Commissioner Of Central Excise v. Centre For Development Of Imaging Technology

HON'BLE SHRI S.S GARG, JUDICIAL MEMBER Final Order Nos. 20028 - 20029 / 2018 Per: S.S GARG The Revenue has filed these two appeals against the common impugned order dated 31.10.2012 passed by the Commissioner whereby the Commissioner has confirmed an amount of Rs. 16,32,702/- (Rupees Sixteen Lakhs Thirty Two Thousand Seven Hundred and Two only) under Show Cause Notice No. 6/2011 CE dated 28.04.2011 and Rs. 13,18,767/- (Rupees Thirteen Lakhs Eighteen Thousand Seven Hundred and Sixty Seven only) under Show Cause Notice No. 12/2011 dated 04.10.2011 and dropped further proceedings in respect of the balance amounts. The Commissioner has also held that the assessee shall pay the interest. The Commissioner has appropriated an amount of Rs. 1,26,59,455/- (Rupees One Crore Twenty Six Lakhs Fifty Nine Thousand Four Hundred and Fifty Five only) paid by the assessee to Government Account but dropped the proceedings proposed vide Show Cause Notice 15/2011 CE dated 01.12.2011. Briefly the facts of the present case are that the assessee/respondents are engaged in the manufacture of paper security labels and flat self adhesive plastic stickers falling under Chapter Sub Heading 48211020 and 39199090 respectively of Central Excise Tariff Act, 1985. The said paper labels cleared to Kerala State Beverages Corporation Ltd. at the rate of 13.86 paise per label while the said plastic stickers are removed to different customers. Department noticed that the assessee had effected clearances of the said excisable goods during the period from November 2006 to March 2010 without obtaining Central Excise Registration, without payment of appropriate Central Excise duty and removing the said goods without the cover of proper invoices and without filing statutory ER-1 returns. The Department sought information from the assessee and the assessee vide their letter dated 28.10.2011 furnished the details called for. During the period from November 2006 to March 2010, the value of clearances of excisable goods of the said assessee during the financial years 2006-07, 2007-08, 2008-09 and 2009-10 had exceeded the exemption limit for availing the benefit of SSI exemption, as per Notification No. 08/2003 CE dated 01.03.2003 as amended for respective financial years. After examining the records of the assessee, the Department found various discrepancies and thereafter the assessee was issued various show-cause notices for various periods. The assessee filed reply to the three show-cause notices issued to them and they submitted that they are a Society registered under the Travancore Cochin Literary Scientific and Charitable Societies Act, under an expansion programme of Kerala State Film Development Corporation as per orders of the Government of Kerala. They have also submitted that they have been providing several categories of services some are taxable and some are non-taxable. After considering the reply of the assessee, the Commissioner confirmed the demand along with interest and also appropriated the amount paid by them. Aggrieved by the said impugned order, the Revenue has filed an appeal on the ground that the impugned order is not sustainable in law as the Commissioner has not imposed any penalty on the assessee under Rule 25 of the Central Excise Rules, 2002 and also under the provisions of Rule 27 of Central Excise Rules, 2002.

2. Heard both the parties and perused the records.

3. Learned AR for the Revenue submitted that the impugned order is not sustainable in law as the Commissioner has not imposed any penalty under Rule 25 and 27 of the Central Excise Rules, 2002 in spite of the fact that in the show-cause notices these Rules have been invoked for imposing penalty. He further submitted that in the impugned order, the Commissioner has not given the reasons for non-imposition of such penalties and therefore, the order of the Commissioner is non-speaking inasmuch as the question of imposition of penalty is not discussed. He further submitted that the respondent had cleared the excisable goods without the cover of proper invoices in violation of the provisions of Rule 11 of the Central Excise Rules, 2002 and also not filed the statutory ER-1 returns in violation of the provisions of Rule 12. Therefore, they are liable to penalty under Rule 25 and 27 of the Central Excise Rules, 2002.

4. On the other hand the learned counsel for the assessee defended the impugned order by submitting that the Commissioner (Appeals) in the impugned order has considered in detail all the facts and circumstances and the documents produced by the assessee and after considering all the material on record, the Commissioner has rightly disposed of all the show-cause notices. He further submitted that in the impugned order, Commissioner has dropped all proceedings proposed vide Show-Cause Notice 15/2011 dated 01.12.2011 and the Revenue has not filed appeal against the same. He also submitted that the Commissioner (Appeals) has given grounds for not imposing the penalty under Rule 25 and 27 of the Central Excise Rules, 2002. Here it is pertinent to reproduce the relevant finding of the Commissioner which is contained in para 32 of the impugned order which is reproduced herein below: 32. Coming to the demand under Section 11D, vide para 12 of their reply, the assessee has explained that whatever amount the assessee had collected from M/s. KSBC has been returned to M/s. KSBC as M/s. KSBC had demanded back the duty paid to the assessee based on the objection raised by the Accountant General while auditing the accounts of M/s. KSBC. Since, the amount wrongly collected has been returned, section 11D does not apply and the demand is not sustainable. Further vide their letter No. 224/AC 5/2012-13/C-DIT dated 21.08.2012 the assessee has informed that M/s. KSBC has now released payment of Central Excise duty for the period from 2006-07 to November 2009 which was withheld by them previously and accordingly the assessee has paid an amount of Rs. 1,26,59,455/- (Rupees One Crore Twenty Six Lakhs Fifty Nine Thousand Four Hundred Fifty Five only) so received under protest. The fact that they have paid the amount received under the nomenclature of duty immediately to the Government account, though under protest, instead of retaining it with them shows their bona fide. Since this amount has been collected as representing duty, I find it proper to appropriate it to Government account as mandated by Section 11D of the Central Excise Act.

5. After considering the submissions of both the parties and perusal of the material on record, I find that there is no infirmity in the impugned order which is passed by the Commissioner after considering all material on record. I further find that the Commissioner has held that there was a bona fide on the part of the assessee for not paying the duty to the Government. I also find that the duty has been paid which was appropriated to the Government account by the Commissioner. In view of these facts, I do not find any infirmity in the impugned order which is upheld by dismissing both the appeals of the Revenue. (Order Pronounced in Open Court on 08/01/2018) (S.S GARG) JUDICIAL MEMBER iss