2017 (3) TMI 722 - AT - Central Excise

Imposition of penalty u/r 26 of the CER, 2002 - goods cleared clandestinely in the names of others - It is on record that goods cleared without payment of duty by Shri Ashok Jain in the name of all the three firms- M/s Cosmo, M/s Riemer and M/s Max have been sold through M/s BDFH and DD Brothers - Held that - Documents evidencing such sales recovered from the premises of M/s BDFH establish that Shri Darshan Lal through both M/s BDFH as well as DD brothers have abetted Shri Ashok Jain in these clandestine clearances and hence will be liable for penalty under Rule 26. For the above reasons, I find that the penalty imposed on BDFH by the adjudicating authority is fully justified and merits no interference. Penalty on Jainico traders, Proprietor Shri Sanjay Jain - Held that - Shri Sanjay Jain, Partner has admitted that they were purchasing goods from Shri Ashok Jain both with bills and without bills every month. Further, goods were seized from their premises which were cleared without payment of duty. In view of the above, the penalty imposed under Rule 26 is fully justified and merits no interference. Penalty on Shri Parvesh Jain, who was the Proprietor of M/s Max - Held that - The investigation has established that during the relevant period, goods worth nearly ₹ 5.5 crores attracting duty of ₹ 91 lakhs have been found to have been cleared to M/s BDFH without payment of duty from M/s Max. Shri Parvesh Jain also in his statement has admitted that he has managed the sales without invoices. Consequently, penalty is liable to be imposed on Shri Jain under Rule 26. Even though Shri Parvesh Jain has claimed that he was only a paid employee of Shri Ashok Jain, it is on record that he has been instrumental in getting goods manufactured in the premises of M/s Max and clearance of the same without payment of duty - Shri Parvesh Jain, Proprietor of the M/s Max will be liable for levy of penalty under Rule 26 of the Central Excise Rules. Penalties upheld - appeal dismissed - decided against appellant.

Summary

Issues:
1. Central Excise duty evasion through clandestine removal of goods.
2. Imposition of penalties under Rule 26 of the Central Excise Rules, 2002.
3. Challenges to penalties by M/s Babu Di Fancy Hatti, M/s Jainico Traders, and Shri Parvesh Jain.

Analysis:
1. The judgment addresses the appeals challenging the Order-in-Original passed by the Commissioner regarding Central Excise duty evasion. The investigation revealed that goods were clandestinely cleared without payment of duty by Shri Ashok Jain to various trading firms, including M/s Babu Di Fancy Hatti and M/s Jainico Traders. The evasion was orchestrated by Shri Ashok Jain through dummy units and depressed MRP values. The duty demand and penalties were confirmed in the impugned order.

2. The penalties imposed under Rule 26 were challenged by the appellants individually. M/s Babu Di Fancy Hatti contended that they believed the goods were duty-exempt, M/s Jainico Traders claimed innocence regarding duty evasion by manufacturers, and Shri Parvesh Jain denied abetting in clandestine clearances. The arguments focused on lack of knowledge or involvement in the evasion scheme.

3. The Tribunal analyzed each appellant's case separately. For M/s Babu Di Fancy Hatti, the penalty was upheld due to their involvement in abetting duty evasion. Similarly, Jainico Traders and Shri Parvesh Jain were found liable for penalties as they were linked to the clandestine clearance of goods without duty payment. Despite various arguments presented, the Tribunal upheld the penalties imposed on all three appellants under Rule 26 of the Central Excise Rules, 2002.

4. The judgment emphasized the evidence gathered during the investigation, including recovered documents and statements from involved parties. The penalties were justified based on the established links between the appellants and the duty evasion scheme. The Tribunal dismissed all three appeals, upholding the penalties imposed on M/s Babu Di Fancy Hatti, M/s Jainico Traders, and Shri Parvesh Jain for their roles in the Central Excise duty evasion scheme orchestrated by Shri Ashok Jain.