2014 (2) TMI 455 - AT - Central Excise

Clearance of goods under parallel invoices - Confirmation of the duty demand - Interest under Section 11AB - Imposition of penalty - Held that - On comparing the particulars of the goods sold to PDIL under commercial invoice no.309 A dated 5.12.2000 with the particulars of the goods mentioned in the corresponding excise invoice no.227 dated 5.12.2000 issued by NSLED to PDIL, it is seen that the particulars are the same. These particulars tally with the description of the goods mentioned in the AR4 and also the description mentioned in the shipping bill. The AR4 had been filed by PDIL against which the goods had been cleared for export. The statement of Shri Nathu Lal of Nirmala Road Lines that the goods have been delivered at the premises of PDIL at Indore is simply based on their documents and in this regard, no inquiry has been conducted with the driver of the trucks to ascertain as to whether the goods covered under the four commercial invoices after their clearance from the factory had been transported to the ICD, Pithampur or to the premises of PDIL at Indore Therefore, the duty demand of Rs.12,89,279/- is not sustainable and the same has to be set aside. Ongoing through the 18 disputed quadruplicate copies of invoices, it is seen that out of 18 invoices, 11 invoices are defective inasmuch as the details in the upper portion rate per unit, quantity supplied and value does not match with the value on which excise duty has been calculated, as indicated in the lower portion of invoices. Therefore the 18 quadruplicate copies of invoices recovered from file no. 229 seized from the factory of NSLED cannot be treated as parallel invoices representing clearances made without payment of duty and hence the duty demand of Rs.6,49,002/- based on the same is not sustainable. Even of the setting aside the duty demand of Rs.19,38,281/- , the duty demand of Rs. 4,91,32/- would still remain, the penalty on him is reduced to Rs.20,000 - there is no evidence on record to prove that they had dealt with any goods cleared without payment of duty, in the manner specified in Rule 26 of the Central Excise Rules, 2002, penalty on them is not sustainable and the same is set aside - Decided in favour of assessee.

Summary

Issues Involved:
1. Duty demand confirmation against NSLED.
2. Imposition of penalty on NSLED under Section 11AC and Rule 25 of the Central Excise Rules, 2002.
3. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on individuals associated with NSLED and PDIL.

Detailed Analysis:

1. Duty Demand Confirmation Against NSLED:
The case involved NSLED, a manufacturer of polypropylene/HDPE woven sacks and other products, allegedly evading duty through various means. The central excise officers conducted a search and recovered documents indicating possible duty evasion. A show cause notice was issued for confirming a duty demand of Rs. 63,72,323/- against NSLED. The adjudicating Commissioner confirmed part of the duty demand amounting to Rs. 24,29,603/- and dropped the rest. NSLED contested only Rs. 19,38,281/- of this amount in their appeal.

2. Imposition of Penalty on NSLED Under Section 11AC and Rule 25 of the Central Excise Rules, 2002:
The Commissioner imposed a penalty of Rs. 19,38,281/- on NSLED under Section 11AC. The penalty amount was equivalent to the contested duty demand. The tribunal found that the duty demand of Rs. 12,89,279/- was based on commercial invoices issued to PDIL, which were alleged to be cleared without payment of duty. However, NSLED argued that these goods were exported under proper excise invoices and supported their claim with matching particulars in AR4s and shipping bills. The tribunal concluded that the duty demand of Rs. 12,89,279/- was not sustainable and set it aside. Similarly, the duty demand of Rs. 6,49,002/- based on alleged parallel invoices was also found unsustainable due to discrepancies and errors in the invoices. Consequently, the penalty of Rs. 19,38,281/- imposed on NSLED was set aside.

3. Imposition of Penalty Under Rule 26 of the Central Excise Rules, 2002 on Individuals Associated with NSLED and PDIL:
The Commissioner had imposed penalties on several individuals: Rs. 1,00,000/- each on Shri Sunil Trivedi and Shri Vinod Gupta, and Rs. 25,000/- each on Shri V.P. Agrawal and Shri Ashok Kulkarni. The tribunal set aside the penalty on Shri Vinod Gupta due to the unsustainable duty demand. For Shri Sunil Trivedi, the penalty was reduced to Rs. 20,000/- since a part of the duty demand (Rs. 4,91,322/-) remained unchallenged. The penalties on Shri V.P. Agrawal and Shri Ashok Kulkarni were also set aside as there was no evidence proving their involvement in dealing with goods cleared without payment of duty.

Conclusion:
The tribunal disposed of the appeals by setting aside the unsustainable duty demand and penalties, reducing the penalty on Shri Sunil Trivedi, and maintaining the penalty related to the unchallenged duty demand.