Case Law Details
Crown Ceramics Vs C.C.E. & S.T.- Rajkot (CESTAT Ahmedabad)
Introduction: The Central Excise and Service Tax Appellate Tribunal (CESTAT) Ahmedabad recently issued a significant ruling in the case of Crown Ceramics Vs C.C.E. & S.T.- Rajkot. The matter revolved around the alleged clandestine removal of goods based on certain documents found on the appellant’s premises. The central issue was whether excise duty could be demanded due to a procedural lapse in the context of an admitted export of goods.
Detailed Analysis:
1. Background: The case originated from a show cause notice dated December 30, 2011, which was issued by the department, proposing the recovery of excise duty amounting to Rs. 39,43,754. The notice was based on documents seized during a visit by preventive officers to the appellant’s premises on December 7, 2010. The show cause notice was adjudicated ex-parte on November 16, 2012. Subsequently, the appellant appealed this decision along with relevant documents before the Commissioner (Appeals). The Commissioner remanded the matter back to the adjudicating authority for further examination, considering a significant volume of documents (1178 pages).
2. Export Quotation: One of the issues in dispute related to a quotation presented by the appellant. The appellant contended that the quotation was not related to actual sales but was provided to potential buyers. The appellant also submitted a chartered accountant certificate certifying the clearance of exports and quotations, emphasizing that there was no clandestine removal. The adjudicating authority accepted the chartered accountant certificate in relation to trading activities but disagreed concerning the value of clearances stated in quotations, exports, rejections, and Jangad (approval) sales.
3. Procedural Lapse in Export: Regarding the export of goods, the primary reason for demanding excise duty was the appellant’s alleged failure to follow the proper procedure. While there was no dispute over the physical export of goods, the demand was based on procedural lapses. The appellant had submitted Form-H as proof of export, which they argued was sufficient compliance, and no duty should be demanded on the grounds of procedural issues.
4. Jangad (Approval): The appellant’s counsel did not contest the issue related to Jangad (approval) during the appeal.
5. CESTAT’s Verdict: Upon careful examination of the submissions from both parties and a review of the records, CESTAT made the following key observations:
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- Regarding the quotation, CESTAT noted that the documents provided were only quotations and did not indicate actual goods clearance. Therefore, the demand based on quotations was not sustainable.
- In the case of excise duty demand on goods cleared for export, CESTAT emphasized that there was no dispute about the physical export of goods. The submission of Form-H, considered a sufficient proof of export, meant that no demand could be raised due to procedural lapses.
- For the issue concerning Jangad (approval), the appellant’s counsel did not pursue the matter, and the demand was accepted.
6. Conclusion: Considering the overall facts of the case, CESTAT ruled that the penalty was not imposable. CESTAT set aside the impugned order and remanded the matter to the adjudicating authority for a fresh order, taking into account the observations made during the case. The appeal was allowed by way of remand to the adjudicating authority.
In this significant ruling by CESTAT Ahmedabad, the tribunal emphasized that excise duty should not be demanded merely for procedural lapses in the case of an admitted export of goods. This decision underlines the importance of procedural compliance in excise matters and provides clarity on when excise duty demands are justifiable. It also underscores the role of proper documentation and compliance in avoiding unnecessary tax liabilities.
FULL TEXT OF THE CESTAT AHMEDABAD ORDER
The issue involved is with regard to alleged clandestine removal of goods on the basis of some documents recovered from the premises of the appellant. After detailed investigation, the department had issued show cause notice dated 30.12.2011 proposing recovery of duty amounting to Rs. 39,43,754/- on the basis of documents impounded during the visit of the preventive officers on 07.12.2010. The said show cause notice was adjudicated ex-parte on 16.11.2012 vide order no. 136/ADC/12. Being aggrieved by the said order-in-original appellant had fled appeal along with relevant documents before the Commissioner (Appeals). After considering the submission and relevant documents, the learned Commissioner (Appeals) has remanded the matter to adjudicating authority to re-adjudicate the matter on the basis of the documents which are running into 1178 pages. On remand the appellant further produced the documents before the adjudicating authority which were got verified by the department through the office of the Assistant Commissioner. During the de-novo, the appellant also filed submission vide letter dated 10.12.2013 along with copy of Chartered Accountant Certificate certifying the clearance of export and quotation. After verification of documents submitted by the appellant, the adjudicating authority accepted that there is some trading turnover and set aside the demand on such trading turnover. However, on the issue of value of clearances reflecting in quotation, export, rejection and Jangad (approval) sale did not agree and confirmed the demand. The appellant filed an appeal before Commissioner (Appeals) against the de-novo adjudication order. The learned Commissioner (Appeals) rejected the documents relied upon by applying the provisions of Rule 5 of Central Excise Appeals Rules 2001. Being aggrieved by the said impugned order-in-appeal, the appellant filed the present appeal.
2. Shri Paresh Sheth, learned counsel appearing on behalf of the appellant submits that as regard the allegation of clandestine removal in respect of the alleged transaction appearing in quotation, he submits that there is no clearance against the all documents, it is only a quotation given to the probable buyers of the goods and no actual sale has taken place. He also referred to some quotations. He submits that the appellant have also submitted a chartered accountant certificate certifying export clearance, quotations and the trading activity. On the basis of which the export clearance and quotation do not involve any clandestine removal hence, the demand on that account is not sustainable. He submits that the chartered accountant certificate was accepted by the adjudicating authority in so far as it relates to trading activity therefore the chartered accountant certificate cannot be doubted. As regard, the export, the demand was confirmed on the ground that the appellant have not followed the procedure. He submits that there is no dispute that the goods have been exported and the appellant have produced the form-H which is admissible as proof of export, therefore, on the export clearance, demand cannot be confirmed. As regard, the demand relates to Jangad (approval), Shri Paresh Sheth does not press and accept the demand during the argument. In support, he placed reliance on the following circulars and judgments:
- Circular No. 648/39/2002-CX dated 25.07.2002
- Amar packaging industries 2016 (344) ELT 187 (Guj HC)
- Decorpac 2021 (376) ELT 759 (T-Del)
- Vishwas Traders 2013 (287) ELT 243 (Guj HC) confirmed by SC 2014 (303) ELT A24 (SC)
- Gupta Synthetics Ltd. 2014 (312) ELT 225 (T-Amd)
- Shree SidhbaliIspat Ltd 2017 (357) ELT 724 (Tri-Mum)
- Chhajsingh S kanwal 2011 (272) ELT 202 (Guj.)
- FlevelInternation 2016 (332) ELT 416 (Del.)
- Hingora Industries Pvt. Ltd. 2015 (325) ELT 116 (T-Amd.)
3. Shri A.K. Samota, learned authorized representative appeared on behalf of the respondent and reiterates the findings of the impugned order.
4. On careful consideration of the submission made by both the sides and perusal of records, we find that in the present appeal the dispute relates to the alleged clandestine removal on the basis of quotations, export of goods, Jangad (approval). As regard the quotation, we find that firstly the appellant’s representative have given statement which is exculpatory and have also explained that it is only quotation and no goods have been cleared under said quotation. The copy of such quotation is scanned below:
5. From the perusal of above quotation, it clearly shows that the aforesaid documents is only a quotation and does not indicate that any goods have been cleared under the aforesaid quotation. Moreover, the appellant have not accepted the detail mentioning the above quotation as clandestine removal. The Revenue did not adduce any other evidence such as transportation of goods, buyer’s statement etc., therefore, we are of the view that the demand on the basis of quotation is not sustainable. As regard the demand of excise duty on the goods cleared for export, there is no dispute about the physical export of the goods. The only reason for demand of duty is that the appellant have not followed the procedure. We find that so far as the form-H was submitted by the appellant, it is sufficient compliance as proof of export and on that basis no demand can be raised as held in various judgments, therefore, merely for a procedural lapse in respect of admitted export of goods, no duty can be demanded. As regard the demand relates to Jangad (approval), we find that learned counsel has not pressed this issue and accept the duty demand. Accordingly, we are not going into the facts of this case and the demand relates to Jangad (approval) is sustained.
6. Considering the overall facts of the case, the penalty is also not imposable, hence, the same is set aside. In view of our above observation, the duty needs to be re-quantified, accordingly, we set aside the impugned order and remand the matter to the adjudicating authority for passing a fresh order considering the above observation. The appeal is allowed by way of remand to the adjudicating authority.
(Pronounced in the open court on 22.09.2023)
