By TIOL News Service

KOLKATA, MAY 16, 2014: THIS is case where the appellant issued nearly 559 invoices for clearing the goods valued at Rs.1,83,37,32,793/-, but could not clear the same from the factory. Department viewed this seriously and imposed penalty of Rs 18 crores under Rule 25, and also personal penalties under Rule 26 on various persons.

The appellant submitted that they had manufactured goods valued at Rs.1,83,37,32,793/- during the period January to March, 2010, but due to cancellation of orders by the customers, could not clear the goods from the factory, even though around 559 excise invoices had been prepared showing payment of duty. Subsequently, in July, 2010, they have paid the duty again on the said goods and cleared it from their factory to the respective customers. It is submitted that they have been maintaining records meticulously, about receipt of raw materials, its use in the manufacture and production of finished goods in their private records. They submitted that the penalty on the Applicant company and personal penalty against other applicants imposed under Rule 25 & 26 of Central Excise Rules, 2002 respectively is unjustified, as there was no intention, whatsoever, to clear the goods clandestinely.

After hearing both sides, the Tribunal held:

Prima facie, we find that even though the goods were manufactured and accounted for, in the private records maintained by the Applicant and subsequently invoices were also prepared for clearance of the said goods, but due to non-lifting of the said goods by the respective customers, the applicant could not clear the goods from the factory. However, subsequent to the visit of the Central Excise officers on 25/6/2010, the applicant paid appropriate Central Excise duty against 559 invoices again and prima facie, we find that the Commissioner (Appeal) while considering their application for refund of duty paid second time, allowed their appeal observing that duty has been paid twice. Also, prima facie, we find from the records enclosed with the appeal memorandum and demonstrated by the Ld. Advocate that the applicants are maintaining proper records from which it could be established the manufacture and clearance of goods, from the factory on payment of duty. Thus, at this stage, the applicants could able to make out a prima facie case for waiver of pre-deposit of penalty imposed against each of the applicants under various provisions of Central Excise Rules.

(See 2014-TIOL-780-CESTAT-KOL)