AI Structured Summary
Not yet generated for this judgment
Judgment
R.M. Savant, J.—The above Appeals challenge the orders dated 12.08.2004 passed by the Customs, Excise and Service Tax Appellate Tribunal, West Regional Bench at Mumbai (hereinafter referred to as "the CESTAT") in the Appeals filed by the Respondents above named. By the said orders penalty under Rule 209A of the Central Excise Rules, 1944 (for brevities sake hereinafter called as "the said Rules") imposed upon the Respondents in each of the Appeals has been set aside.
Since the questions of law raised in both the above Appeals are overlapping and common, the above Appeals are heard together. The questions of law are reproduced herein under:
Appeal No. 53 of 2005:
Whether the CESTAT was right in law by allowing the appeal on basis of part of the evidence without taking into consideration and ignoring the other vital evidences leading to prove the departmental contention, the circumstantial evidence leading to direct aiding and abetting in the evasion of central excise duty?
Appeal No. 55 of 2005:
1). Whether it is correct and legal for the CESTAT, and not erred, to pass an order, allowing the appeal on basis of part of the evidence without taking into consideration the other vital evidences leading to prove the departmental contention, the circumstantial evidences leading to direct aiding and abetting in the evasion of Central Excise Duty ?
2). Whether the Tribunal was right in setting aside the penalty imposed on the Respondent for having aided and abetted the manufacturer M/s. Lalit Products inasmuch as they had supplied the raw material, components and packaging material for the manufacture of Flex Box ?
The factual matrix involved in the above Appeals can be stated thus:
The penalty imposed against the Respondents above named has got its genesis in a case booked against one M/s Lalit Products situated at P Plot, Vivek Industries Estate, Walbhut Road, Goregaon (West), Mumbai. A case was registered against the said Lalit Products alleging that they had manufactured and cleared excisable goods viz. Mixer Grinder and Flex Box, affixed with brand Cellonex, Nandi, Pilot, Kundan, Vinay, etc not owned by them but belonging to others without payment of appropriate central excise duty. A show cause notice therefore came to be issued to the said M/s. Lalit Products dated 29.06.1998 in which apart from a demand for duty to the extent of 13,10,581/ the said Lalit Products were also asked to show cause against confiscation, penalty and interest in respect of the goods in question. The Respondents above named were made conoticees, for aiding, and abetting the said M/s. Lalit Products in contravention of the payment of the said excise duty, a proposal for penalty under Rule 209A of the said Rules was also made. In the light of the issues raised in above Appeals it would be relevant to note that the following were conoticees along with the said M/s. Lalit Products:
1 Shri Lalit Dehlahra
2 M/s. Mahendra Trading Co.
3 M/s. Padma Metal Corporation
4 M/s. Hitech Electronics
5 M/s. Arihant Distributors
6 M/s. Ankeet Kumar Company
7 M/s. Heera Products/Bhagyawati Marketing
8 Mr. Vinay Electricals (Respondents in Appeal No. 55 of 2005)
9 M/s. Beekay Industries
10 M/s. Goodwill Electricals (Respondents in Appeal No. 53 of 2005)
11 M/s. IN Mumbai
12 M/s. Meha Arts.
The said show cause notice was adjudicated upon and was confirmed by the Commissioner of Central Excise, Mumbai vide order in original dated 17.2.2000. Against the said conoticees the adjudicating authority held that they had all connived in aiding and abetting the said M/s. Lalit Products to evade central excise duty and, therefore, a penalty of Rs. Five lakhs on the Respondents above named as also redemption fine of Rs. Two Thousand was imposed on the Respondents in Appeal No. 53 of 2005 i.e. M/s. Goodwill Electricals. The relevant extracts in so far as the Respondents M/s. Goodwill Electricals , M/s. Vinay Electricals and M/s. Beekay Industries from the order in original are reproduced herein under:
M/s. Goodwill Electricals, Jamnagar are another distributor of M/s. Lalit Products, Mumbai for `Cellonex'' brand mixer grinders and M/s. Ranjit Freight Carriers were engaged to transport goods from Mumbai to the said distributors. Statement of Shri Bharat V. Oza of M/s. Ranjit Freight and Shri M.A Khatri, partner in M/s. Goodwill Electricals recorded u/s 14 of Central Excise Act, 1944 are available on record. From their statements, it is proved that M/s. Lalit Products have manufactured and clandestinely cleared `Cellonex'' brand mixer grinders under L.R. No. 1719 dated 27.5.976, 1879 dated 3.6.97 and under bill/invoice No. 4/9798 dt. 5.6.97 (out of which only one transaction under Bill No. 4/9798 dt6. 5.6.97 is reflected in their records) as detailed in the Annexure to the show cause notice under the cover of kaccha chits, loose papers, through the above transporters using abbreviated name of the consignor and consignee. Therefore, the value of remaining two consignments has been rightly worked out and the Central Excise duty is correctly demanded."
As regards, the siezure of `KUNDAN'' and `VINAY'' brand cum flex box and their raw materials parts are concerned, the same were seized in the premises of M/s. Lalit Products, Mumbai on the date of raid. It has come on records that `KUNDAN'' and `VINAY'' brands are owned by M/s. Vinay Electricals and M/s. Beekay Industries, Shri Vinay a Chedda and Shri Gautam J Jani have deposed accordingly in their respective statements. As per their statements raw materials were sent to M/s. Lalit Products, Mumbai for assembly into flex box of the above brand. It has been observed that no proper documentation covering movement of raw material was followed in their case nor records maintained at M/s. Lalit Products end. Moreover, M/s. Lalit Products, Mumbai never informed Central Excise department about job work for the above goods with brand name of the suppliers. Since the investigations into this case has clearly established the role of M/s. Lalit Products in the manufacture of `Cellonex'' brand mixer grinders (brand name belonging to other person) and their clandestine removals, it can be remotedly believed that in the above case. M/s. Lalit Products restricted their role to assembly of flex box on job work basis. Hence, statements of Shri Vinay A Chedda and Gautam J Jani cannot be raised upon and do not absolve their firms from imposition of penalty under Rule 209A of Central Excise Rules as proposed in the show cause notice.
Being aggrieved by the said order in original the Respondents herein as well as the said Lalit Products preferred an appeal before the First Appellate Authority. The said appeal was rejected by the Tribunal vide order dated 16082001 on account noncompliance of predeposit in terms of Section 35F. It appears that the department proceeded for recovery of the said amount of duty. The Respondents herein thereafter filed a further Appeal before the Customs Excise & Service Tax Appellate Tribunal, West Zone Bench, Mumbai being Appeal No. E/1925/2000. The said Appeals came to be allowed by the CESTAT by its orders, both dated 12.08.2004. The gist of the reasoning of the CESTAT was that the Respondents could not be said to have been in the knowledge of the fact that the goods were liable for confiscation on the grounds of ineligibility of SSI exemption of the manufacturer. The CESTAT was of the view that Rule 209A of the said Rules postulates mensrea on the part of the party, which according to the Tribunal in the instant case was missing. The CESTAT therefore came to the conclusion that the penalty imposed by the order in original cannot be sustained. However, so far as redemption fine imposed on the Respondents Vinay Electricals is concerned, the CESTAT did not go into the said aspect as the said issue was not pressed by the said Respondents. As indicated above, it is the said order dated 12.08.2004, which is challenged by way of the above Petition.
We have heard the learned Counsel for the Appellant Mrs.S I Shah. However, non appeared for the Respondents in both the Appeals though served.
It is an undisputed fact that concurrent findings of fact have been recorded against all the conoticees in the order in original and the order of the First Appellate Authority to the effect that they had aided and abetted the contravention of payment of excise duty by the said Lalit Products and were therefore similarly circumstanced. All the said conoticees were the distributors of the said Lalit Products. The said findings of fact are, therefore, one and indivisible. During the course of hearing, we were informed by the learned Counsel for the Appellant that the Appeal filed as against the same order dated 12.08.2004 qua M/s. Beekay Industries has been rejected on account of the nonremoval of the office objections. However, the learned counsel for the Appellants submitted that instant appeals can still be pursued against the Respondents above named who were also the conoticees. We are afraid, such a submission cannot be countenanced by us in the teeth of the fact that identical findings were recorded in respect of M/s. Beekay Industries, and the identical order passed by the CESTAT of setting aside the penalty against the said Beekay Industries has become final and binding. In our view since the findings against the conoticees were recorded visavis their role as distributors they are one and indivisible. The order of the CESTAT as regards the setting aside of penalty against the said M/s. Beekay Industries having become final and binding, the said course of action would therefore also follow in respect of the Respondents above named. This Court cannot, in the above Appeals, whilst considering the issue of penalty which has been set aside against the Respondents above named, record inconsistent findings. Resultantly, question of law framed would have to be answered in favour of the Respondents and against the Revenue. Consequently, both the Appeals to stand dismissed.