2004 (97) ECC 244 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

New Delhi -- Bench-NB(SM)

Shri V.K. Agrawal, Member (T)

Haguru Engg. Pvt. Ltd. & Ors.

Versus

CCE, Ahmedabad I

Appeals No. E/2569 & 2565-2568/01-NB(SM)

[Arising out of Order-in-Appeal No. 547 to 551/2001, dated 27.9.2001 passed by Commissioner (Appeals), Central Excise & Customs, Ahmedabad.]

Final Order No. A/954-958/04/NB(SM), dt 27.11.03, Certified on 24.6.04

Duty demand (C. Excise)

Clandestine removal -- Goods seized at the premises of job workers included in total number of pieces impound goods manufactured by the assessee -- Departmental evidence does not show any such material or record, it cannot be accepted that the remaining quantity of the books were defective and were received back by them and remelted -- Evasion of duty proved -- Personal penalty on Manager set aside and demand upheld -- Section 11A of CEA -- Rules 57F(3), 209 of CER.

PRESENT :

Shri R. Sudhinder, Adv. for the appellants.

Shri H.C. Verma, JDR for the respondent.

Per : V.K. Agrawal

As these five appeals, filed by M/s. Haguru Engineers Pvt. Ltd. and others, have arisen out of a common Order-in-Appeal No. 547 to 551/2001, dated 27.9.2001 these are taken up for disposal together.

Shri R. Sudhinder, learned Advocate, submitted that M/s. Haguru Engg. Pvt. Ltd., Appellant No. 1, manufacture housing covers and pressure plates of clutch assembly according to designs and drawings of their customers, who are O.E. manufacturers of clutch assembly; that they have a small furnace for manufacturing castings of their products which are sent by them under Rule 57 F (3) of the Central Excise Rules, 1944 to M/s. Mansa Shotblasting Services for carrying out short blasting of the casting on job work basis; that from the premises of job worker, the castings are sent to two other job-workers, namely (1) M/s. Sainath Engineering and M/s. Harikrupa Engineering Works for carrying out machinery works on the castings; that on return, the goods are subjected to various other processes like filing, chamfering, oiling, etc. and thereafter cleared from the factory; that during the processes of shotblasting and machining, certain defects are noticed in the castings; that such defective castings are brought back to the factory for remelting and utilizing the same in further manufacture of their final products. He, further mentioned that the Central Excise officers visited their factory premises on 30.9.1995 and after investigation, a show cause notice dt. 12.4.1996 was issued to all the Appellants. Which has been adjudicated upon by the Dy. Commr. under Order-in-Original No. 171/97-98 dated 16.7.98; that the Dy. Commissioner had ordered as under:

(i) 1689 pieces of Pressure plates seized from the premises of Haguru Engineering P. Ltd. are liable for confiscation. Redemption fine of Rs. 10000 has been imposed.

(ii) Confirmed demand of duty Rs. 5,11,725 in respect of 10133 pieces of Housing/covers cleared by Appellant No. 1 without payment of duty;

(iii) Confirmed the demand of Rs. 1,81,018 on 4077 housings/covers cleared by the Appellant No. 1 without payment of duty;

(iv) Confirmed the demand of Rs. 11000 in respect of 250 pieces of housing /covers received back from Mansa Shotblasting Services and cleared by the Appellants No. 1 without payment of duty;

(v) Confiscated 1529 pressure plates seized from M/s. Sainath Engineering; Redemption fine of Rs. 25000 has been imposed;

(vi) Confirmed the demand of Rs. 26926.50 p. in respect of inputs cleared without payment of duty; and

(vii) Imposed penalties as under:

(a) Haguru Engineering P.Ltd. Rs. 2 lakhs

(b) Mansa Shotblasting Services Rs. 25,000

(c) Sainath Engineering Rs. 25,000

(d) HariKrupa Engineering Works Rs. 25,000

(e) M.G. Sadanandan Rs. 50,000

Manager of Appellants No. 1

3. The learned Advocate, while fairly admitting that there were certain discrepancies in the records maintained by the Appellant No. 1 and there was delay in giving 57F(3) Challans, submitted that the case of the Department is that the Appellant No. 1 had manufactured 58517 Housing covers and Pressure Plates out of which 48,384 were cleared on payment of duty and 10,133 pieces of final products had been removed without payment of duty; that it has been found by the Central Excise officers themselves that the Appellant No. 1 had sent 23,226 castings to Mansa Shotblasting Services under Rule 57F (3) of the Central Excise Rules and 35291 castings to Mansa Shotblasting Services under the cover of private delivery Challan; that 1689 pieces seized at Mansa Shot blasting and 1529 pieces seized from Sainath Engineering are out of the goods sent to them for job work which had already been taken into consideration while arriving at the total number of housing covers and pressure plates manufactured by the Appellant No. 1; that similarly 4077 plates alleged to have been removed to Mansa Shotblasting Services are covered by the overall figure of 58517 pieces; that thus duty on these quantities cannot be demanded; that the remaining quantity 2838 were rejected ones which were re-melted in their furnace. He contended that the normal rejection is about 12 to 15% in any foundry unit; that there is no evidence of illicit removal. He finally submitted that no penalty is imposable on Appellant No. 1 as well as their manager; that no penalty is imposable on other Appellants also as there is no evidence that they were concerned in keeping, removing or otherwise dealing with the excisable goods which they know or had reasons to believe that the same were liable to confiscation.

4. Countering the arguments, Shri H.C. Verma, learned Departmental Representative reiterated the findings of both the lower authorities and submitted that Shri M.G. Sadanandan, Manager and Authorized Signatory of the Appellant No. 1, has clearly admitted in the statement dated 9.10.1995 that they had removed inputs, after availing the Modvat Credit, to their sister concerns without payment of duty as they were not aware of the provisions of Rule 57F(2) at the material time.

5. We have considered the submissions of both the sides. The Adjudicating Authority has confirmed the demand of duty in respect of 10,133 housing covers and pressure plates which have remained unaccounted by the Appellant No. 1 out of the total quantity of impugned products manufactured by them. The learned Advocate has contended that the goods seized at the premises of their job workers are included in the total number of pieces of impugned goods manufactured by them. There is nothing on record to show that the impugned goods seized from the premises of the job workers do not form part of the total quantity of impugned goods manufactured by the Appellant No. 1. In absence of any material or record adduced by the Appellant No. 1, it cannot be accepted that the remaining quantity of goods were defective and were received back by them and remelted. We therefore, uphold the demand of Central Excise duty in respect of 10133 pieces of impugned goods minus 1689 pieces seized from the premises of Mansa Shotblasting Services and 1529 pieces seized from the premises of Sainath Engineering. The duty of Excise will be payable on these pieces as and when these are cleared by the Appellant No. 1. However, these goods seized from the premises of job workers are liable to confiscation as these have not been removed admittedly under the proper documents. We are, however, of the view that the redemption fine imposed is on the higher side which we reduce as under:

a. In respect of 1689 pieces redemption fine is reduced to Rs. 2500

b. In respect of 1529, redemption fine is reduced to Rs. 1500

6. Similarly there is no material brought on record by Revenue that 4077 pieces cleared to Mansa Shotblasting Services do not form part of 23,226 castings sent to them in total. We, therefore, extend the benefit of doubt to Appellant No. 1 and set aside the demand of duty amounting to Rs. 1,81,018. As the Appellant No. 1 has not disputed the removal of inputs as such without payment of duty, we uphold the demand of Rs. 26,926.50 paise. As the learned Advocate has also not pressed the demand of duty amounting to Rs. 11,100 which also is upheld. M/s. Haguru Engineering Pvt. Ltd. has made themselves liable for penalty as the excisable goods have been cleared by them without payment of duty and without observing the Central Excise formalities specified in the Central Excise Rules. We, however, reduce the penalty to Rs. 1,00,000 which will meet the end of justice. Shri M. G. Sadanandan who is Manager and Authorised signatory of the Appellant No. 1 is also liable for penalty under Rule 209A of the Central Excise Rules as he has dealt with the excisable goods which he knew were liable for confiscation, being Authorised signatory. We, however, reduced the penalty imposed on him to Rs. 10,000. No guilty knowledge can be attributed to the job workers who had received the goods for undertaking certain processes whether under Rule 57F Challan or private Challans. We, therefore, set aside the penalty imposed on Ms. Harikrupa Engineering Works, M/s. Mansa Shotblasting Services and M/s. Sainath Engineering

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