ORDER
Krishna Kumar, Member (J)
1. Heard both sides. The ld. Counsel for the appellant submitted that the following questions need to be decided in respect of the appeals filed by the appellant:-
i) whether the penalty, of Rs. 1,11,441/- under Section 11AC is sustainable when the duty amount has already been paid before issue of the show cause notice.
ii) whether the Central Excise duty of Rs. 2,10,535/- is liable to be confirmed alongwith equal amount of penalty and interest under Section 11AB in respect of clearances may during the period from 17/5/1998 to 13/7/1998. (annexure B II to the show cause notice).
2. Whereas the question to be decided in the appeal filed by the Department is as under: –
Whether the Commissioner (Appeals) is right in reducing the demand for Central Excise duty and penalty by Rs. 32,080/- applying the cum duty price principle laid down by the Apex Court in the case of Maruti Udyog Ltd. reported in 2002 (49) RLT 1 (SC).
At the outset the ld. Counsel for the appellant has submitted that he is not contesting the duty of Rs. 1,11,441/-. Therefore, no consideration is required on this amount and the same stands confirmed.
3. So far as the first question in the appeal filed by the appellant is concerned, the ld. Counsel submitted that the appellant has paid Central Excise duty of Rs. 1,11,441/- before issue of the show cause notice. Therefore, in view of the decision of the Larger Bench in the case of CCE v. Machine Montell (India) Ltd, reported in 2004 (168) ELT 466 (L.B.), penalty under Section 11AC is not imposable.
4. So far as the 2nd question in the appeal filed by the appellant is concerned, the ld. Counsel submitted that out of the total demand of Rs. 2,10,535/-, the demand of Rs. 40,605/- is not at all sustainable. Since it is raised in respect of duty paid goods/non-excisable goods purchased from other manufacturers. He further submitted that the appellants have submitted adequate documentary evidence as in exhibit 10 to 30 alongwith the memo of appeal to prove the said contention.
5. So far as the remaining demand of Rs. 1,69,930/- is concerned, the ld. Counsel has submitted that though the castings in respect of which the said demand is raised were cleared to M/s Trio Enterprises on simple delivery challans for machining, subsequently invoices were raised for the said castings in favour of M/s Tri and duty is paid on the said castings by the appellant. He also submitted that the appellant have produced a correlation chart showing the correlation of delivery challan and the Central Excise invoices covering the said castings. He also submitted that the Department has not conducted any enquiries from M/s Trio and also not adduced any evidence to negate the appellant’s contention. He further contended that without verifying RG1 Register and Central Excise invoices, the Department cannot conclude clandestine clearance specially when the appellant is pleading that the goods covered under simple delivery challans are recorded in RG1. Register and subsequently duty thereon has been paid by issuing Central Excise invoices. He also submitted that all the goods covered under the said delivery challans are only to M/s Trio and hence the investigation at the end of M/s Trio was essential. However, since no investigation has been made at the end of M/s Trio, the charge against the appellant of supplying the casting to M/s Trio without payment of duty is not supported by any concrete evidence. Further, the statement of one of the Director of the appellant’s recorded on 22/7/1998 only is accepting the clearance of casting involving the Central Excise duty of Rs. 1,11,441/- during the period 14/7/1998 to 22/7/1998. However, in the said statement nowhere he has accepted the clearance of castings involving the Central Excise duty of Rs. 2,10,535/-. In other words’ the Department has failed to adduce any concrete evidence to support the charge of clandestine clearance of castings involving Central Excise duty of Rs. 2,10,535/-. On the other hand, the appellant have produced sufficient evidence to prove the wrongness of the charge of clandestine clearance of castings.
6. The ld. DR inter alia submitted that the appellant has made only part payment of the duty that is Rs. 1,11,441/- before issue of the show cause notice. The items in question were dutiable. The commissioner (Appeals) with regard to the demand of Rs. 40,605/- has recorded that the items were procured from other manufacturers. No corroborative evidence has been produced by the appellant. The total demand is Rs. 35,04,56/-. Therefore, the balance amount related to the goods cleared clandestinely. The delivery chalians have only shown the clearance but no excise invoices have been produced. He also drew my attention towards the order-in-original at Page 15 Para 31 with regard to the admission of the Director. However, it is seen from the said para that the duty has been subsequently paid. The ld. JDR also submitted that the order of the Commissioner (Appeals) is reasonable with regard to cum duty price and consequent reduction. 7. In view of the above, so far as the penalty of Rs. 1,11,441/- is concerned, I find that the ratio of the Apex Court decision in the case of Machino Montell (India) Ltd (Supra) is clearly applicable and as such I do not find any reasons to sustain the penalty amount. I, therefore, set aside the penalty of Rs. l,11,441/- imposed under Section 11AC. As regards the 2nd question in the appellants case with regard to the demand of Rs. 40,605/-, I do not find any reasons to sustain the same as the appellant has clearly proved with respect to the delivery chalians and the exhibits No. 10 to 30.
Therefore, there is no question of exclusion of documentary evidence and the demand of the aforesaid amount is set aside. As regards the clandestine clearance of castings involving duty of Rs, 2,10,535/-, I find that the Department has miserably failed to bring any evidence on record to support their case. The documentary evidence brought on record by the appellant cannot, therefore, be disbelieved and as such the demand is not liable to be sustained and consequently the penalty also fails.
8. So far as the revenue’s appeal is concerned, I find that the Commissioner (Appeals) has rightly reduced the demand and consequently the penalty by applying the principle of cum duty price and which is fully supported by the Apex Court decision in the case of Maruti Udyog Ltd. (Supra). Besides, the different Benches of the Tribunal have given benefit of cum duty price and reduced the demand and penalties. (1993 (63) ELT 723). Therefore, I do not find any fault with the Commissioner (Appeals) order.
9. In view of the above discussions, I allow the appeal filed by the appellants except to the extent the ld. Counsel has not contested the duty of Rs. 1,11,441/-. The revenue’s appeal is rejected.
(Pronounced in Court on)