2015 (11) TMI 710 - AT - Central Excise

Benefit of cum-duty-price - CENVAT Credit - Imposition of penalty - Held that - Tribunal in the case of M/s Mamta Silk Mills Pvt. Ltd (2015 (11) TMI 251 - CESTAT AHMEDABAD) on the identical situation following the decision of the Hon ble Supreme Court extended the benefit of cum-duty-price. In the case of Dugar Tetenal India Ltd. (2008 (3) TMI 50 - SUPREME COURT ), the Hon ble Supreme Court held the cum-duty price would be extended even in the case of extended period of limitation. The case of Amrit Agro Industries Ltd. (2007 (3) TMI 14 - SUPREME COURT OF INDIA), as relied upon by the Learned Authorised Representatives in the context of the assessee cleared the goods, during the relevant period on the basis of exemption notification. Hence, the said case law would not be applicable in the present case. Further, the Tribunal in the case of Bhawani Weaving Factory (2008 (3) TMI 227 - CESTAT NEW DELHI) held that once duty is demanded the assessee, entitled to CENVAT credit benefit. It is a clear case of clandestine removal of the goods. It is noticed that the appellant No. 2 had indulged for removal of the goods without payment of duty, which was detected by the Central Excise Officer. The main contention of the Learned Advocate is that there is no proposal for confiscation of the goods, and therefore, penalty under Rule 26 cannot be imposed. On close reading of Rule 26 of the Central Excise Rules, 2002, we are unable to accept the contention of the learned advocate. The words in any other manner deals with, which he knows or has reason to further are liable to confiscation make it clear that if, the goods cleared without payment of duty, liable to confiscation, the penalty would be imposed on him. In the present case, the appellant No. 2 knowingfully well cleared the goods without payment of duty, and the penalty under Rule 26 is justified. However, we agree with the Learned Advocate that the quantum of the penalty on Appellant No. 2 is excessive. - Decided partly in favour of assessee.

Summary

Issues:
- Demand of duty, interest, and penalty on the appellant company
- Benefit of cum-duty-price and CENVAT credit
- Penalty under Section 11 AC of the Central Excise Act, 1944
- Imposition of penalty on the Director of the appellant company
- Confiscation of goods and penalty under Rule 26 of the Central Excise Rules, 2002

Analysis:

1. Demand of duty, interest, and penalty on the appellant company:
The case involved the appellants engaged in the manufacture of Man Made fabrics, where Central Excise officers seized documents and issued a Show Cause Notice proposing duty demand, interest, and penalties. The Adjudicating Authority confirmed the duty demand along with interest and imposed penalties. The Commissioner (Appeals) rejected the appeals, leading to the filing of appeals by both appellants.

2. Benefit of cum-duty-price and CENVAT credit:
The Learned Advocate for the appellants argued for the extension of cum-duty-price for duty quantification and the allowance of CENVAT credit. Citing relevant decisions, the Advocate emphasized the applicability of such benefits based on judicial precedents.

3. Penalty under Section 11 AC of the Central Excise Act, 1944:
The Advocate contended that the option to pay a reduced penalty of 25% of the duty should be allowed under Section 11 AC. Additionally, the penalty imposed on the Director of the appellant company was challenged on the grounds of lack of involvement in the goods for confiscation.

4. Imposition of penalty on the Director of the appellant company:
The Tribunal noted the Director's involvement in clandestine removal of goods without duty payment, leading to the imposition of penalties. While the penalty under Rule 26 of the Central Excise Rules, 2002 was deemed justified, the quantum of penalty on the Director was considered excessive.

5. Confiscation of goods and penalty under Rule 26 of the Central Excise Rules, 2002:
The Tribunal upheld the penalty under Rule 26 on the Director for involvement in the clandestine removal of goods without duty payment. Despite the absence of a proposal for confiscation, the Tribunal found the penalty justified based on the Director's actions. However, the Tribunal reduced the quantum of penalty imposed on the Director.

In conclusion, the Tribunal upheld the demand of duty, interest, and penalty on the appellant company while directing the Adjudicating Authority to quantify the duty demand with the benefit of cum-duty-price and CENVAT credit. The Tribunal also ordered the reduction of the penalty imposed on the Director. The appeals were disposed of with specific directives for further proceedings and the handling of pre-deposit amounts by the Department.