Penalty imposed for Abetting Clearance of Goods: CESTAT reduces Penalty as Main notice Settled Dispute under SVLDR Scheme [Read Order]

The Chennai bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) reduced the Penalty imposed for abetting clearance of goods as the main notice settled dispute under Sabha Vishwas (Legacy Dispute Resolution) Scheme, 2019 (SVLDR Scheme). Four R Associates, U and S Solutions and Southern Spares and Services, the appellants are sister concerns of M/s. Micro Spares who is engaged in the manufacture and trading of engineering goods viz. various parts and spares, pipes, accessories etc. which are used in thermal power stations. Based on intelligence gathered by DGCEI, it appeared that the aforesaid units were closely interconnected, belonged to members of the same family and that M/s. Micro Spares was evading central excise duty by not disclosing the actual and complete value of clearances and had wrongly claimed SSI exemption despite exceeding the exemption limit of annual clearances. It appeared that the appellants herein did not have manufacturing facilities and had abetted with M/s. Micro Spares to show separate clearances of goods on paper as units having a separate legal entity. On verification of documents of the appellants, the department issued a Show Cause Notice to the appellants proposing to club all their clearances for demanding duty. After due process of law, the adjudicating authority confirmed the proposals in the Show Cause Notice and imposed a penalty of Rs.10 lakhs each on the appellants herein under Rule 25 of Central Excise Rules, 2002 for their act of abetting with M/s. Micro Spares in suppressing the value of clearances. Shri M. Kannan, counsel for the appellants submitted that there was no financial flow back of funds from the appellants to M/s. Micro Spares and there was no evidence produced by Revenue of any such financial flowback of funds from M/s. Micro Spares to the appellants. It was submitted that separate and independent identities and the existence of the appellants are proved as manufacturers. Hence the findings in the impugned order are not sustainable in the absence of independent evidence that all the goods cleared by the appellants were manufactured by M/s. Micro Spares. Without prejudice to the above submissions, he submitted that the main appellant M/s. Micro Spares had already availed the benefit of the SVLDRS Scheme and the discharge certificate has been issued to them. The appellants however were under bona fide belief that the said discharge certificate shall suffice for them as well. If the appellants had filed declarations, the penalty imposed on them would have been waived/settled under the Sabha Vishwas Scheme. Shri R. Rajaraman supported the findings in the impugned order. It was argued that the main noticee M/s. Micro Spares has already settled the matter under the SVLDR Scheme and was issued Form SVLDRS – IV dated 15.6.2020 (discharge certificate for full and final settlement of tax dues). Based on the said certificate, the appeal filed by M/s. Micro Spares was dismissed as settled under the SVLDR Scheme. “Since the main noticee has settled the dispute under the SVLDRS Scheme and the issue cannot now be re-opened and examined on merits.”, the Tribunal viewed. Further, the co-noticees who were subjected to penalties only, have not filed a declaration under the SVLDRS Scheme before the scheme’s closure. Considering the facts and circumstances of the cases, the discharge given to the main notice and the clarification given by CBIC regarding co-notices under the SVLDR Scheme, 2019, the single member bench of Shri M. Ajit Kumar, Member (Technical) reduced the penalty to Rs.50,000/- (Rupees fifty thousand) each only. Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates

Penalty imposed for Abetting Clearance of Goods: CESTAT reduces Penalty as Main notice Settled Dispute under SVLDR Scheme [Read Order]

Your free access to Taxscan has Expired

To read the article, get a premium account.

Taxscan Premium

Topics