2018 (9) TMI 743 - AT - Central Excise

Clandestine removal - SSI exemption - N/N. 09/2003- CE - shortage of finished goods - it was alleged clandestine manufacture and removal of goods as well as irregular availment of SSI exemption using other s Branc name - Held that - It is not clear from show cause notice itself, whether the brand name Vandana is owned by the appellant himself in which case no differential duty arises or the brand name is owned by somebody else, in which case, the differential duty is payable. It is also the submission of the appellant that in respect of mint stools manufactured by them the goods did not carry brand name NAMASKAR as alleged by the Department in the show cause notice. - These factual aspects need to be verified by the Original Authority to determine which of the clearances indicated in annexure D-4 to the show cause notice had the brand name of another person and recompute the differential duty accordingly - matter on remand. The penalty of ₹ 10,000/- under Rule 13 of CCR, 2004 confirmed by the First Appellate Authority in the impugned order is set aside - The penalty under Section 11AC shall stand reduced - Personal penalty on Shri M.V. Sekhar Rao and Smt. M. Vijayalakshmi is reduced to ₹ 25,000/- each. Appeal allowed in part and part matter on remand.

Summary

Issues: Appeal against demand of duty, interest, and penalties imposed on the appellant company and its directors, challenge to differential duty calculation, challenge to penalties imposed, personal penalties on directors, re-computation of demands and penalties, verification of brand ownership.

Analysis:
1. Demand of Duty, Interest, and Penalties:
The appellant company, engaged in manufacturing plastic moulded furniture, faced allegations of irregularities including shortage of finished goods, clandestine manufacture, and irregular availment of SSI exemption. The lower authority confirmed various demands, including duty on shortages and alleged clandestine clearances, along with penalties and interest. The First Appellate Authority set aside some demands but upheld others, leading to appeals by both the department and the appellant.

2. Challenge to Differential Duty Calculation:
The primary issue revolved around the differential duty demand of &8377; 5,08,745, related to irregular availing of concessional duty on goods bearing another brand name. The appellant contested the calculation, arguing that certain goods did not carry specific brand names as alleged. The appellate tribunal highlighted the need for clarity on brand ownership to determine the correct duty liability.

3. Penalties Imposed and Personal Penalties:
The penalties imposed under Section 11AC of the Central Excise Act and Rule 13 of CCR, 2004 were challenged by the appellant. The tribunal reviewed the penalties, reducing some and setting aside others based on the re-computation of demands. Personal penalties on the directors were also revisited, considering their roles in the company and the alleged offenses.

4. Re-computation and Verification of Brand Ownership:
The tribunal emphasized the importance of re-computing demands and penalties based on accurate information regarding brand ownership. It directed the original authority to verify the brand names associated with clearances and adjust the demands accordingly. Principles of natural justice were to be followed in this re-determination process.

5. Final Decision:
Ultimately, the tribunal set aside certain penalties, remanded the matter for re-computation of demands related to SSI exemption irregularities, and reduced personal penalties on the directors. The order aimed to ensure a fair and accurate assessment of duties and penalties, emphasizing the need for clarity on brand ownership in determining differential duty liabilities.

This detailed analysis encapsulates the key aspects of the legal judgment, highlighting the issues, arguments, and the tribunal's decision in a comprehensive manner.