2018 (1) TMI 405 - AT - Central Excise

Tribunal upholds duty recovery on finished goods, reduces penalty for Director in 100% EOU case

C.C.E. & S. Tax, Surat I Versus Shree Shakambari Silk Mills

The Tribunal upheld duty recovery on finished goods but exempted raw materials in the case involving a 100% EOU. The penalty on the Director was ... 100% EOU - Whether duty could be recovered both on the finished goods as well as on raw materials used in the manufacture of finished goods from the Respondent an 100% EOU? - Held that: - once the duty on the finished goods manufactured by the 100% EOU is directed to be recovered and the duty involved in the raw materials used in the manufacture of goods on which duty confirmed cannot also be recovered in view of the judgment of this Tribunal in the case of Sarala Polyester Ltd. Vs. C.C.E., Surat II - 2008 (222) ELT 376 (Tri-Ahd.) and C.C.E., Surat-I Vs. Cupro Recyline Pvt. Ltd. [2009 (1) TMI 893 - CESTAT AHMEDABAD]. Penalty on Director - Held that: - the ld. Commissioner (Appeals) has not taken cognizance of the result of analysis of the evidence recorded by the adjudicating authority while imposing penalty on the Director - penalty on Director upheld - quantum of penalty reduced. Appeal allowed in part. Issues involved:Recovery of duty on finished goods and raw materials from a 100% EOU, validity of re-warehousing certificate, liability of the Director for penalty.Analysis:1. Recovery of duty on finished goods and raw materials from a 100% EOU:The appeal was filed by the Revenue against the Order-in-Appeal, questioning the recovery of duty on both finished goods and raw materials from the Respondent, a 100% EOU. The Commissioner (Appeals) had directed the Respondent to discharge duty but set aside the demand on raw materials. The Tribunal found that duty on finished goods and raw materials cannot both be recovered, citing precedents like Sarala Polyester Ltd. and Cupro Recyline Pvt. Ltd. The judgment clarified that once duty on finished goods is to be recovered, duty on raw materials used in their manufacture cannot be additionally imposed.2. Validity of re-warehousing certificate:The Commissioner (Appeals) observed that the Respondent failed to produce a valid re-warehousing certificate, leading to the duty liability. It was noted that the goods were diverted without reaching the destination. However, the duty on raw materials was exempted from recovery based on the Tribunal's previous decisions, indicating a nuanced approach to duty recovery based on specific circumstances and legal precedents.3. Liability of the Director for penalty:The Revenue argued against setting aside the penalty imposed on the Director, stating that no reply was filed to the show cause notice. The Tribunal held that the Commissioner (Appeals) did not consider the evidence against the Director properly. After analyzing the evidence, the Tribunal found the penalty justified due to the Director's involvement in duty evasion. The penalty was reduced to Rs. 2.0 lakhs, taking into account the Director's role in the evasion. The judgment emphasized the importance of evidence and proper analysis in determining liability for penalties in such cases.In conclusion, the Tribunal modified the impugned order, upholding duty recovery on finished goods but exempting raw materials. The penalty on the Director was reinstated, albeit reduced, based on evidence of involvement in duty evasion. This comprehensive analysis demonstrates the meticulous legal reasoning applied by the Tribunal in addressing the complex issues raised in the appeal.