2002 (6) TMI 71 - AT - Central Excise

Glazed tiles case: Duty demands confirmed, penalties imposed, interest specified.

The case involved issues of cash collection without paying central excise duty on glazed tiles, evidence sufficiency, applicability of differential duty ... Demand - Penalty Issues Involved:1. Collection of part of the price in cash and non-payment of central excise duty.2. Evidence sufficiency and reliability.3. Applicability of differential duty demand.4. Imposition of penalties on the firms and individuals.Summary:1. Collection of part of the price in cash and non-payment of central excise duty:Investigations by central excise authorities revealed that Alfa Ceramics and Globe Ceramics were realizing part of the price of glazed tiles in cash without paying central excise duty on this component. Show cause notices were issued proposing to reassess the goods and recover the short-levy. The adjudication orders confirmed the duty demands and imposed penalties on the firms, their officers, and distributors.2. Evidence sufficiency and reliability:The Revenue's case was supported by evidence showing that the distributors collected part of the value in cash and passed it on to the manufacturing firms without recording it in their books. The appellants contended that the evidence was insufficient to prove a systematic collection of cash over the entire period. However, the Tribunal found the evidence, including testimonies and records, sufficient to establish the practice of cash collection and its transmission to the manufacturers.3. Applicability of differential duty demand:The appellants argued that the differential duty should be limited to sales in Madhya Pradesh, as there was no evidence of cash collection from dealers in other states. The Tribunal agreed, citing the decision in State of Kerala v. C. Velukutty, and limited the duty demand to sales in Madhya Pradesh. The differential duty was computed at Rs. 27,35,960/- for Alfa Ceramics and Rs. 11,05,036/- for Globe Ceramics.4. Imposition of penalties on the firms and individuals:The Tribunal upheld the imposition of penalties on the manufacturing firms due to the established case of duty evasion through fraud and suppression of facts. However, it reduced the penalties in view of the reduced duty demand and set aside penalties on the partners and officers of the firms, as separate penalties on partnerships and their partners are not permissible. Penalties on the Madhya Pradesh distributors were confirmed, while penalties on other appellants were set aside.Conclusion:1. Duty demand of Rs. 27,35,960/- confirmed on Alfa Ceramics.2. Duty demand of Rs. 11,05,036/- confirmed on Globe Ceramics.3. Penalty of Rs. 27,00,000/- imposed on Alfa Ceramics.4. Penalty of Rs. 11,00,000/- imposed on Globe Ceramics.5. Penalties on Shri P. Chordia and Shri Mahendra Khandelwal confirmed.6. Other penalties set aside.7. Confiscation of plant and machinery set aside.8. Interest at appropriate rates to be paid on short-levy from 28-9-1996.9. Payments and deposits made during the investigation to be adjusted towards duty demands.