Roll Well Conveyor Components Pvt. Ltd. vs The Joint Commissioner of Central Excise, Commissioner of Customs and Central Excise (Appeals) and Assistant Registrar Customs, Excise and Service Tax Appellate Tribunal

V. Gopala Gowda, J.—Heard the learned Counsel for the appellant.

The correctness of the impugned Judgment dated 29.12.2008 passed by the Customs Excise and Service Tax Appellate Tribunal, South Zonal Bench, Bangalore (in short ''the CESTAT'') in Appeal Nos. 901 & 902/06 is questioned in this appeal framing the following substantial questions of law and urging various grounds in support of the same.

Whether the Tribunal is justified on facts and in the circumstances of the case in arriving at the conclusion that the goods were clandestinely removed by the appellant on the basis of stock verification by the departmental officials was on the basis of random weighment/verification?

Whether on the facts and in the circumstances of the case the Tribunal was justified in imposing fine of Rs. 75,000/- and penalty of Rs. 1,00,000/- and order of confiscation of 3,661 Nos. of rollers?

Whether on facts and in the circumstances of the case the Tribunal was justified in imposing fine of Rs. 1,00,000/- and penalty of Rs. 25,000/- in respect of excess stock of inputs valued at Rs. 21,31,586/- and their order of confiscation?

Whether in the facts and circumstances of the case the appellant could be denied the benefit of Cenvat credit on the ground of shortage when the stock verification by the departmental officials was on the basis of random weighment/ verification?.

The ground of attack of the impugned Judgment of the CESTAT is that the redemption fine and the penalty imposed under the provisions of the Central Excise Act and Rules and the CENVAT Credit Rules is not tenable in law.

The learned Counsel submits that non-consideration of explanation regarding non-accountability of the goods, raw materials and the finished goods could not have been interfered with by the respondent when there was no intention on the part of the appellant to evade the payment of excise duty on account of confiscation of goods in lieu of same redemption fine imposed is arbitrary and unreasonable. Therefore, the substantial questions of law Nos. 1 and 2 would arise for consideration of this Court. Further, he has contended that the Tribunal was not justified in reducing the penalty and redemption fine amount in relation to both goods namely input and finished product is arbitrary and unreasonable as the same is on the higher side as the same has not been considered by either the original authority or the first appellate authority for not considering the explanation offered by the appellant assessee regarding non-accountal of raw material and finished product in the register does not amount to intention on its part to evade payment of excise duty to the Revenue. Therefore, the substantial question No. 3 would arise for consideration.

Another ground of attack in support of substantial question No. 4 is that the facts and circumstances for denial of CENVAT credit on the ground of shortage of raw material when the stock verification by the Departmental officers during their visit and random verification is not tenable in law. Therefore, he has requested this Court to answer the same in favour of assessee. The learned Counsel for appellant/assessee has also placed reliance upon the decision of Supreme Court in the case of Commnr. of Central Excise, Bangalore Vs. Srikumar Agencies etc. etc., in support of his contention that the Tribunal has not taken into consideration the ground urged before it in the appeals and that the factual position has not been analysed in detail by it and disposal of the appeals with reference to certain facts and the findings and reasons recorded by the original authority concurred by the first appellate authority is not proper. Therefore, he submits that the appellate Tribunal was required to analyse the nature of goods and it ought to have set aside the imposition of penalty amount and redemption fine in relation to raw materials and finished products. In not doing so, the impugned Judgment is vitiated in law.

With reference to the above said legal grounds urged on behalf of appellant, we have carefully examined the original order, first appellate authority''s order and the order passed by CESTAT with a view to find out as to whether the above framed substantial questions of law by the appellant would arise for our consideration. The original authority has referred to the explanation offered by the assessee to the show-cause notice issued by the assessing officer. The assessing officer has recorded the findings with reasons regarding the finished products namely the rollers of various sizes input/raw material of various goods required to be used as inputs for the finished products for which CENVAT credit benefit under the CENVAT Credit Rules, 2002 was availed by the appellant. Having regard to the undisputed fact that proper accounting of goods was not made by the appellant in the relevant register such as daily stock register, the assessee has suppressed regarding finished goods. In not entering the same in the daily stock register, which shows that there was an intention on its part to evade payment of duty to the Revenue as in contravention of Rule 10 of Central Excise Rules, 2002. Having done so, the assessee has failed to properly account physical stock of raw materials upon which CENVAT credit was availed and thereby contravened sub-Rule 4 of Rule 7 of CENVAT Credit Rules. Under the Central Excise Rules wherein, quantity of 3661 Nos. of finished goods viz., rollers of different dimensions, valued at Rs. 15,87,579/- which was found excess and seized, are required to be confiscated under Rule 25 of the Central Excise Rules. Further, 6341 Nos. of Ball bearings (Raw Material) and 56267 kgs of different categories of raw material totally valued at Rs. 21,31,586/- which was found excess and seized was required to be confiscated under Rule 13 of the Cenvat Credit Rules 2002. The Executive Officer of the appellant''s Company Mr. Surendra was asked to show cause as to why the penalty should not be imposed on him under Rule 26 of the Central Excise Rules, 2002 for contravention of the rules. Therefore, imposing penalty and redemption fine in respect of both goods which order is concurred by the first appellate authority and the Commissioner of Customs and Central Excise vide order dated 27.8.2006 dismissing the appeals after recording the reasons at paragraph-6 of the order with reference to the decisions of CESTAT, Mumbai and Delhi.

The findings recorded in the said order is questioned in the appeal before the CESTAT. The CESTAT, after adverting to relevant undisputed facts regarding the nature of goods namely finished goods and raw materials not properly accounted is an undisputed fact for which the explanation is offered by the assessee as the same could not be maintained in the register due to dearth of staff is taken into consideration by the Assessing Authority. Further having regard to the undisputed fact that finished goods and raw materials are not accounted, the finding of fact is recorded by the original authority, which finding is concurred by first appellate authority, which is accepted by the CESTAT in exercise of its appellate jurisdiction and power and modified the redemption fine and penalties as follows:

(i) Redemption fine of Rs. 1,50,000/- in respect of 3661 Nos. of rollers is modified to Rs. 75,000/-.

(ii) Redemption fine of Rs. 2,00,000/- in respect of the inputs valued at Rs. 21,31,586/- is reduced to Rs. 1,00,000/-.

(iii) The order of reversal of irregular cenvat credit of Rs. 1,23,844/- is upheld.

(iv) Interest on the above amount under Rule 12 of Cenvat Credit Rules read with Section 11AB is also upheld.

(v) The Penalty of Rs. 1,23,8440/- u/s 13(2) of Cenvat Credit Rules read with Section 11AC is set aside.

(vi) Penalty of Rs. 25,000/- under Rule 13 of Cenvat Credit Rules in respect of excess stocks of inputs, is upheld.

(vii) Penalty of Rs. 1,00,000/- on the unit under Rule 25 of the Central Excise Rules, 2002 is reduced to Rs. 50,000/-.

(viii) Penalty of Rs. 25,000/- on Sri Surendra, Chief Executive under Rule 26 is reduced to Rs. 5,000/-.

The said relief granted by the Tribunal in exercise of its appellate power and jurisdiction in favour of the appellant. The Tribunal after considering the explanation offered by it has granted substantial relief to the appellant. It is the revenue, who has to be aggrieved by the order but not the assessee. Therefore, we do not find any of the above substantial questions referred to supra would arise for our consideration. The Tribunal has rightly referred to the rival legal contentions, adverted to the findings recorded in the impugned order with reference to the undisputed facts and granted the relief reasonably by reducing the redemption fine in lieu of confiscation of goods in exercise of its power and jurisdiction. Therefore, we do not find any good reason to answer the substantial questions in favour of the appellant as the same do not arise for our consideration. The appeal is devoid of merit.

Hence, the appeal is dismissed.