2015 (7) TMI 583 - AT - Central Excise

SSI Exemption - Penalty u/s 11AC - Invocation of extended period of limitation - Held that - Goods so called as cartons, wallets or catch covers are similar in nature and are meant for packaging of different products. We have also gone through the heading 4817 as also 4819. We find that heading 4817 covers wallets of paper or paperboard containing an assortment of paper stationery. The goods manufactured by the appellant are primarily meant for packaging of condoms, pencils, pharmaceutical items. These will therefore not be covered by the description given in heading 4817. These would be clearly covered under heading 4819.19 and would be chargeable to duty. During investigation, the appellants have not clarified and made such a claim. We also note that the description in all the copies is inserts. An insert can be a leaflet or some other item of cardboard. In the event the inserts are nothing but printed leaflets, then these would not be chargeable to duty and the same would be required to be excluded from the computation of duty. On this issue, the matter is remanded to the Commissioner. Appellant has not produced any documents even before this Tribunal so as to indicate that they have the duty paying documents. However, in the interest of justice, we are giving two months time from today to produce the duty paying documents used in the manufacture of dutiable cartons, wallets, catch covers etc. and correlate the same (with grammage etc.) to their final products. Such documents will be produced before the jurisdictional Commissioner. Thereafter the Commissioner will examine the claim of the appellant and in case they are entitled to the cenvat credit, extend the same. The balance amount of duty will be paid by the appellant in cash within 30 days from communicating the requantification details. In case the appellants fail to produce the said documents within two months, it will be assumed that they are not claiming cenvat credit and requnatification done. Keeping in view the fact that different copies of the invoices were manipulated, it is a case of fraud and extended period of limitation is correctly involved and is upheld. Penalty under Section 11AC and interest are also upheld. However, the amount of duty, interest and penalty will require to be requantified. The role of Shri Subhash Palande who was the managing director and was looking after the day-to-day work, has been clearly brought out in the adjudication order and the manipulation in the description in the different copies of the invoices cannot happen without his direction and we, therefore, do not find any merits in his appeal. Similarly, it is not disputed that appellants 3 and 4 were not in the business of manufacturing cartons, catch covers etc. but were only making the positive plates for printing industry. The goods which have been shown as if manufactured by appellants 3 and 4, were in fact manufactured by appellant No. 1 and they have connived so as to evade payment of excise duty. The penalties have been correctly imposed on them. - Decided party in favour of appellants.

Summary

Issues:
1. Non-receipt of relied upon documents leading to inability to participate in original proceedings.
2. Classification of goods under different headings and chargeability to excise duty.
3. Manipulation of descriptions in invoices to evade duty payment.
4. Claim for cenvat credit and exclusion of certain goods from duty computation.
5. Involvement of different appellants in the fraudulent activities and imposition of penalties.

Analysis:
1. The main issue raised was the non-receipt of relied upon documents by the appellants, hindering their participation in the original proceedings. The Tribunal noted that the documents were indeed provided to the appellants, as evidenced by an acknowledgment dated 22.6.2005. Despite this, the appellants continued to claim non-receipt of documents, which was found to be inaccurate. The Tribunal examined the nature of the relied upon documents and concluded that the appellants had access to the necessary information for participation in the proceedings.

2. The classification of goods under different headings and their chargeability to excise duty was a crucial aspect of the case. The Tribunal analyzed the nature of the goods manufactured by the main appellant, such as cartons, wallets, and catch covers. It was determined that these goods fell under heading 4819.19 and were chargeable to duty, contrary to the appellant's claim for exemption. The Tribunal also addressed the issue of inserts and leaflets, remanding the matter to the Commissioner for further examination based on supporting documents.

3. The manipulation of descriptions in invoices to evade duty payment was a significant finding in the case. The Tribunal observed discrepancies in the descriptions provided in different copies of the invoices, indicating an attempt to misclassify the goods under an exempt heading. The appellants were found to be aware of this manipulation, leading to a case of fraud. The Tribunal upheld the extended period of limitation, penalties under Section 11AC, and interest, while requiring a requantification of duty, interest, and penalty amounts.

4. The appellants also sought cenvat credit and exclusion of certain goods from duty computation. The Tribunal granted a two-month period for the production of duty paying documents to support the cenvat credit claim. Additionally, the issue of excluding certain goods from duty computation was addressed, with a directive for the appellants to provide necessary documentation for verification by the Commissioner.

5. The involvement of different appellants in the fraudulent activities and the imposition of penalties were thoroughly examined. The Tribunal found merit in upholding penalties against the appellants involved in the manipulation of invoices and evasion of duty payment. The roles and responsibilities of each appellant were scrutinized, leading to the affirmation of penalties imposed on them. The appeals were disposed of based on the above considerations, with the operative part pronounced in court.