2018 (4) TMI 1383 - AT - Central Excise

Tribunal sets aside penalties on companies for excise violations, finding show cause notice invalid.

The Tribunal allowed the appeals, setting aside the impugned order that imposed penalties on M/s Samtel Electron Devices and M/s Samtel Color Ltd. for ... Removal of goods at Nil rate / concessional rate to EOU in excess quantity then permitted - clearance of 247324 nos. of 14” size Electron guns in violation of certificate - Whether under the facts and circumstances M/s Samtel Color Ltd. have violated the provisions of N/N. 43/2001–CE(NT) read with Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001? - Held that: - it is an admitted fact that similar to the permission dated 08/07/2004 for procurement duty-free for the financial year 2004-05, further permission dated 18th July, 2005 was granted for the financial year 2005-06. In the show cause notice, there is no whisper regarding the details of similar permission for the financial year 2005-06 - In view of the permission granted, being permission dated 18/07/2005 for procurement of 05lakhs 14” size Electronic guns for the financial year 2005-06, apparently, there is no violation of any provisions or the condition of the certificate in question. Appeal allowed - decided in favor of appellant. Issues:Violation of provisions of Notification No.43/2001-CE(NT) read with Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001.Analysis:The judgment revolves around two appeals stemming from a common impugned Order-in-Appeal dated 31/01/2008 passed by the Commissioner of Central Excise, (Appeals), Ghaziabad. The core issue at hand is whether M/s Samtel Color Ltd. violated the provisions of Notification No.43/2001-CE(NT) in conjunction with the Central Excise (Removal of Goods at Concessional Rate of Duty for Manufacture of Excisable Goods) Rules, 2001. The case involves M/s Samtel Electron Devices, a division of M/s Samtel Color Ltd., engaged in manufacturing Thermionic Valves and Heaters/Cathodes for Electron Gun, and M/s Samtel Color Ltd., a 100% EOU manufacturing picture tubes for Color Televisions. The former was permitted to obtain excisable goods at nil duty rate from the latter during specific financial years based on certificates issued by the Assistant Commissioner, Central Excise Division-IV, Ghaziabad.Further scrutiny revealed discrepancies in the procurement details provided by M/s Samtel Color Ltd., prompting an inquiry by the revenue authorities. The Assistant Commissioner clarified that the permission granted for duty-free procurement was valid only up to a certain date, leading to the issuance of a show cause notice proposing recovery of Central Excise duty and penalties. The Additional Commissioner adjudicated the notice, confirming the demand and imposing penalties on both M/s Samtel Electron Devices and M/s Samtel Color Ltd. The appeals against this decision were rejected by the learned Commissioner (Appeals), prompting the appellants to approach the Tribunal.Upon deliberation, the Tribunal found that the allegations of procurement violations were unfounded. It noted that permissions were granted for duty-free procurement for the respective financial years, and the procurement of 14' size Electron guns by M/s Samtel Color Ltd. fell within the scope of the granted permissions. Consequently, the show cause notice was deemed misconceived and untenable, leading to the allowance of the appeals and the setting aside of the impugned order. The appellants were granted consequential benefits as per the law.The judgment appreciates the assistance provided by the Amicus-curiae, Mr. Kartikeya Narain, in resolving the legal complexities of the case.