Decided on February 23,2015

Excellent Forge Pvt. Ltd. Appellant
Commr. of C. Ex. And S.T. Respondents


Ashok Jindal, J. - (1.)THE appellants are in appeal against the impugned order imposing penalty on them. The facts of the case are that appellant is engaged in manufacturing of Spanners and Wrenches. On 16 -1 -2009 the premises of the appellants were searched and it was found that there was a shortage of inputs of 114.880 Metric Tonnes. The appellant could not give any explanation for shortage thereon. It was also found that appellant has taken Cenvat credit of Rs. 2,19,466/ - on nickel plates on the basis of invoices issued by M/s. Himalaya International, Ludhiana, which in turn was issued on the basis of invoices issued by M/s. AIP Industries, Ludhiana. The said unit was registered for manufacture of copper ingots, copper wires and copper/insulated wires and not for manufacture of nickel plates and their registration has been cancelled since November 2006. It was also found that appellant has cleared samples to their customers without payment of duty of Rs. 16,120/ - against gate pass without issuance of any invoices. In these set of circumstances, Cenvat credit availed of Rs. 6,94,701/ - was sought to be denied which was wrongly availed by the appellants and a demand on duty of Rs. 16,120/ - was sought to be confirmed for clearance of samples without payment of duty. The show cause notice was issued to demand the duty along with interest and imposition of penalty on both the appellants. The show cause notice was adjudicated. A sum of Rs. 10 lakhs paid by the appellant during the course of investigation was appropriated against the impugned demands along with interest and penalties equivalent to duty were confirmed against both the appellants. Aggrieved from the order and imposition of penalty appellants are before me.
(2.)THE ld. Counsel for the appellant submits that the appellants are not disputing duty. They are contesting only penalties imposed on them by way of the appeals. He submits that as the appellant has paid entire amount of duty along with interest and some portion of the penalty before issuance of the show cause notice. Therefore, penalty on the main appellant be restricted to 25% of the duty as per the proviso of Section 11AC of the Central Excise Act. Therefore, penalty be reduced to that extent. He further submits that for imposition of penalty under Rule 26 on the appellant, first the goods were required to be held for liable for confiscation as the adjudicating authority has not held the case which are liable for confiscation. Therefore, penalty under Rule 26 on the appellants is not imposable.
On the other hand the ld. AR reiterated the findings of the impugned order.

(3.)HEARD the parties. Considered the submissions.

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