M.M. SCRAP TRADERS Vs. COMMISSIONER, C. EXCISE

JUDGEMENT

(1.) THE appellant is engaged in trading of goods like M.S. Tanks which are obtained from various Ship Breaking Yards in Aland. In addition, from time to time appellants also obtained such items which are sold by local Traders/Companies also. Investigation was taken up and it was found that appellants had stock of 149 old and used M.S. Tanks of various sizes and shapes, and 195 old and used Radiators of various sizes. Total approximate value of goods was Rs. 26 Lakhs, which were seized. After issue of show cause notice and adjudication and appellate proceedings, penalty of Rs. 4,28,480/ - has been imposed on the appellant under Rule 26 of Central Excise Rules, 2002. Seized goods have been confiscated and ordered to be released on payment of redemption fine of Rs. 4,50,000/ -. Further, duty has also been demanded with interest as applicable and also penalty has been imposed equal to duty, under Section 11AC of Central Excise Act, 1944 on unknown ship breakers, whosoever has removed or claimed to have removed seized excisable goods. On an appeal filed by the appellant, the same was rejected.

(2.) LEARNED Chartered Accountant on behalf of the appellant submits that the investigation was started on 04.8.2007, during which appellant had admitted that he had M.S. Tanks and Radiators in stock and he also produced the file relating to the year 2006 -07 containing purchase bills and weighment slips, to the officers. Thereafter, the officers visited the appellant's premises and seized the tanks and radiators as mentioned above, on the ground that the same have been received without payment of duty. He submitted that he had submitted the full file with department and he had also produced relevant details and invoices of the goods and than the department had recorded the statements of only three traders, who admitted that they had sold goods but they had not sold M.S. Tanks and Radiators. It is his submission that 40 Nos. of invoices were submitted from various ship breakers but not even a single ship breaker was enquired into. Further, inspite of the fact that the invoices issued by the ship breakers, produced by him containing the details of ship breaking Yards, no follow -up investigation was conducted. Instead, show cause notice has been issued to unknown ship breaking Yards, as if the department could not found out that who are the suppliers. Further, he also submits that he had produced nine invoices from Priyank Ship Breaking Co. Pvt. Limited, out of which only four invoices were considered during the adjudicating process and remaining invoices were ignored. Further, he also submitted that appellant is a proprietary firm and proprietor is an aged person of 58 years and Yard is located 90 Kms away from Bhavnagar and he finds it difficult to conduct business. Further, he also submits that the firm has earned profit of about Rs. 2 Lakhs only during last year and earned less profit in the preceding financial year and therefore, he also submits that appellant has financial difficulties. Further, he also submits that not only the department failed to conduct any further investigation but even while imposing penalty, penalty under Rule 26 imposed on him is more than the penalty imposed on the unknown ship breaking yards. While the manufacturers un -identified have been imposed the penalty of Rs. 4,28,480/ -, the same amount has been imposed as penalty on him under Rule 26. Further, redemption fine of Rs. 4.5 Lakhs has also been imposed. He submits that both are extremely harsh.

(3.) I have considered the submissions made by both the sides. The appellant has received two types of invoices one showing payment of excise duty and other showing the same goods as non excisable. The fact that both types of invoices are issued by ship breaking yards in respect of same goods shows that appellants have dealt with the goods knowing they were not duty paid. Therefore penalty is imposable. I agree with the learned Chartered Accountant that department should have investigated and demanded the duty from ship breaking yards having identified them. However, this does not help the appellants at all. Improper investigation and incomplete investigation has caused loss to the department but this aspect has to be looked into by the concerned supervisory officers. Further, the learned Chartered Accountant also stated that five invoices issued by Priyank Ship Breaking Co. Pvt. Limited were not taken into account and reduce the excise duty involved on these goods, the difference in the actual duty liable can be approximately Rs. 1,28,000/ -, whereas the total duty calculated on the goods is Rs. 4,28,480/ -. Further, as rightly submitted by the learned Chartered Accountant, penalty can not be equal to penalty imposable under Section 11AC on manufacturers as well as on purchasers who had purchased goods without payment of duty. Further I agree that fine is also harsh. While penalty and confiscation are justified, quantum can not be justified. Further, admittedly there are nine invoices which show excise duty has been paid but out of which only four have been taken into account while calculating the duty liability. When this amount is reduced the total duty liable would come down only to about Rs. three lakhs. In fact on this ground the matter should have been remanded but since the case was heard at length and I find that penalty is imposable and it is the quantum that I have to reduce, I find it appropriate that matter should be finally decided rather than remanding the same for the limited purpose of quantum of penalty and redemption fine. Further, the fact that these four invoices were not considered, comes out from Para 9 of the show cause notice, wherein it has been stated that the appellant had produced four invoices bearing Numbers 559 to 561 and 563. In view of the above position, the requirement of pre -deposit is waived and stay petition is allowed and matter itself is taken up for final disposal with the consent of both the parties.