved:
1. Maintainability of Revenue's Appeal. 2. Allowance of MODVAT Credit of Rs. 2,27,220/-. 3. Sustainment of the demand of Rs. 1,25,723/-. 4. Appropriateness of penalty of Rs. 2,00,000/- imposed on Shree Chem. 5. Imposition of penalty on partners under Rule 26 of the Central Excise Rules 2002. 6. Extension of Cum Duty price benefit to Shree Chem. Detailed Analysis: Issue I: Maintainability of Revenue's Appeal The preliminary objection raised by the Consultant for Shree Chem regarding the authorization to file the appeal by the Assistant Commissioner instead of the Joint Commissioner was found unsustainable. The Tribunal cited multiple case laws, including CCE, Kanpur Vs. Ufan Chemicals and Commissioner Vs. S. Krishna & Co., which held that appeals should not be dismissed on technical grounds. Thus, the appeal was deemed maintainable. Issue II: Allowance of MODVAT Credit of Rs. 2,27,220/- The Revenue failed to provide evidence that the respondent had already taken credit against the six invoices immediately on receipt of inputs. The Tribunal upheld the lower appellate authority's decision to allow the MODVAT Credit of Rs. 2,27,220/-, as the inputs were used in the manufacture of finished goods cleared clandestinely. The Tribunal also found no evidence that inputs involving credit of Rs. 2,95,997/- were removed as such, confirming the clandestine manufacture and clearances. Issue III: Sustainment of the Demand of Rs. 1,25,723/- The Tribunal noted that the Revenue did not provide detailed reasons for rejecting the respondent's plea regarding the duplication of the duty demand of Rs. 1,25,723/-. The consultant for Shree Chem argued that this amount was already included in the total clandestine clearance duty demand of Rs. 6,40,285/-. The Tribunal held that the onus of proving that goods cleared on parallel invoices were different from the shortages found in the factory lay with the department. The Tribunal rejected the Revenue's appeal on this issue but remanded the case to the Adjudicating Authorities to decide on the benefit of 'Cum-duty-price.' Issue IV: Appropriateness of Penalty of Rs. 2,00,000/- Imposed on Shree Chem The Tribunal agreed with the Revenue that the mandatory penalty under Section 11AC could not be less than the duty evaded. However, it extended the option of a 25% penalty under Section 11AC, provided the entire duty, interest, and penalty were paid within 30 days from the date of communication of the quantified duty by the Adjudicating Authority. Issue V: Imposition of Penalty on Partners under Rule 26 of the Central Excise Rules 2002 The Tribunal found that the Revenue had not filed a separate appeal against the partners. Thus, it could not entertain the Revenue's ground of appeal seeking imposition of penalties on the partners. However, it upheld the penalty of Rs. 25,000/- imposed on Shri Deepak F. Shah, agreeing with the Revenue that penalties could be imposed on both the partnership firm and the partner under different provisions. Issue VI: Extension of Cum Duty Price Benefit to Shree Chem The Tribunal noted that this quantification was not agitated before the lower authorities and was raised only before the bench. Therefore, it remanded the case to the Adjudicating Authorities to decide on this issue in light of the case laws relied upon by the appellant. Conclusion: The appeals were disposed of with the following terms: - The allowance of MODVAT Credit of Rs. 2,27,220/- was upheld. - Penalty equivalent to the total duty quantified after allowing cum-duty benefit, if any, was imposed on Shree Chem under Section 11AC, with a reduction to 25% if paid within 30 days. - The penalty of Rs. 25,000/- imposed on Shri Deepak F. Shah was upheld. - The appeals of the appellants and Revenue were allowed only to the specified extent.
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