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TMI Blog2014 (4) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and Ors. [1999 (8) TMI 952 - PATNA HIGH COURT] and State of A.P. Vs Jindal Strips Limited [2006 (7) TMI 621 - ANDHRA PRADESH HIGH COURT] - Decided in favour of assessee. Clearances of raw materials removed from Sab Chem Division under the cover of challans - Whether duty on raw materials removed from Sab Chem Division of appellant, under the cover of challans maintained by the appellant, could be demanded from the Sab Chem Division of the appellant - Held that:- During the material period, the Sub Chem Division was engaged in the manufacture of excisable goods on job work basis for M/s Berger Paints Ltd, which was cleared on payment of full rate of duty after availing MODVAT Credit of duty paid on inputs. While it is true that excise duty cannot be demanded on removal of raw materials on which no MODVAT Credit had been taken, but when MODVAT Credit was availed by Sab Chem Division on raw materials/ inputs received from Berger Paints Ltd, a part of which (involving duty of 2,21,134/- as accepted by the appellant) was subsequently returned to Berger Paints Ltd, Sab Chem Division was required to pay duty on the such returned inputs/ raw materials at the time of removal from t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 01/ BRC-I/ MP/ 2006 dated 19.07.2006, passed by the Commissioner of Central Excise & Customs, Vadodra-I. As the facts leading to all these appeals are the same, therefore these appeals are being disposed of by this common order. 2. M/s Marigold Paints Private Limited, the main appellant filing Appeal No. E/ 59/ 2006-DB, are engaged in the manufacture of paints, varnishes, resins, thinners falling under Chapter 32 and 39 of the Schedule to the Central Excise Tariff Act, 1985. M/s Sab Chemicals (subsequently known as Sab-Chem Division of the appellant) was taken over by the appellant with effect from 31.12.1995. M/s Marigold Coating Private Limited (at present Known as Resin Division of the appellant), M/s Rosalee Paints Private Limited, M/s Rosalee Products Private Limited (at present known as Paints Division of the appellant), and M/s Rosalee Coatings Private Limited amalgamated with the appellant company on 22.10.1997. The officers of the Central Excise Department seized records from the premises of the appellant, and finally issued show cause notice on 16.04.1998. The adjudicating authority, vide his impugned Order on Original : (a) Confirmed demand of central excise duty o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Registrar of Companies, Ahmedabad, Gujarat for registration and on such certified copy being so delivered the transferor company shall be dissolved and the Registrar of Companies shall place all the documents relating to transferor companies and registered with him on the file kept by him in relation to the transferee company and the files relating to said companies shall be consolidated accordingly. Learned Advocate thus argued that since the transferor company M/s Marigold Coatings P Ltd submitted the certified copy of the court's order dated 01.10.1997 with the Registrar of Companies on 22.10.1997, 22.10.1997 is the relevant date on which amalgamation became effective and the transferor company (Marigold Coatings P Ltd) stood dissolved. For this reason the appellant started paying full rate of duty from 22.10.1997 onwards. Therefore, he argued that since M/s Marigold Coatings P Ltd stood dissolved from 22.10.1997 and got amalgamated with the appellant on 22.10.1997, the appellants were entitled to exemption under SSI notification up to 21.10.1997, and thus the demand of Rs. 9,32,848/- for the period 01.04.1996 to 21.10.1997 was not sustainable against the appellant. He relied u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able. He submitted that without prejudice to submissions above demand of duty on raw materials for the period up to 16.10.1997 is barred by limitation. (iv) With regard to demand of duty of Rs. 7,81,593/-, the Ld. Advocate argued that the entire demand of duty against the appellant is based on the records maintained by them in their normal course of business. The basic record, on which proceedings were initiated, are serially numbered Challans, which are bound in triplicate books containing details of all materials, whether raw materials or finished goods, sent out from various divisions of the appellant since inception. The fact that the Challans are maintained for all type of removals would indicate that the appellant acted in bona fide manner and was neve any attempt by the appellants to remove any goods from the factory without payment of duty. He argued that in all cases of goods cleared under the Challans, the appropriate duty of excise has been paid though belatedly and thus there was no demand against the appellant. He argued that out of the total demand of Rs. 7,81,593/- on this count, the demand of Rs. 52,822/- pertained to goods manufactured on job work basis for M/s Be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with clandestine removal and evidence of both has to be present in a given case. It is well settled legal position that confiscation is not attracted by mere non accountal of goods when there is no evidence that such non accountal of goods still in the factory was with intent to evade payment of duty. Learned Advocate relied upon the following case laws in support of his arguments: (1) Southern Steels Ltd Vs. UOI - [1979 (4) ELT J 402 (AP)]; (2) Bhillai Conductors (P) Ltd Vs. CCE - [2000 (125) ELT 781 (Tribunal)]; (3) Koch Rajes C. D. Industries Pvt. Limited Vs. Commissioner of Central Excise, Mumbai-IV - [2006 (193) ELT 566 (Tri. Mumbai); (4) Commissioner of Central Excise & Customs Vs. Resham Petrotech Ltd. - [2010 (258) ELT 60 (Guj.)]; (5) Commissioner of Central Excise, Chandigarh Vs. Sadashiv Ispat Ltd. - [2010 (255) ELT 349 (P&H)]; (6) Commissioner of Central Excise, Hyderabad Vs. Srinivasa Frozen Foods Ltd. - [1010 (262) ELT (Tri. Bang.)]. (vi) Regarding the goods valued at Rs. 88,800/-, seized at the main appellant's premises on 22.10.1997, he argued that there was no intent to evade duty as the goods were covered by regular challan of Sab Chem Division and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue of corresponding central excise invoice on 22.10.1997 were liable to confiscation? 6. With respect to issue relating to the effective date of amalgamation we find that the Honble High Court of Patna, while deciding a case under the Industrial Disputes Act, 1947, cited by the Ld. Advocate, has held in the case of Tata Iron and Steel Company Limited Vs. Presiding Officer & others (supra), as under: 16. From perusal of Clause 15 it is abundantly clear that although the scheme of amalgamation would be operative from the appointed date; i.e. April 1, 1983 but it shall take effect from the last of the date upon which certified copy of the orders of the High Court's sanctioning the scheme shall be filed with the appropriate Registrar of the companies pursuant to Section 394 of the Companies Act. Such last date will be taken as an effective date for the purpose of the scheme. 6.1 Similarly, in the matter of State of A. P. Vs. Jindal Strips Limited (supra), cited by the Ld. Advocate of the appellant Hon'ble High Court of Andhra Pradesh, while deciding a case under Sales Tax Act, observed as follows: 10. The Tribunal came to such a conclusion relying upon the Supreme Court reporte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m Berger Paints Ltd, a part of which (involving duty of Rs. 2,21,134/- as accepted by the appellant) was subsequently returned to Berger Paints Ltd, Sab Chem Division was required to pay duty on the such returned inputs/ raw materials at the time of removal from their factory in terms of the provisions contained in Rule 57F of the erstwhile Central Excise Rules, 1944. It is also evident from appeal records that the Sab Chem Division was also manufacturing excisable goods for the main appellant out of raw materials supplied by them without availing MODVAT Credit. We, therefore, find that out of the total demand Rs. 7,44,510/- involved in this issue, the demand Rs. 2,21,134/- is only sustainable. 8. On the third issue relating to demand of Rs. 7,81,593/- on alleged removal of finished goods without payment of duty, we find that all goods including inputs/ raw materials, whether excisable or not, invariably used to be removed from the appellant's factory under the cover of serially numbered challans issued from bound books since the inception of the appellants factories. The investigating officers have not come across even a single instance where the appellant had removed any goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Koch Rajes C. D. Industries Pvt. Limited Vs. Commissioner of Central Excise, Mumbai-IV - [2006 (193) ELT 566 (Tri. Mumbai), cited by the Advocate for the appellant, the CESTAT held in Para 3 (b) of the decision as under: (b) The law on confiscation of goods, in the factory and not entered in RG -1 production record is well settled. From the following decisions of the Bombay & Andhra Pradesh High Courts & of this Tribunal. (i) Southern Steels Ltd. v. U.O.I. - 1979 (4) E.L.T. (J 402) (A.P.) (ii) Kirloskar Brothers - 1988 (34) E.L.T. 30 (Bom.) (iii) Nalanda Tobacco - 1997 (91) E.L.T. 275 (A.P.) (iv) Bhilai Conductors Pvt. Ltd. - 2000 (125) E.L.T. 781 (Trib.) It is very clear that mere non-entry of the productions in the RG-1 will not bring in the liability to confiscation under provision of the Central Excise Rules if there is no corresponding material of clandestine clearance also available. Unaccounted production goes in tandem with clandestine removal and evidence of both has to be present in a given case to avoid the charge to be determined on an assumption/presumption. Applying the tab for liability to confiscation in this case under Rule 173Q(1), we find the test to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounted exciseable goods under Rule 173Q (a), (b), (c) of erstwhile Central Excise Rules, 1944 and present Rule 25 (a), (b), (c) of Central Excise Rules, 2002? 10. This question has squarely been answered by a Division Bench of this Court in Commissioner of Central Excise, Jalandhar. v. Indo German Fabs reported as 2007 (209) E.L.T. 184 (P & H), wherein while relying on the judgement of Hon'ble Supreme Court in Hindustan Steel Ltd. v. State of Orrisa, reported as 1978 (2) E.L.T. (J159) (S.C.), it was held that element of mens rea is normally required to be shown for imposition of penalty. Same view was taken in The Commissioner of Income Tax, West Bengal v. Anwar Ali, reported as AIR 1970 SC 1782. 11. In the present case, the Department has failed to prove the element of mens rea for imposition of penalty. It has been so held by the Commissioner as well as the Tribunal that no case was made out to impose penalty. The finding recorded that no case was made out for imposition of penalty is not shown in any manner to be perverse. 12. In view of the above, we find no merit in this appeal and the same is accordingly dismissed. 10.3 In the case of Commissioner of Central Excise, Hyder ..... X X X X Extracts X X X X X X X X Extracts X X X X
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