Delhi High Court
Micro Super Cables Pvt Ltd vs Commissioner Of Central Excise on 18 September, 2013
Author: Sanjiv Khanna
$~5, 6 & 7.
* IN THE HIGH COURT OF DELHI AT NEW DELHI
+ CEAC 37/2012
Date of decision: 18th September, 2013
MICRO SUPER CABLES PVT LTD
..... Appellant
Through Ms. Shikha Sapra Yariagadda &
Mr. Sanjeev Jaiswal, Advocates.
versus
COMMISSIONER OF CENTRAL EXCISE
..... Respondent
Through Ms. Sonia Sharma. Sr. Standing
Counsel.
CEAC 38/2012
MICRO SUPER CABLES PVT LTD
..... Appellant
Through Ms. Shikha Sapra Yariagadda &
Mr. Sanjeev Jaiswal, Advocates.
versus
COMMISSIONER OF CENTRAL EXCISE
..... Respondent
Through Ms. Sonia Sharma. Sr. Standing
Counsel.
CEAC 39/2012
BOMBAY METAL INDUSTRIES
..... Appellant
Through Ms. Shikha Sapra Yariagadda &
CEAC Nos. 37/2012, 38/2012 & 39/2012 Page 1 of 6
Mr. Sanjeev Jaiswal, Advocates.
versus
COMMISSIONER OF CENTRAL EXCISE
..... Respondent
Through Ms. Sonia Sharma. Sr. Standing
Counsel.
CORAM:
HON'BLE MR. JUSTICE SANJIV KHANNA
HON'BLE MR. JUSTICE SANJEEV SACHDEVA
SANJIV KHANNA, J. (ORAL):
On 11th September, 2013, the following common substantial
question of law was framed in these three appeals:
"Whether there is error in the order of the
Tribunal as it does adjudicate and decide the
ground of appeal that the penalty and
redemption fine have been calculated by
including value of accounted for stock
mentioned in RG-IV Register?"
2. The appellants herein are associate companies/concern, which
were subjected to search and seizure operations on 7 th January, 2009.
Thereafter, show cause notices were issued and orders-in-original were
passed. The appellants filed first appeals but did not succeed and then
approached the Customs, Excise and Service Tax Appellate Tribunal
(tribunal, for short). The tribunal has disposed of these appeals by
three separate orders but all dated 26th March, 2012. The reasoning
given in the impugned orders is also identical, though the quantum of
CEAC Nos. 37/2012, 38/2012 & 39/2012 Page 2 of 6
personal and redemption fine imposed are different. In paragraph 6 of
the orders of the tribunal, it is recorded that the appellants did not
dispute at the time of the search that statutory records like production
register, raw material register, invoice etc. were not there in the
factory. The goods found in the factory, which represented their
production was not entered in the RG-1 register. Thus, there was
violation of Rule 10 of the Central Excise Rules, 2002, which attracts
confiscation of unaccounted for goods and penalty on the manufacture
under Rule 25 thereof.
3. Learned counsel for the appellants has drawn our attention to the
redemption fine, which has been imposed on three appellants, which is
as under:-
Sr. No. Name Amount (Rs.)
1. M/s. Micro Super Rs.1,25,000/-
Cables (P) Limited,
Unit-I
2. Micro Super Cables Rs.1,25,000/-
Private Limited, Unit-
II
3. Bombay Metal Rs.60,000/-
Industries
4. For the sake of clarity, we note that personal fines were also
imposed on the directors of the two companies but they have not
preferred any appeal and the order of the tribunal against them have
become final. The tribunal had substantially reduced personal
CEAC Nos. 37/2012, 38/2012 & 39/2012 Page 3 of 6
penalties payable/fines to be paid by the directors and this is probably
the reason why appeals have not been preferred. Bombay Metal
Industries is sole proprietorship of Harish Chand Goyal.
5. The contention of the appellants herein is that while examining
the question/issue of redemption fine, only unaccounted stock can be
taken into consideration. Our attention is drawn to the grounds of
appeal preferred before the tribunal wherein it was submitted and
alleged that RG-IV Register was found at the administrative office on
the date of the search, i.e., 7th January, 2009. The said RG register
contained details of all accounted for and duly recorded purchases of
raw material. The redemption fine could not have been imposed on
duly accounted for purchases. It is submitted that this specific plea
was earlier raised, in reply to the show cause notice and the amount of
accounted for purchases were stated and computed. It was stated that
substantial raw material was duly accounted for in RG-IV Register.
Our attention is drawn to the reply to show cause notices submitted by
Micro Super Cables Private Limited, Unit-I in which it was stated that
excess stock or shortage of stock was worth about Rs.3,57,500/- and
the duty element for unaccounted for excess or shortage was
Rs.38,056/-. Similarly, in the case of Micro Super Cables Private
Limited, Unit-II, the unaccounted stock was valued at Rs.2,70,000/-.
The excise duty payable on the said excess/shortage was Rs.25,250/-.
CEAC Nos. 37/2012, 38/2012 & 39/2012 Page 4 of 6
In the case of Bombay Metal Industries, it was stated that excess stock
of 113 Kg. involving duty of Rs.2,912/- was found and the balance
stock was completely accounted and recorded. It is accordingly
submitted that without adjudication and decision on the said aspect, the
quantum of redemption fine should not have been ascertained and
imposed. The adjudicating authority as well as the appellate authority,
including the tribunal, have not gone and examined the said aspect
while fixing the quantum of redemption fine.
6. We have examined the grounds of appeal raised by the
appellants wherein the said contention has been explicitly raised.
However, we find neither the adjudicating authority, first appellate
authority nor the tribunal have dealt with and examined the said
grounds or answered the same. RG-IV registers, entries therein and
whether they were found at the time of the search is neither adverted to
nor dealt with.
7. In view of the aforesaid position, we answer the question of law
mentioned above in favour of the appellants and against the Revenue
with an order of remand for fresh decision by the tribunal. The
tribunal will examine the entire controversy once again, without being
influenced by the earlier order. We, therefore, clarify that the tribunal
will be at liberty to impose redemption fine in accordance with law
without taking into notice the earlier fine. If required and necessary,
CEAC Nos. 37/2012, 38/2012 & 39/2012 Page 5 of 6
the respondent will be entitled to meet and answer the contentions after
verification as permitted and allowed under the rules.
8. In order to expedite the hearing and curtail delay, it is directed
that the appellants will appear before the tribunal on 7th October, 2013,
when a date of hearing will be fixed.
The appeals are disposed of.
SANJIV KHANNA, J.
SANJEEV SACHDEVA, J.
SEPTEMBER 18, 2013
VKR
