TaxTMI 
TaxTMI 
2014 (4) TMI 260
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....reinafter referred to as 'Shree Chem' main appellant), a manufacturer of DASA (4.4 Diamino) and other dyes, and detected shortage of finished goods involving central excise duty of Rs. 6,40,285/- and shortage of raw materials involving duty of Rs. 2,95,997/-, and also seized certain records revealing removal of finished goods under parallel invoices without payment of duty amounting to Rs. 2,25,096/-. Shree Chem admitted that to have duty liability and deposited Rs. 5,00,000/- during the course of investigation before the issue of show cause notice. (ii) A Show Cause Notice dated 19.11.2004 was issued by the first adjudicating authority to Shree Chem, Shri Deepak F. Shah and others and the case was adjudicated vide his Order in Original dated 18.11.2005 confirming demand of duty of Rs. 11,61,378/- along with interest against Shree Chem & imposition of a penalty of Rs. 8,00,000/- under Section 11AC of the Central Excise Act 1944. A penalty of Rs. 50,000/- was also imposed upon Shri Deepak F. Shah. (iii) Being aggrieved with the OIO, dt 18/11/2005 passed by the Adjudicating Authority both Shree Chem as well as Shri Deepak F. Shah filed appeals with the Commissioner (Appeals), who v....
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....fact, the respondent had already taken Credit immediately on receipt of inputs in their factory under the cover of six invoices produced by the appellant, and thus allowing credit of the same amount again through impugned Order in Appeal would amount to extending double benefit to the respondent. It is not the respondents case that inputs received by them under the six invoices were not earlier accounted for in their records and final products manufacture out of these inputs were subsequently cleared without payment of duty. Moreover, the respondent has never brought these facts to the notice of the investigating agency. (ii) That the Commissioner (Appeals) had erroneously dropped the demand to the extent of Rs. 1,25,723/- on the ground of duplication of demand as the benefit could not be extended at the appeal stage as it was never claimed before the lower authorities and was not part of the remand order earlier passed by the Commissioner (Appeals). Moreover, the Range Superintendent had reported in compliance to the directions contained in Para 4 of the impugned Order in Appeal, that it was not possible to verify that goods found short were the same which were cleared on parall....
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....pertained to clandestine clearances of 'DASA', made under the cover of parallel invoices. As demand for duty evasion of Rs. 2,25,096/- on account of clearance of finished goods under the cover of parallel invoices had also been separately worked out by the Revenue, the figure of duty evasion of Rs. 1,25,723/- had been taken into account twice. He argued that the appellant could not bring this fact to the notice of the investigating officers, as both the partners were in shocked state of mind on account of their immediate arrest by the Central Excise Department, and they remained behind the bars for forty days. He contended that these facts are verifiable from the seized records available with the Department. 6.3 He argued that penalty on the partners was not imposable when penalty has been imposed on the partnership firm. He requested for deletion of penalties imposed on Shri Deepak F. Shah and Shri Mayur Shah. In this context, he cited the following case laws: (a) Compusoft Vs. Commissioner of Central Excise, Mumbai - [2003 (154) ELT 241 (Tri. Mumbai]; (b) Rajan Prints Vs. Commissioner of Central Excise & Customs, Surat - [2009 (236) ELT 720 (Tri. Ahmd.)] (c) Sol....
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....ted that section 4 shows that the wholesale price charged is deemed to be the value for the purpose of levy of excise duty, but the element of excise duty, sales tax, or other taxes are to be excluded in arriving at the assessable value. Therefore, the amount realised by the appellant from the sale of goods has to be regarded as a normal wholesale price and in determining the value on which excise duty is payable the element of excise duty which must be regarded as having been incorporated in the sale price, must be excluded. There is nothing to show that once the demand was raised by the Department, the appellant will be able to recover the same from such buyer/purchaser of goods cleared. The facts indicate that after the sale transaction was completed, the buyer was under no obligation to pay any extra amount to the seller i.e., the appellant. In such a transaction, it is the seller who takes on the obligation of paying all taxes on the goods sold and in such a case the said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii)and this is precisely what has been submitted by the appellant. There is no other evidence contrary to this to prove that amount od duty was....
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....issioner (Appeals) ought to have imposed penalty on Shree Chem equal to the amount of duty evaded in terms of Section 11AC and that lesser penalty of Rs. 2,00,000/- imposed by the Commissioner (Appeals) under Section 11AC is inconsistent with the provisions of Section 11AC, which needs to been enhanced to the quantum of duty evaded. In this context, he cited the following case laws: (a) Union of India Vs. Dharamendra Textile Processors - [2008 (231) ELT 3 (S.C.)]; (b) Union of India Vs. Rajasthan Spinning & Weaving Mills - [2009 (238) ELT 3 (S.C.)]; (c) Haryana Acrylic Mfg. Co. Pvt. Ltd. Vs. Commissioner of Central Excise, New Delhi [2013 (294) ELT 419 (Tri. Del.)]; (ii) With respect to penalty of Rs. 25,000/- imposed on Shri Deepak F. Shah, Partner of Shree Chem, under Rule 209A/ 25, he argued that the same was maintainable even if penalty had imposed on the partnership firm Shree Chem under Section 11AC, although Hon'ble High Courts and Tribunals have given decisions per incuriam in many cases that separate penalty on partners cannot be imposed when penalty has been imposed on partnership firm. In this regard, he cited interalia, the case law - Textoplast Industries Vs.....
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....puts mentioned therein, and thus allowing credit of same amount again through impugned Order in Appeal would amount to extending double benefit to the respondent. I find that if respondent had already taken the Credit, as argued by the Ld. A.R., then the same should have been reflected as per the entries to that effect in respondent's RG 23 A Part-I and RG 23A Part-II Registers. The Revenue has also not adduced any such evidence in support of its argument that the inputs mentioned in the six invoices were not used in or in relation to the manufacture of final products cleared clandestinely by the respondent. On the other hand respondent contended that entire quantity of inputs mentioned in the six invoices had been completely used in the manufacture of finished goods which were cleared clandestinely, and the lower appellate authority, while allowing credit of Rs. 2,27,220/- on this count, observed in Para 4 of the impugned Order in Appeal that there appeared to be no justification and no valid ground for not extending the credit of such input material which were duty paid and out of which finished goods were manufactured and cleared clandestinely. I, therefore, hold that the lower ....
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.... clandestinely. Onus of proving that goods cleared on parallel invoices were different from the shortages found in the factory lies with the department. Revenues appeal to this extent is also required to be rejected. However, there is no strength in the argument of the Appellant Shree Chem that a duty amount of Rs 2,73,152/- has been paid by the buyers of 'DASA' as it is not established that this duties were paid by the buyers on the clandestine removals and not on the finished good manufactured by the buyers out of the clandestinely procured raw materials cleared by the appellant. So far as the benefit of 'Cum-duty-price' to be extended to Appellant 'Shree Chem' is concerned, it is relevant to mention that this quantification was not agitated before the lower authorities and has been raised only before this bench. Therefore, for allowing the benefits of 'Cum-duty-price' the case is required to be remanded to the Adjudicating Authorities for deciding this issue in view of the case laws relied upon by the appellant. (iv) On the issue (IV) of Para 8 above, I find that the lower appellate authority had imposed penalty of two lac rupees on Shree Chem by invoking the provisions of Sect....