TaxTMI 
TaxTMI 
2013 (4) TMI 255
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.... to November 2002; (d) demand of interest on the above duty amounts under Section 11AA/11AB of the Central Excise Act; (e) penalty of Rs. 16,00,000/- imposed under Section 11AC of the Act read with Rule 25 of the Central Excise Rules, 2002; (f) redemption fine of Rs. 50,000/- imposed in lieu of confiscation of seized goods viz. raw materials, semi-finished goods and capital goods. The appeals of M/s. Bayir Chemicals and M/s. Sneha Chemicals are against the respective penalties viz. Rs. 1,00,000/- and Rs. 5,000/- imposed under Rule 26 of the Central Excise Rules, 2002. The original authority had imposed on the assessee under Section 11AC a penalty of Rs. 32,34,540/- which came to be reduced to Rs. 16,00,000/- by the appellate authority which upheld the order-in-original with this modification. The appellate order is under challenge in the present appeals. There is no appeal from the department against the above reduction of penalty. 2. M/s. Gani Natural Colors and Oleoresins Pvt. Ltd. (GNCOPL for short), presently called M/s. Bayir Extracts Pvt. Ltd. (BEPL for short), was licensed in the year 199....
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....d by the Commissioner (Appeals) with a minor modification as to the quantum of penalty imposed on GNCO/BEPL. The order of the appellate authority is presently under challenge in these appeals. 3. Heard both sides. The learned counsel for the appellants submitted that M/s. BEPL were only undertaking job work for M/s. Bayir Chemicals who supplied the raw materials. He submitted that the semi-finished goods were sent back to the Peenya unit of M/s. Bayir Chemicals who manufactured the final product (herbal extracts) and exported the same. He submitted that the demand of duty was not sustainable on these facts. According to him, job work was no taboo for EOU. Without prejudice to these submissions, the counsel claimed that the processes such as milling, soaking with solvents, etc., undertaken in the premises of M/s. BEPL did not result in any marketable and excisable product and therefore the demand of duty of Rs. 10,30,360/- was not sustainable. The learned counsel further submitted that the semi-finished herbal extracts were not shown by the Revenue to be marketable and hence not excisable. He also pleaded time-bar against the above demand of duty by submitting that the nature ....
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.... in possession of the EOU premises since November 2001 as per the MoU and hence had direct knowledge of the activities which took place during the material period) could not be dislodged by the job worker EOU. The learned advocate, who represented the EOU and M/s. Bayir Chemicals before us, did not attempt to establish any conflict or inconsistency between the oral evidence of M/s. Bayir Chemicals and the stand taken by the EOU. In this scenario, BEPL's argument that the semi-finished herbal extracts cannot be held to have been manufactured or to be marketable/excisable does not hold water. In other words, their challenge to the demand of duty on the semi-finished herbal extracts on the ground of non-excisability must fail. There is, also, no merit in their alternative claim that the job-worked herbal extracts were further processed by Bayir chemicals' Peenyan Unit and exported or cleared on payment of duty. There is no evidence to substantiate this claim. This apart, job work itself is outside the scope of a 100% EOU's activities (as rightly held by the lower authorities) inasmuch as the EOU's entire production is meant for export. 3.3 There is no valid plea of limitation ei....
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....e statement was subsequently clarified by Shri K.M. Harish in an affidavit dated 12-3-2005. Without prejudice to these submissions, the learned counsel contended that the clearances made prior to 11-5-2001 could not be assessed to duty under the proviso to Section 3(1) of the Central Excise Act as done in this case. The assessment was liable to be made in terms of the main part of Section 3(1) of the Act. In this connection, the learned counsel relied on the Tribunal's decision in M/s. NCC Blue Water Products Ltd. v. CCE : 2005 (183) E.L.T. 148 (Tri.-Bang.) affirmed by the Supreme Court in CCE v. M/s. NCC Blue Water Products Ltd. : 2010-TIOL-73-SC-CX = 2010 (258) E.L.T. 161 (S.C.) (judgment dated 24-9-2010 in Civil Appeals Nos. 4608-4609 of 2005). According to the learned counsel, even assuming that duty was leviable on the aforesaid quantity of oleoresins, the amount of duty would be Rs. 7,98,354/- only if estimated in terms of the main part of Section 3(1) of the Act. Learned Additional Commissioner (AR) again reiterated the relevant findings of the adjudicating authority. 4.1 We have considered the rival submissions. The challenge to the demand of duty on oleoresins cannot....
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.... Water Products Ltd. (supra). The impugned demand of duty was quantified under the proviso even for the period prior to 11-5-2001, which cannot be sustained. As per the provisions interpreted by the Hon'ble Supreme Court, the demand of duty on oleoresins cleared from EOU premises from April 1999 to 10-5-2001 requires to be requantified in terms of the main part of Section 3(1) of the Central Excise Act and we shall direct the adjudicating authority to do so. 5. Duty of Rs. 38,054/- was demanded from the EOU in respect of black phenyl which was held to have been manufactured by the EOU as a job work for M/s. Sneha Chemicals who supplied the necessary raw materials. After hearing both sides, we have found this dispute to be similar to the one pertaining to semi-finished herbal extracts and, therefore, there is no reason for a different view. Consequently, the above demand has only to be sustained. 6. The plea of limitation is not sustainable against any of the demands of duty, for which we have already recorded our reasons. The entire demand is liable to be honoured by the EOU which never sought debonding but only chose to plead with the Development Commissioner, even aro....
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....Insofar as the penalty imposed on BEPL under Section 11AC is concerned, it goes without saying that this penalty is sustainable on the facts of this case inasmuch as the proviso to Section 11A(1) of the Act was rightly invoked on the ground of wilful suppression of facts by GNCO/BEPL, for recovery of duty and, for that matter, the requirements of Section 11AC were satisfied. However, the quantum of this penalty needs to be redetermined by the adjudicating authority after requantifying the demand of duty. 10. There are penalties of Rs. 1/- lakh on M/s. Bayir Chemicals and Rs. 5,000/- on M/s. Sneha Chemicals under Rule 26. As Shri Ganapathy Bairy was found to have actively abetted the clandestine activities of GNCO/BEPL, Bayir Chemicals rightly attracted this penal provision. However, in the facts and circumstances of this case, a penalty of Rs. 1/- lakh appears to be disproportionate and we reduce it to Rs. 50,000/-. The other penalty is on Smt. Veena Bairy, owner of Sneha Chemicals. She is the wife of Shri Ganapathy Bairy, owner of Bayir Chemicals. There is no evidence of the wife having been actively involved in the transactions with GNCO/BEPL. Hence the penalty imposed on h....