2018 (6) TMI 1348 - AT - Central Excise

Liability of Excise Duty - vintage case - case of appellant is that the adjudicating authority has not considered their plea for reduction in the duty liability on account of some quantities of the LAB having been used for manufacture of cleaning powder without the aid of power which is exempted from central excise duty - Held that - The evidence relied upon by the appellants which was produced to the adjudicating authority in respect of the impugned adjudication proceedings were beyond the period of demand. This dispute is of 1992 vintage and in the last 25 years that have passed by the matter has come up to the Tribunal on three earlier occasions which has resulted in the proceedings having been adjudicated on four occasions. The fact that the appellants could not produce satisfactory evidence of their claim in respect of the exempted clearances in all these proceedings leads us to the obvious conclusion that no such clearances would have taken place during the period of dispute - thus there is no infirmity in the aforesaid conclusions of the adjudicating authority. Penalty - Held that - he original Show Cause Notice dated 20.11.1992 and 31.08.1993 had alleged differential duty liability of 4.69 crores and 89.51 lakhs respectively. In the course of the four adjudications which have resulted in the last 25 years these amounts have now been whittled down to 12.70 lakhs and 2.09 lakhs respectively - is it proper to reduce the penalty imposed on Meenakshi Soap Works under Rule 173(q) of the erstwhile Central Excise Rules 1944 from 5 lakhs to 1 lakh - Similarly the penalty of 1 lakh imposed on Aruna Industry under Rule 173(q) ibid. is reduced to 20, 000/-. Appeal allowed in part.

Summary

Issues:
1. Duty liability reduction plea based on exempted product manufacturing.
2. Penalty imposition exceeding duty liability.
3. Inclusion of LAB procured by traders in duty liability calculation.
4. Reduction of penalties imposed.

Analysis:

1. Duty Liability Reduction Plea:
The appellants argued for a reduction in duty liability, citing the use of LAB for manufacturing exempted cleaning powder without power. However, the adjudicating authority thoroughly analyzed the evidence presented, including retracted statements and supporting documents. The Tribunal noted that the evidence provided was beyond the period of demand, spanning back to 1992. Given the lack of satisfactory evidence in multiple proceedings over 25 years, the Tribunal rejected the plea, concluding that no exempted clearances likely occurred during the disputed period.

2. Penalty Imposition:
The original duty liability amounts alleged in the Show Cause Notices were significantly higher than the final amounts determined after multiple adjudications. Considering the prolonged nature of the case and the appellants' inadvertent actions possibly due to incorrect advice, the Tribunal decided to reduce the penalties imposed on Meenakshi Soap Works and Aruna Industry. The penalties were reduced from ?5 lakhs to ?1 lakh for Meenakshi Soap Works and from ?1 lakh to ?20,000 for Aruna Industry under Rule 173(q) of the Central Excise Rules, 1944.

3. Inclusion of LAB Procured by Traders:
Aruna Industry contended that the duty liability calculation included LAB procured by traders, leading to an inflated amount. The adjudicating authority addressed this issue by explaining the inclusion of LAB purchases by traders in the calculation. The Tribunal upheld the authority's decision, emphasizing that the traders were separate entities from the units involved and that there was no evidence to support the exclusion of these purchases. Therefore, the plea made by Aruna Industry regarding the inclusion of LAB purchased by traders was rejected.

4. Reduction of Penalties Imposed:
After reviewing the case history and the circumstances surrounding the penalties imposed on Meenakshi Soap Works and Aruna Industry, the Tribunal decided to reduce the penalties. Acknowledging the prolonged duration of the case and the appellants' possible lack of awareness, the penalties were reduced from the initial amounts to ?1 lakh for Meenakshi Soap Works and ?20,000 for Aruna Industry under Rule 173(q) of the Central Excise Rules, 1944.

In conclusion, the appeals were partly allowed based on the reduction of penalties and the rejection of pleas regarding duty liability reduction and inclusion of LAB procured by traders in duty calculations.