TMI Blog2018 (12) TMI 855X X X X Extracts X X X X X X X X Extracts X X X X ..... ck were manufactured for the purpose of export under the contract which establish the fact that goods were not meant to be removed clandestinely with intent to evade duty. Therefore, the charges of suppressing with intent to clear the same clandestinely are not sustainable. There is otherwise no evidence on record to prove any intention of clandestine clearance. Above all there is no evidence on record to prove any intention of clandestine clearance - penalty set aside. Appeal allowed - decided in favor of appellant. - Excise Appeal No. E/52234/2018 [SM] - FINAL ORDER NO. 53406/2018 - Dated:- 10-12-2018 - MRS. RACHNA GUPTA, MEMBER (JUDICIAL) Present for the Appellant: Mr. Mehul Jivani, CA Present for the Respondent: Mr. P.R. Gupta, DR ORDER PER: RACHNA GUPTA The appellant herein is a 100% EOU engaged in manufacture of various kinds of chemical products. The adjudication in this case began with the SCN bearing No. 569 dated 21.04.2017 issued after the Department observed that the appellant has shown the finished goods as nil in the ER-2 return of September 2016. Thus, vide the SCN the confiscation of the stock which was found available at the time ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en to a narrow compass of the issue of imposition of penalty upon the appellant in view of the findings otherwise arrived at by the Adjudicating Authority below. It is observed from the orders of the adjudicating authorities that the confiscation of finished stock as was proposed by the impugned SCN is held to be proposed merely on ground of not tallying it with ER-2 return filed, and thus not sustainable when the said stock is physically available in the factory premises and also found tallying with the records maintained in SAP system at the time of physical verification by the preventive officers. 6. Further, I find that the Noticee is a 100% EOU and most of its clearance is meant for export. They have cleared only one item namely Dimethy phosphonate [(out of 37 items seized) to one of their customers for domestic clearance ever. Further, I also find that the Noticee is doing only contract research and manufacturing service (CRAMS) wherein they manufacture fluorine molecules through R D for the customers. The said fluorine molecules is used in specialized advanced pharmaceuticals by the client (like Pflizer, vertex, Noverts Gilead etc in USA) i.e. used into the manufacturing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an be exercised. Rule 25 of the CE Rules itself came up for interpretation before the Gujarat High Court in Saurashtra Cement Ltd 2010 (260) ELT 71 (Guj.) wherein para 17 it was observed as under: 17. It is also to be borne in mind that Rule 25 starts with the word subject to the provisions of Section 11AC . Section 11AC of the Central Excise Act deals with penalty for short levy or non-levy of duty in certain cases. It says that where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reasons of fraud, collusion or any wilful misstatement or suppression of facts, or contravention of any of the provisions of this Act or of the Rues made there under with intent to evade payment of duty, the person who is liable to pay duty as determined under sub-section (2) of Section 11AC, shall also be liable to pay a penalty equal to the duty so determined. For the purpose of invoking Section 11AC of the Act, the condition precedent is that the duty has not been levied, or paid or short levied or short paid or the refund is erroneously granted by reasons of fraud, collusion or any wilful misstatement or suppression of facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has not been levied, or paid or short-levied or short-paid or the refund is erroneously granted by reasons of fraud, collusion or any willful misstatement or suppression of facts. If these ingredients are not present, penalty under Section 11AC cannot be levied. Since Rule 25 can be invoked subject to the provisions of Section 11AC of the Act, as a natural corollary, the ingredients mentioned in Section 11AC are also required to be considered while determining the question of levying of penalty under Rule 25 of the Central Excise Rules. 18. This issue has come up before the Andhra Pradesh High Court in case of Commissioner of C. Ex. Guntur v. Andhra Cements Limited (supra) wherein the Court has taken the view that as per Rule 25(d) of the Rules subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, he is liable to pay the penalty in terms of Rule 25 of the Rules. The Court further observed that a bare perusal of this Rule would suggest that evasion of pa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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