At, Customs Excise Service Tax Appellate Tribunal West Zonal Bench At Mumbai
By, THE HONORABLE JUSTICE: RAMESH NAIR
By, MEMBER AND THE HONORABLE JUSTICE: RAJU
For Petitioner: M.P. Baxi, Advocate And For Respondents: H.M. Dixit, AC (AR)
1. The facts of the case are that the appellant is inter-alia manufacturing different types of chocolates on job work basis out of raw and packing material supplied by one Cadbury India Ltd. They were receiving duty paid raw and packing material from Cadbury India Ltd. Cadbury India Ltd. also supplied them with costing data in respect of such duty paid raw and packing material from time to time. During the period in question namely January to December 2004, the appellants were supplied the costing data in a timely manner by Cadbury India Ltd. After the department initiated the enquiry the appellants sought and received costing data from Cadbury India Ltd. upon receipt of such data the appellants realised that the goods cleared by them on job work basis during the relevant period had been undervalued to the extent of undervalue and there was a short duty to the extent of Rs. 68,34,780/-. The appellant suo motu paid the amount along with interest in November 2006. A show-cause notice dated 9-7-2007 was issued for the period January to December 2004 seeking appropriation of the duty and interest already paid and also proposing to impose penalty under Section 11AC. The adjudicating authority confirmed the demand and appropriated the amount already paid. In addition imposed a penalty of Rs. 68,34,780/- under Section 11AC and a penalty of Rs. 3 lakhs was also imposed under Rule 25. The appellant being aggrieved by the Order-in-Original filed the present appeal only for waiver of penalties imposed under Section 11AC and Rule 25. Shri M.P. Baxi, ld. Counsel for the appellant submits that the appellant is only a job worker. The short payment of duty has occurred without any mala fide intention due to non-supply of costing data by the principal Cadbury India Ltd. The appellant being a job worker is not beneficiary irrespective whether duty is correctly paid or short paid. In this fact the ingredient required to invoke Section 11AC i.e. suppression of fact, mis-declaration, fraud, collusion with intent to evade payment of duty cannot be alleged. In support he placed reliance on the following judgment:--
• Natco Pharma Ltd. v. CCE 2009 (248) ELT 635 (Tri-Bang.)
• Deccan Enterprises (P.) Ltd. v. CCE : 2005 (190) ELT 241 (Tri-Bang.)
2. Shri H.M. Dixit, Ld. AC (AR) appearing on behalf of the revenue reiterates the finding of the impugned order.
3. We have carefully considered the submission made by both sides. We find that the appellant admittedly paid the excise duty along with interest which was confirmed by invoking the extended period in the impugned order. We also observe that the short payment of duty is due to incorrect costing of the product manufactured on job work basis. Throughout, the plea of the plea of the appellant is that the short payment is due to non-supply of costing data by the principal Cadbury India Ltd. This excuse cannot exonerate the appellant form their responsibility. In the eyes of central excise law the job worker is the sole manufacturer. Accordingly, they are bound to comply with all the provisions of central excise including the valuation. In failure to supply the costing data by the principal who has no locus standi inasmuch as the appellant being an assessee and liable to pay duty, appellant cannot wash out their hands from the statutory compliance of valuation provisions of the final product being manufactured. It is also observed that the appellant have also not informed the department regarding their inability to assess the value correctly due to non-supply of costing data. In such as situation, the appellant had legal option to follow the provisional assessment as provided under the law in respect of their goods which also they have failed to comply. In these circumstances, the bona fide of the appellant is not proved. Therefore, penalty under Section 11AC was rightly imposed by the lower authority. However, it is observed from the Order-in-Original that the adjudicating authority has not extended the option for payment of reduced penalty of 25% as provided under proviso to Section 11AC as held by the Hon'ble Supreme Court in the case of CCE & C v. R.A. Shaikh Paper Mills (P.) Ltd : 2016 (335) ELT 203, the adjudicating authority must give option of reduced penalty of 25% to the assessee to enable them to avail the benefit if the assessee wishes. Considering this position, we reduce the penalty to 25% in terms of proviso to Section 11AC subject t
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o condition that the duty, interest and 25% penalty stand paid within one month from date of receipt of this order. As regard the penalty imposed under Rule 25, we are of the view that once the penalty under Section 11AC has been imposed, no further penalty under Rule 25 is warranted. 4. Accordingly, the penalty of Rs. 3 lakhs imposed under Rule 25 of Central Excise Rules, 1944 is set aside. The impugned order is modified to the above extent. The appeal is partly allowed in above terms.