2017 (5) TMI 758 - HC - Central Excise

Rectification of mistake - principles of natural justice - SSI Exemption - clubbing of clearances - extended period of limitation - personal penalties - Held that - having found that all other firms / units are dummy and therefore, the adjudicating authority confirmed the demand of duty on clubbing of the clearances value of of other units / firms (which were found to be dummy) with that of the assessee. The order passed by the authorities below cannot be said to be contrary to evidence on record and / or finding recorded by the authorities below cannot be said to be perverse and therefore, no interference of this Court is called for. Natural justice - Held that - it is required to be noted and it is not in dispute that no documents / bills were produced either before the Adjudicating Authority nor even before the Commissioner (Appeals). The same came to be produced for the first time before the learned Tribunal. Even the said documents were not produced at the time of search. Thus, the said documents were produced for the first time before the learned Tribunal at a belated stage. It is not the case on behalf of the assessee that those documents were not available and / or misplaced at the time of adjudication - Order In Original came to be passed in the year 2008. No such documents were produced till than and as observed herein above the same came to be produced for the first time before the learned Tribunal, which can be said to be an afterthought and to get out of the findings recorded by the authorities below that other units / firms were not having their independent, separate plant and machineries. Under the circumstances, the learned Tribunal has rightly rejected the Rectification Application. Penalties - Held that - no error has been committed in imposing the penalty upon Shri Babubhai Mistry, Director, and Smt. Jasuben Mistry, the proprietor - penalty amount was reduced. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Violation of principles of natural justice and non-application of mind by the Appellate Tribunal
2. Validity of demand of duty and penalty imposed on the appellants
3. Legality of invoking extended period of limitation by the Revenue
4. Legality of upholding personal penalties on appellant Nos. 2 and 3

Analysis:

Issue 1:
The appeals raised concerns about the violation of natural justice principles and lack of consideration of facts and evidence by the Appellate Tribunal. The Tribunal confirmed the Order In Original passed by the Adjudicating Authority, dismissing the appeals and Rectification Application. The questions of law proposed revolved around the Tribunal's alleged non-application of mind. The Tribunal's decision was challenged on grounds of procedural fairness and factual assessment.

Issue 2:
The case involved the demand of duty from the appellants for goods manufactured and cleared by other manufacturers, leading to penalties. The Tribunal upheld the duty demand and penalties, citing the clubbing of clearances of different firms operating from the same premises. The appellants argued that the firms had separate entities, registrations, and financial records, making the clubbing of clearances impermissible. The dispute centered on the validity of imposing duty based on the interconnected operations of multiple entities.

Issue 3:
Another issue raised was the legality of the Revenue invoking the extended period of limitation. The appellants contested the Tribunal's failure to address the Revenue's authority in law to extend the limitation period. The legality of the Revenue's actions in extending the limitation period for imposing duty and penalties was a point of contention.

Issue 4:
The final issue concerned the legality of upholding personal penalties on appellant Nos. 2 and 3. The Tribunal had imposed penalties on specific individuals associated with the firms in question. The appellants challenged the validity and correctness of these personal penalties, leading to a reduction in the penalty amounts by the Tribunal. The decision to uphold personal penalties was scrutinized for its legal validity and correctness.

In conclusion, the High Court upheld the decisions of the lower authorities, emphasizing the lack of independent plant and machinery for the other firms operating from the same premises. The rejection of the Rectification Application due to belated submission of documents was deemed justifiable. The Court also affirmed the reduced penalties imposed on specific individuals associated with the firms. Ultimately, all appeals were dismissed based on the findings and reasoning provided in the judgment.