2019 (8) TMI 1102 - AT - Central Excise

Imposition of penalty - Clandestine removal - N/N. 8/2003-CE dated 1st March 2003 - compounded levy scheme - Extended period of limitation - HELD THAT - The inclusion of the value of aluminium circles for the purpose of determining the ceiling for exemption value under notification no. 8/2003-CE dated 1st March 2003 is only a question of fact. It has been established that the value of all the clearances would exceed the threshold prescribed for discharge of duty liability on the two dutiable products - there is no reason to discard the finding of the lower authority on the liability to pay duty on the clearance of aluminium sheets and aluminium fixtures during 2009-10 and ₹ 6,48,792/- on the goods clandestinely removed either without invoices or by misdescription in the invoices as aluminium circles for the year 2008-09 and 2009-10. The claim of Shri Bhadresh Sheventilal Shah of being innocent of the involvement in the mis-declaration to be acceptable. As purchaser of aluminium sheets , it would hardly be his place to verify the documents. He was not required to be compliant with central excise procedures, either as a manufacturer or as a registered dealer, and cannot be expected to have any interest other than satisfaction that goods that were supplied as per orders issued by him. In these circumstances, the fastening of a penalty on an uninvolved dealer does not appear to be proper. Appeal dismissed - decided against Revenue.

Issues involved:
1. Duty liability on the manufacturer for misdeclaration of goods.
2. Penalty imposition on the manufacturer and the buyer for evasion of central excise duty.
3. Appeal against setting aside duty liability.
4. Inclusion of value of goods for determining exemption limit.
5. Imposition of penalty on a buyer for alleged involvement in misdeclaration.
6. Confirmation of duty liability based on evidence.
7. Acceptance of innocence of a buyer in misdeclaration.

Analysis:

1. Duty liability on the manufacturer for misdeclaration of goods:
The central excise authorities alleged that the manufacturer had been misdeclaring goods by clearing 'aluminium sheets' against delivery challans without corresponding invoices, and on some clearances with misdescriptions. The manufacturer was involved in the production of 'aluminium sheets' and 'street light fixtures' liable to duty, along with 'aluminium circles' subject to a special duty procedure. The duty liability was confirmed for crossing the exemption limit for the years 2007-08 and 2008-09, with penalties imposed on the manufacturer's partner and the buyer for abetting central excise duty evasion.

2. Penalty imposition on the manufacturer and the buyer for evasion of central excise duty:
The manufacturer admitted to crossing the duty payment threshold and misdeclaration of goods. Customer statements corroborated the misdeclaration, indicating an intent to evade duty. However, the buyer, Shri Bhadresh Shah, claimed innocence, stating he was a bona fide purchaser and not involved in the misdeclaration. The Tribunal found the penalty imposition on the buyer unjustified, given his lack of involvement in central excise procedures and the misdeclaration.

3. Appeal against setting aside duty liability:
One of the appeals was filed by Revenue against the setting aside of duty liability for 2008-09 due to the absence of evidence of fact suppression. The Tribunal dismissed the Revenue's appeal based on the prescribed threshold by the Central Board of Excise and Customs.

4. Inclusion of value of goods for determining exemption limit:
The Tribunal determined that the inclusion of the value of 'aluminium circles' in calculating the exemption limit under a specific notification was a factual matter. The findings confirmed the duty liability on 'aluminium sheets' and 'aluminium fixtures' clearances, along with clandestinely removed goods misdescribed as 'aluminium circles' for the relevant years.

5. Imposition of penalty on a buyer for alleged involvement in misdeclaration:
The Tribunal accepted the innocence of the buyer, Shri Bhadresh Shah, in the misdeclaration scheme. The buyer's lack of involvement in central excise procedures and the misdeclaration process led to the setting aside of the penalty imposed on him.

6. Confirmation of duty liability based on evidence:
The Tribunal based its decision on the admission of the manufacturer regarding crossing the duty threshold and misdeclaration of goods. The lack of evidence to counter these admissions further supported the confirmation of duty liability.

7. Acceptance of innocence of a buyer in misdeclaration:
The Tribunal found Shri Bhadresh Shah, the buyer, to be innocent of involvement in the misdeclaration scheme. As a purchaser of goods, he was not obligated to verify documents or comply with central excise procedures. Therefore, the penalty imposition on the uninvolved buyer was deemed improper.

In conclusion, the Tribunal dismissed the Revenue's appeal, upheld the duty liability on the manufacturer, and set aside the penalty imposed on the buyer, Shri Bhadresh Shah, while confirming other demands and detriments in the impugned order.

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