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2016 (9) TMI 227 - AT - Central ExcisePeriod of limitation - Demand alongwith interest and penalty - evasion of Central excise duty - clearance of superior branded PVC pipes (Sri Vasavi brand) in the guise of inferior brand (Sri Devi brand) to their marketing agency - apparent inter relationship between VPPL and SVA - adoption of incorrect assessable value - Order-in-Original dated 22.02.2005 and Order-in-Original dated 20.04.2006 both relate to SCNs for overlapping period and listing out same set of facts and circumstances - Order-in-Original dated 22.12.2005, which was passed earlier by same adjudicating authority had set aside the allegations and proposals of related SCN dated 25.02.2005. Held that - adjudication of any one of the aforesaid notices will not be an impediment for adjudication of the other notice on the grounds of res judicata. Neither can it be held, like the appellant vehemently argued, that adjudication of 2005 notice and its setting aside will obstruct adjudication of the 2004 notice on the grounds of limitation , we find this argument, to say the least, is frivolous. While it is settled law that subsequent SCN on identical issue to identical notice cannot invoke extended period of limitation, there is no such estoppel for issue of simultaneous or subsequent SCNs invoking extended periods, for identical noticees, even for identical periods, when the issues alleged in both SCNs are different. Possibly because of misconception and inadequate appreciation of the two aforesaid orders, the appellant sought to convey that both the notices are on same issue and hence dropping of demand in one notice will be a limitation to the adjudicating authority to take any other view in the second one. We further find that even in the course of hearing related to the Tribunal s earlier order dated 05.02.2007, appellant had made the same albeit misconceived argument. The adjudicating authority has carefully considered all the evidences that have emerged during investigation and narrated in the notice. In any case the appellant has submitted that he is contesting the impugned order only on the grounds of limitation. In fact the earlier Tribunal order had set aside the impugned order on the ground of limitation and res judicata. However, based on the ROM application filed by Revenue, the Tribunal vide Misc. Order held that the impugned order had not reached finality and hence ordered recall of its earlier order. Therefore, we hold that the impugned order cannot at any stretch of imagination be set aside on the grounds of limitation or res judicata. This appeal is liable to be dismissed. Imposition of penalty on Sri G. Bhaskar Rao ,Managing Director of VPPL - Rule 26 of Central Excise Rules, 2002 - Held that - t is his case that to fasten vicarious culpable mental state in relation to the offence would have to be established; that there is no finding recorded by the lower authority to impose penalty. On perusal of records we find that though he is the managing Director, there is no finding or conclusion in the order establishing his guilt in the matter. We therefore hold that the imposition of the said penalty on Shri G. Bhaskar Rao is not justifiable and requires to be set aside. Imposition of penalty on SVA - Rule 26 of Central Excise Rules, 2002 - Held that - appellant submitted that the penalty under Rule 26 of the CER, 2002 is not imposable on the SVA, partnership firm, since penalty envisaged in the said rule is only for individual persons - Held that - by following the dictum of various case laws, we hold that the imposition of penalty on the appellant being a partnership firm requires to be set aside. Maintainability - authorization by Committee of Chief Commissioners has members on different dates, and therefore done in a manner which law does not approve, being in violation of the provisions of Section 35(1B) and 35 E of Central excise Act, 1944 - grounds of appeal are largely verbatim reproduction of the authorization order and further, it does not contain the premises on which revenue challenges the order - Held that - wWe find ourselves in agreement with the contentions of the Revenue. It for a fact that there is no statutory impediment in Section 35B (1B) or for that matter in Section 35E ibid for the two Chief Commissioner members of the Committee to form opinion and issue authorization order by circulation. It is also not specifically mandated that the said committee should issue such order only after jointly conferring and holding their meeting at one place and on one date/time. As regards the second ground, we find that indeed the appeal contain grounds of appeal . It is upto the appellant, whether assessee or Revenue, to choose and put forth the grounds of appeal that such appellant may find appropriate. These arguments are too flimsy and we hold that the objections of the appellant regarding maintainability of appeal No.E/109/2007 per se are not tenable or acceptable. Demand - evasion of Central excise duty during the period July 2001 to June 2004 - adjudicating authority has discounted overall demand by 5% and accordingly demanded only an amount of ₹ 18,72,890/ apparently under the impression that the demand is based on the highest value of the highest quality brand ,namely Sri Vasavi - Held that - the lower authority has arrived at this conclusion as per details in the chart extracted from the sales records and sales invoices of SVA. On the other hand the department cannot also claim its calculation is unimpeachable in the face of the aforesaid findings of the lower authority. This being so, we are of the considered opinion that 5% of reduction in the demand proposed in the SCN and limiting the confirmed demand to ₹ 18, 72,890/ is just and reasonable and therefore does not call for any interference. Hence dismissed.
Issues Involved:
1. Alleged evasion of central excise duty by M/s Sri Vasavi Polymers Pvt. Ltd (VPPL). 2. Imposition of penalties under Rule 26 of the Central Excise Rules, 2002. 3. Determination of assessable value and related person status under Section 4 of the Central Excise Act, 1944. 4. Validity of authorization by Committee of Chief Commissioners. 5. Reduction of demand by the adjudicating authority. Issue-wise Detailed Analysis: 1. Alleged Evasion of Central Excise Duty by VPPL: - VPPL was accused of clearing superior branded PVC pipes (Sri Vasavi brand) as inferior brand (Sri Devi brand) to their marketing agency, M/s Sri Vasavi Agencies (SVA), thereby evading central excise duty. - A show-cause notice (SCN) dated 06.12.2004 proposed a demand of ?21,35,228/- for the period July 2001 to June 2004, which was confirmed at ?18,72,890/- along with interest and penalties. - The Tribunal found that both SCNs dated 06.12.2004 and 25.02.2005 originated from the same investigation but dealt with different issues: one on undervaluation by manipulating brand clearances and the other on related person status. - The Tribunal held that adjudication of one SCN does not impede the adjudication of the other due to different issues involved, dismissing the appeal on grounds of limitation or res judicata. 2. Imposition of Penalties under Rule 26 of Central Excise Rules, 2002: - Penalties were imposed on VPPL, SVA, and Sri G. Bhaskar Rao (Managing Director of VPPL) under Rule 26. - The Tribunal found no specific findings against Sri G. Bhaskar Rao establishing his culpability, thus setting aside the penalty imposed on him. - Similarly, penalties on SVA, a partnership firm, were set aside based on case laws that Rule 26 penalties are not applicable to firms or companies. 3. Determination of Assessable Value and Related Person Status: - The Revenue's appeal argued that VPPL and SVA were related persons, thus requiring the use of the price charged by the last related person in the chain for duty calculation. - The Tribunal upheld the adjudicating authority's finding that VPPL and SVA were not related persons, emphasizing that the issue was decided on merits and not on time bar. - The Tribunal dismissed the Revenue's appeal, finding no merit in the contention that financial relationships indicated mutual interest. 4. Validity of Authorization by Committee of Chief Commissioners: - The appellant questioned the maintainability of the Revenue's appeal based on the authorization by the Committee of Chief Commissioners being done on different dates. - The Tribunal found no statutory impediment in Section 35B (1B) or Section 35E for such authorization by circulation, dismissing the objections regarding maintainability. 5. Reduction of Demand by the Adjudicating Authority: - The Revenue contended that the reduction of demand from ?21,35,228/- to ?18,72,890/- was arbitrary and not based on facts. - The Tribunal upheld the adjudicating authority's decision, finding the 5% reduction just and reasonable based on sales records and invoices. Conclusion: - Appeal No. E/848/2006 by VPPL was dismissed. - Appeal No. E/848-A/2006 by Sri G. Bhaskar Rao was allowed. - Appeal No. E/144/2007 by SVA was allowed. - Revenue appeal No. E/109/2007 was dismissed. - Revenue appeal No. E/254/2007 was dismissed. - Both cross objections were disposed of accordingly. (Pronounced in open court on 26.07.2016)
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