TMI Blog2014 (4) TMI 260X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the manufacture of the finished goods cleared clandestinely. Onus of proving that goods cleared on parallel invoices were different from the shortages found in the factory lies with the department. So far as the benefit of ‘Cum-duty-price’ to be extended to Appellant ‘Shree Chem’ is concerned, it is relevant to mention that this quantification was not agitated before the lower authorities and has been raised only before this bench. Therefore, for allowing the benefits of ‘Cum-duty-price’ the case is required to be remanded to the Adjudicating Authorities - The allowance of MODVAT Credit of Rs. 2,27,220/- by the lower appellate authority vide impugned Order in Appeal is upheld. Penalty equivalent to the total duty quantified by the Adjudicating Authority after allowing cum-duty benefit, if any; will be impossible upon Appellant Shree Chem under Sec. 11AC of the Central Excise Act 1944. However, if the entire duty, interest and penalty is paid within 30 days from the date of communication of quantified duty by the Adjudicating Authority, the penalty imposed under Sec 11AC will be reduced to 25% of the penalty imposed as per the provisions of Sec 11AC of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n authority for considering the submissions of Shree Chem regarding adjustment of duty paid by three buyers of their clandestinely removed goods against the demand, and for considering the admissibility Credit of Rs. 2,27,220/- on inputs used in the manufacture of finished goods removed clandestinely. (iv) In the remand proceeding adjudicating authority passed Order in Original No. 3/ JC/ 07 dated 11.01.2007 again confirming demand of Rs. 11,61,378/- along with interest, against Shree Chem and imposed a penalty of Rs. 11,61,378/- on them. A penalty of Rs. 50,000/- was also again imposed on Shri Deepak F. Shah in remand proceedings. (v) Being aggrieved with the OIO dated 11.01.2007, both Shree Chem and Shri Deepak F. Shah filed appeals before Commissioner (Appeals), who vide his impugned Order in Appeal dropped demand of Rs. 2,27,220/- by allowing MODVAT Credit on inputs used in the manufacture of clandestinely removed final products. He further dropped the demand of Rs. 1,25,723/- (subject to verification on the part of Range Superintendent with the available documentary evidence) by accepting Shree Chems submission that out of the total shortage of finished goods, involving ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 11AC could not be less than the duty confirmed against the main appellant on the grounds of fraud, willful suppression of facts, and contravention of various provisions of the Act or of the rules made there under with intent to evade payment of duty. Learned AR relied upon the following case laws in support of his arguments: (a) Union of India Vs. Dharamendra Textile Processors - [2008 (231) ELT 3 (S.C.) (b) Union of India Vs. Rajasthan Spinning Weaving Mills - [2009 (238) ELT 3 (S.C.)] (iv) That the penalties imposed on Shri Deepak F. Shah, and Shri Mayur Shah, both partners of Shree Chem, may be restored as imposed on them by the original adjudicating authority. 5. Shree Chem filed Memorandum of Cross-Objection, which was received by the Registry on 15.10.2013 and assigned No. as E/ MA (CO) 22753 for rejecting Revenue s appeal. 6. Ld. Consultant appearing for the appellant for Shree Chem, raised preliminary objection that the Revenues appeal was not maintainable inasmuch as the Committee of Commissioners, constituted under Section 35B of the Central Excise Act, 1944, had authorized the Assistant Commissioner, Central Excise Division-II, Ahmedabad-I, while th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Tri. Ahmd.)] (d) CCE C, Surat-II Vs. Mohammed Farookh Mohammed Ghani - [2010 (259) ELT 179 (Guj.)] 6.4 With respect to Appeal Nos. E/ 777/ 2007-SM and E/ 778/ 2007-SM, Ld. Consultant appeared for Shree Chem and Shri Deepak F. Shah, argued as under during and through filing of written submission:- (i) That the appellants do not contest the demand of duty to the extent confirmed by the Commissioner (Appeal). (ii) That the appeals have been filed seeking reduction in the amount of penalties only. (iii) That the appellants factory had been incurring heavy losses since 1999, and the appellant cleared the goods without payment of duty for meeting day to day expenses required to run the factory. In this case two partners of the appellant Shri Deepak F. Shah and Shri Mayur R. Shah were also arrested by the Central Excise Department, and they remained behind the bars for forty days, during which the appellant s factory remained closed. Both the partners of the appellant have become bankrupt, and their residential bungalows have been attached by the Banks to recover loans advanced by Banks. (iv) That the entire duty of Rs. 11,61,378/- has been paid in cash or by making ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to show that the sale price was not cum-duty . Such a view has been taken by the Hon ble Supreme Court in cases of Srichakta Tyres Ltd. vs. Collector- 1999 (108)ELT.361 (Tribunal), Commissioner v. Maruti Udyog Ltd 2002(141)ELT.3(SC) and 2008 (224)ELT.180(SC) - CCE vs. Dugar Tetenal India Ltd decided on 7.3.2008. It is a settled law that later judgment of the Supreme Court will prevail over the previous decision. Therefore, the logical submission of the appellant is also supported by the decision dt 7.3.2008 of the Hon ble Supreme Court which will prevail over the other decision. Appellant is eligible for Cum-duty-Price benefit, in case duty is fastened on the appellant for clearance of goods valued of Rs 63,46,996/- found short has to be considered as the Cum-duty-Price . Accordingly, for computing clandestine clearance value of Rs 58,63,039/- Cum-duty-Price would be Rs 53,49,488/- and computing duty demand on 53,49,488/- @ 9.6% total duty will come to Rs 5,13,551/- instead of Rs 5,62,852/-. Similarly, for computing remaining clandestine clearance value of Rs 4,83,957/- cum-duty-Price would be Rs 4,17,204/- and computing duy demand on Rs 4,17,202/- @ 16% duty will be Rs 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 513 (Bom.)] and Standard Chartered Bank vs. Directorate of Enforcement [2006(197) ELT 18 (SC)]. 8. Heard both sides and perused the case records. The issues to be decided in these appeals are: (I) Whether the Revenue s Appeal No. E/ 798/ 2007 is maintainable in view of the preliminary objection raised by Ld. Consultant? (II) Whether MODVAT Credit of Rs. 2,27,220/- has been correctly allowed by the Commissioner (Appeals)? (III) Whether the demand of Rs. 1,25,723/- is maintainable against Shree Chem? (IV) Whether penalty of Rs.2,00,000/- imposed on Shree Chem by Commissioner (Appeals) under Section 11AC is proper? and (V) Whether penalty was imposable on partner under Rule 26 of the Central Excise Rules 2002 when the partnership firm has already penalized under Section 11AC of the Central Excise Act 1944. (vi) Whether the benefit of Cum Duty price can be extended to the appellant Shree Chem? 9. (i) With respect to issue (I) of Para 8 above, I find that in Revenue s Appeal No. E/ 798/ 2007, the original adjudicating authority was Joint Commissioner, Central Excise, Ahmedabad-I, while the authorization to file appeal was issued in favour of the Assistant Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... correctly allowed MODVAT Credit of Rs. 2,27,220/- after satisfying that the inputs in question have been used in the manufacture of finished goods removed clandestinely by the respondent. Further there is no evidence on records that inputs involving credit of Rs 2,95,997/- were removed as such in the absence of any seizure of the inputs so removed. Rather shortages of such inputs on which credit was taken is another clinching evidence that appellant Shree Chem has indulged in clandestine manufacture and clearances. (iii) As regards the third issue of dropping of demand to the extent of Rs. 1,25,723/- at Para 8(III) above. The same is proposed to be rejected by the Revenue on the ground that it is no possible to verify that finished goods DASA found short were the same which were cleared on parallel invoices. On the other hand consultant for Shree Chem argued that total duty evasion on account of shortage of finished goods (DASA) was Rs. 6,40,285/-, out of which an amount of Rs. 1,25,723/- pertained to clandestine clearance of 5,735.550 Kg. of DASA , valued at Rs. 7,85,770/-, under the cover of parallel invoices. As demand for duty evasion of Rs. 2,25,096/- on account of clan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Act, 1944 as against alleged evasion of duty of Rs. 8,08,435/- confirmed by him. I agree with the argument of the Ld. A.R. that mandatory penalty imposable on a person under Section 11AC cannot be less than the duty evaded by a person by reason of fraud, wilful suppression of facts, and contravention of various provisions of the Act or of the rules made there under with intent to evade payment of duty. However, option of 25% penalty as per Sec. 11 AC of the Central Excise Act 1944 is required to be extended to the appellant Shree Chem as the Show Cause Notice demanding duty was issued on 19/11/2004. (v) On the issue (V) in Para 8 above, I find that the Revenue s appeal is directed against Shree Chem only. The Revenue has not filed any appeal against Shri Deepak F. Shah, Shri Mayur Shah, Shri Kirtibhai Shah. Therefore, the Bench cannot entertain the Revenue s Ground of Appeal seeking imposition of penalty of Rs. 50,000/- each on Shri Deepak F. Shah and Shri Mayur Shah and penalty of Rs. 25,000/- on Shri Kirtibhai Shah as no separate appeal was filed against them, the Appeal No. E/ 778/ 2007 of Shri Deepak F. Shah is also before me for decision. Shri Deepak F. Shah ..... X X X X Extracts X X X X X X X X Extracts X X X X
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