2014 (7) TMI 483 - AT - Central Excise

Duty of duty of excise as well service tax on the same transaction - sale and marketing of excisable goods i.e. tobacco products - Penalty - Held that - Revenue has undertaken two parallel proceedings in respect of the same transaction. On the one hand, they have treated the entire transaction as Business Support Services rendered by M/s SRPL and has accordingly confirmed the Service Tax demand and on the other they are treating the transaction as an excise transaction and on the same consideration received, excise duty demand of ₹ 4.6 crore (approx.) has been confirmed. The transaction cannot amount to both service and manufacture and sale at the same time; it can be only one of the two. On this very ground alone, the impugned order cannot be prima facie sustained. Further, we observe that there is no evidence available on record with regard to the receipt of the consideration by the main appellant M/s FTPL and all the C&F Agents and Directors of the main appellant M/s FTPL have denied having received any money. Similarly, in the case of transaction with Rajendra Trading Company in the jurisdiction of Aurangabad Commissionerate, the Revenue has taken a view that the duty demand is not sustainable - appellants have made out a strong case in their favour for grant of stay - Stay granted.

Summary

Issues: Appeal against Central Excise duty demand, penalties imposed on directors and agents, parallel proceedings for Service Tax and excise duty, lack of evidence on receipt of consideration, plea for grant of stay.

Analysis:
1. Central Excise Duty Demand and Penalties:
The judgment involves 10 appeals challenging the Central Excise duty demand of Rs. 4,61,64,018/- confirmed by the Commissioner, along with penalties imposed on the main appellant and related parties under Rule 26 of the Central Excise Rules, 2002. The penalties include Rs. 15 lakhs each on three directors of the main appellant, Rs. 5 lakhs each on three C&F Agents, Rs. 1 crore each on another entity and its director, and Rs. 50,000/- on a dealer. The appellants contested the demand and penalties, leading to the appeal.

2. Parallel Proceedings and Lack of Evidence:
The appellant's counsel argued that two parallel proceedings were initiated by the department concerning the same transaction involving Rs. 5.8 crore. One proceeding demanded Service Tax, while the other alleged undervaluation under the Central Excise Act. The counsel contended that the transaction cannot be both a service transaction and an excise transaction simultaneously. Moreover, the lack of documentary evidence and denials by directors and agents raised doubts on the receipt of the said consideration. The judgment highlighted the absence of evidence supporting the excise duty demand and emphasized the contradictions in statements made by involved parties.

3. Plea for Grant of Stay:
The appellants sought a stay on the recovery of dues during the pendency of the appeals. The counsel presented arguments challenging the sustainability of the excise duty demand and penalties imposed. The judgment acknowledged the appellants' strong case for a stay, considering the factual discrepancies, lack of evidence, and contradictory statements by the parties involved. Consequently, the Tribunal granted an unconditional waiver from pre-deposit of the adjudged dues and stayed the recovery during the appeal process.

In conclusion, the judgment addressed various issues, including the Central Excise duty demand, penalties, parallel proceedings, evidentiary concerns, and the plea for a stay on recovery. The analysis highlighted the legal arguments presented by both sides, emphasizing the lack of evidence supporting the demand and the contradictions in statements made by the concerned parties. The Tribunal granted the appellants' request for a stay, considering the factual discrepancies and the strong case presented in their favor.