2009 (1) TMI 636 - AT - Central Excise

Summary

Issues involved: Allegations of assembling and clearing photocopiers without payment of excise duty by floating fronts to remain eligible for the SSI exemption, demand of duty, imposition of penalties, confiscation of photocopiers, redemption fine, errors in the order perceived by the Revenue, rectification sought for errors in the order.

Adjudication of allegations: The Commissioner of Central Excise adjudicated allegations against Copier Force India Ltd., Chennai (CFI) for assembling and clearing photocopiers without paying excise duty by using fronts to qualify for the SSI exemption. Duty of Rs. 9,84,39,315/- was demanded from CFI, penalties were imposed on CFI and individuals, and ninety-four photocopiers were confiscated. CFI was given the option to redeem the seized photocopiers by paying a fine of Rs. 20 lakhs. The Tribunal affirmed the evasion finding by clubbing clearances of CFI and its fronts but set aside the demand and penalties due to lack of notice to the front firms before treating them as dummies and clubbing their clearances with CFI. The Tribunal upheld the confiscation of photocopiers but set aside the redemption fine as excessive, remanding the issues for fresh adjudication by the Commissioner.

Errors perceived by the Revenue: The Revenue filed a ROM application seeking rectification of errors in the order. The Revenue contended that the Tribunal wrongly applied case law in vacating the demand and penalties, as the dummy units in previous cases had made clearances unlike the fictitious concerns in this case. The Revenue also challenged the vacating of the redemption fine, arguing that the Commissioner had the authority to impose it within legal limits, and the Tribunal could have modified it accordingly.

Arguments and submissions: The Special Consultant for the Revenue reiterated the errors and cited a Supreme Court judgment emphasizing rectification of mistakes to avoid prejudice. The Senior Counsel for CFI and others defended the Tribunal's decision, stating that the front units were dummies as per the case law applied. He argued that the Tribunal rightfully vacated the illegal fine and emphasized the need for a ROM petition to point out manifest errors, citing another Supreme Court judgment in support.

Decision on ROM petition: After considering the arguments and submissions, the Tribunal found that CFI had clandestinely made the clearances with the dummies created to evade duty, which only existed on paper. The Tribunal had relied on case law requiring such units to be heard before treating them as dummies. Therefore, the ROM petition challenging this point was dismissed. Regarding the redemption fine, the Tribunal had already set it aside and remanded the matter for fresh adjudication, rendering the application on this point redundant. Ultimately, the ROM petition filed by the Revenue was rejected.

Conclusion: The Tribunal pronounced the decision in open court on 13-1-2009.