CHAMUNDA SYNPROCESS PVT. LTD. Vs. CCE

JUDGEMENT

(1.) THE Appellants are processor of Man Made Fabrics, processing on job work basis. At the time of scrutiny of their records by the officers who visited their factory in the second weak of Jan'04, it was found that during the period from 5.10.02 to 4.1.04, a number of debit notes had been issued by the Appellant to the principal manufacturers but neither any duty had been paid on those debit notes nor debit notes had been reflected in the ER -I returns. The total duty chargeable on the debit notes was quantified as Rs. 57,233/ - (Cenvat Rs. 45,786/ - + AED (ST) Rs. 11,447/ -). The Appellant paid the entire duty on 9.1.04 under two challans - amount of Rs. 45,678/ - tones BED and Rs. 11,555/ - towards AED (ST) the total duty paid was Rs. 57,233/ -. Subsequently, the Deputy Commissioner issued a show cause notice for confirming the demand differential duty as Rs. 57,233/ - and also differential duty of Rs. 108/ - (difference between Rs. 45,786/ - and Rs. 45,678/ -). The SCN also sought imposition of penalty on the Appellant's company under Section 11AC and imposition of penalty on the Director of the Appellant's company under Rule 26 of Central Excise Rules. Besides the SCN was also sought a recovery of interest under Section 11AB on differential amount of Rs. 108/ -. The Dy. Commissioner vide order -in -original dt. 26.5.06 confirmed the duty demand of Rs. 57,233/ - under proviso to Section 11A(1) of Central Excise Act and also the demand of Rs. 108/ - under proviso to Section 11AC and besides this, imposed penalty of Rs. 57,233/ - on the Appellant company under Section 11AC and penalty of Rs. 10,000/ - on Shri Amit Agarwal, the Director of the Appellant company under Rule 26 of the Central Excise Rules. He also ordered the recovery of interest of the balance amount of Rs. 108/ - under Section 11AB. The Commissioner (Appeals) upheld the Dy. Commissioner's order against which the present appeal has been filed. In the present appeal filed by the Appellants company only imposition of penalty and duty demand of Rs. 108/ - has been challenged.

(2.) HEARD both sides.

(3.) THE next contention of the Appellant is that Section 11A(2B) is applicable and even if Section 11A(2B) is not applicable, they cannot be denied to the benefit of proviso to Section 11AC of the Act as the entire duty demanded had been paid even before the issue of SCN. Since the debit notes being issued to the principal manufacturers, which have the effect of enhancing the assessable value of the goods were not being declared in the ER -1 returns, the Appellants are guilty of suppression of facts and therefore, Section 11A(2B) is not applicable and the Appellant would be liable for penalty under Section 11AC. The Appellant claim that they are eligible for the benefit of 1st proviso to Section 11AC.