2019 (6) TMI 319 - AT - Central Excise

Imposition of penalty on Sh. Prem Khanna M.D. - crossing of threshold limit - Whether in view of the admitted liability when appellant did not pay duty for four years after crossing the SSI limit and Sh. Prem Khanna was in overall control of affairs the penalty on Sh. Prem Khanna M.D. is to be upheld and the appeal dismissed as held by Member (Technical)? - Difference of Opinion - Majority Order. HELD THAT - Both Members were in agreement to remand the matter to the adjudicating for fresh calculation of demand payable by the main party. In that circumstance the whole order is required to be reconsidered by the adjudicating authority for both the appellants before this Tribunal. Therefore I agree with the observation made by the by the Hon ble Member (Judicial) in her order. For the issue of imposition of penalty on Shri Prem Khanna M.D. is also remanded back to the adjudicating authority.

Summary

Issues:
1. Duty payment exceeding small scale exemption limit.
2. Assessment under Section 4(A) of the Central Excise Act.
3. Verification of sales to institutions/hospitals.
4. Benefit of Cenvat Credit on duty paid inputs.
5. Imposition of penalty on Managing Director.

Analysis:
1. The appellant, engaged in manufacturing paper labels and bar codes, was found not paying duty after exceeding the small scale exemption limit. The impugned orders confirmed duty demand and penalties. The appellant admitted crossing the exemption limit and agreed to pay duty on excess clearances.

2. The appellant's bar code printing ribbons were initially assessed under Section 4(A) of the Central Excise Act. However, due to sales to institutional buyers without MRP printing, the goods were re-assessed under Section 4. The matter was remanded for verification based on invoices to determine sales to institutions.

3. The appellant claimed Cenvat Credit on duty paid inputs, rejected by authorities citing clandestine activity. The Tribunal decisions supported extending Cenvat Credit even in such cases. The matter was remanded for verification of duty payment evidence.

4. The appellant was entitled to Cenvat credit, neutralizing the duty payable. The authorities were directed to examine this aspect along with the verification of duty paid on raw materials.

5. The penalty on the Managing Director was a point of contention. While one Member upheld the penalty due to admitted liability, another Member favored remand for further consideration. The matter was referred to the third Member for resolution.

6. The third Member agreed with remanding the penalty issue back to the adjudicating authority for fresh calculation of demand and imposition of penalty. The majority order remanded the matter for fresh adjudication, emphasizing reconsideration by the adjudicating authority for both appellants.