2017 (12) TMI 79 - AT - Central Excise

Benefit of N/N. 4/2006 dated 01.02.2006 - clearance of Cement - Revenue held a view that the main appellant availed the concessional rate of duty when they have cleared cement with brand name of another person - charge of clandestinely unaccounted clearance of branded cement was also made against the main appellant - Held that - N/N. 4/2006 dated 01.02.2006 allowed concessional rate of duty for cement cleared by the appellant. One of the conditions to be fulfilled is that cement manufactured should not be from such clinker which is not manufactured within the factory and cement should not be bearing brand name or trade name (whether registered or not) of another person - The Revenue during investigation collected material as well as oral evidence to support the case that the main appellants had violated the conditions and avail ineligible exemption. The stationary used by the appellant, the packing material available in the factory and the statements of responsible person of the main appellant corroborated the case of the Revenue. The unaccounted clearance is also evidenced by private document corroborated by the statement of the Director of the main appellant. Admittedly, the main appellant did make clearances of cement which were not entered into in the RG-I register. The reasons recorded by the original authority are based on material as well as oral evidences gathered during investigation. The appellant s present appeal cannot bring in any categorical contrary evidence to persuade us to interfere with the said impugned order - there is no merit in the appeal fined by the appellant and two of its Directors against confirmation of demand and imposition of penalties - penalties imposed on the paid employees namely Sh. Ram Kishor, Authorised Signatory and Sh. Bhawani Singh Sekhawat, Munim/ Supervisor of the main appellant are not justifiable. They acted as per the direction of the Directors, as paid employees. They did not gain personally in these transactions - penalty u/r 26 of the CER, 2002 on them is not justifiable. Regarding penalties imposed on M/s Kamdhenu Cement and Sh. Satish Kumar Kabu, Director of M/s Kamdhenu Cement, the only allegation in the proceedings against them is that they were part of alleged document in the form of letter dated 31.12.2007 to claim termination of agreement for use of Kamdhenu brand - Held that - the termination per se by itself will not help the main appellant to claim the concession under the said notification - No other action or role on the part of these two appellants have been discussed to justify penalty on them under Rule 26 of the Central Excise Rules, 2002. Further, the forged nature of the termination letter could not be categorically established with corroboration as no verification was made from the signatories of the said letter. We also note that the provision which is invoked in the impugned order was notified only w.e.f. 01.03.2007 - penalties set aside. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Eligibility for concessional rate of duty under Notification No. 4/2006.
2. Clandestine removal of goods and unaccounted clearance.
3. Imposition of penalties on various individuals and entities.

Issue-wise Detailed Analysis:

1. Eligibility for Concessional Rate of Duty under Notification No. 4/2006:
The main appellant, engaged in manufacturing cement, availed a concessional rate of duty under Notification No. 4/2006. The notification stipulated that the concessional rate was not applicable if the cement was manufactured from clinker not produced within the factory or if it bore the brand name of another person. The Revenue contended that the main appellant cleared cement with the brand name "Kamdhenu," which belonged to another entity, violating the notification's conditions. The appellant argued that they cleared cement with their own brands "Jai Kisan" and "Modi Plus" and that there was no contract with M/s Kamdhenu Cement before 01.12.2006. However, the original authority found that the appellant did not maintain separate records for different brands and that the invoices and packing materials indicated the use of the "Kamdhenu" brand. The Tribunal upheld the original authority's decision, stating that the appellant failed to provide categorical evidence to support their claim of using their own brands.

2. Clandestine Removal of Goods and Unaccounted Clearance:
The Revenue alleged that the main appellant clandestinely cleared cement without accounting for it in the RG-I register. A private notebook found during a search contained details of unaccounted clearances. The Director of the main appellant admitted that the notebook included details of both accounted and unaccounted clearances. The original authority concluded that the appellant suppressed the production and clearance of finished goods to evade duty. The Tribunal agreed with this finding, noting that the appellant did not dispute the reliability of the notebook or the Director's statement. The Tribunal found no merit in the appellant's argument that they had already paid duty on part of the clandestinely cleared quantity.

3. Imposition of Penalties on Various Individuals and Entities:
The original authority imposed penalties on the main appellant, its Directors, employees, and M/s Kamdhenu Cement and its Director under Section 11AC of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2002. The Tribunal upheld the penalties on the main appellant and its Directors, finding that they were responsible for the violations. However, the Tribunal set aside the penalties on the employees, noting that they acted under the Directors' instructions and did not personally benefit from the transactions. Regarding M/s Kamdhenu Cement and its Director, the Tribunal found that their involvement was limited to a letter claiming termination of the agreement for using the "Kamdhenu" brand. The Tribunal concluded that this did not justify penalties under Rule 26, as no other role or action was attributed to them, and the termination letter's forged nature was not established. Therefore, the Tribunal allowed their appeals and set aside the penalties.

Conclusion:
The Tribunal dismissed the appeals filed by the main appellant and its Directors, upholding the demand for duty and penalties. However, it allowed the appeals filed by the employees and M/s Kamdhenu Cement and its Director, setting aside the penalties imposed on them. The judgment emphasized the need for clear and categorical evidence to support claims for concessional duty rates and highlighted the importance of maintaining proper records to avoid allegations of clandestine removal.