In the case of M/s. Voltas Limited, the Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that penalty under Rule 26 of Central Excise Act cannot be imposed on purchaser for non payment of excise duty by manufacturer.
The appellant, namely, M/s. Voltas Limited, Teynampet, Chennai, appears to be the owner of the brand name who procured Automatic Voltage Stabilizers ( ‘AVS’ ) in this case from M/s. St. Roch Enterprises, Chennai and the impugned order reveals that M/s. St. Roch Enterprises is a proprietary concern basically manufacturing and supplying AVS to M/s. Voltas Ltd. in their brand name namely, “V-Service” since 2005, besides their own brand namely, “Info Power”.
On a certain input, the Revenue entertained a doubt that the said M/s. St. Roch Enterprises had manufactured and cleared goods bearing the brand name of another person without payment of appropriate duty during the years 200809, 2009-10, 2010-11 and 2011-12; it also appeared to the Revenue that the above activity of manufacturing by the said M/s. St. Roch Enterprises and clearance through the trading company M/s. St. Roch Electricals was after crossing the SSI exemption limit during the year 2010-11 and hence, a Show Cause Notice dated 17.07.2013 was issued to M/s. St. Roch Enterprises.
The appellant before this Bench was also called upon to Show Cause as to why penalty under Section 26 of the Central Excise Rules, 2002 shall not be imposed on them since they were the other party who had received the non-duty paid goods from the said M/s. St. Roch Enterprises.
Both the co-noticees filed their respective replies separately. The appellant namely, M/s. Voltas Ltd., appears to have contended primarily that the relationship between them and the manufacturer was purely commercial in nature, governed by the purchase order; they had no knowledge about the non-payment of Excise Duty by the manufacturer nor did they have any knowledge about the manufacturer claiming, for all those years, exemption from payment of Excise Duty.
The adjudicating authority-Commissioner of Central Excise, Chennai-II Commissionerate having considered the explanation of the appellant, passed a common adjudication order vide Order-in-Original No. 01/2014 dated 16.01.2014, wherein he has confirmed the proposals made in the Show Cause Notice against the appellant before this forum.
Smt. J. Ragini, Ld. Advocate appeared for the appellant and Shri N. Satyanarayanan, Assistant Commissioner appeared for the Revenue.
A single member bench of Mr P Dinesha, Member ( Judicial ) observed that the granting of exemption for SSI unit is based on certain criteria of the particular claimant/unit and it does not depend on the business understanding, if any, of the said unit with any other person. Having obtained the SSI exemption, it was for the said unit to comply with the requirements of the applicable statutes including the Central Excise provisions insofar as the liability to duty of the product/s manufactured by it are concerned, and it is not the case of the Revenue that the said manufacturer is catering to the needs of the present appellant alone.
The CESTAT set aside the impugned order.
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