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2010 (8) TMI 53 - AT - Central ExcisePenalty Clandestine removal Pan Masala and Gutkha manufactured and cleared without payent of duty. Statement of accountant of raw material supplier that appellants were actual owner of such supplier firm, not retracted and the same corroborated by documentary evidence. Invoices with address of appellants reached raw material supplier proving link between such supplier and appellant. Gold transaction by members of appellants family facie amounting to money laundering. Held that duty demand of ₹ 33.20 crore confirmed. Penalty totaling ₹ 67 crore higher and reduced to ₹ 5 crore each on all three appellant.
Issues Involved:
1. Whether the appellants (Shri D.D. Garg, Shri R.K. Garg, and Shri S.K. Garg) were the actual persons behind AJP and its operations. 2. Whether penalties are imposable on the appellants under Rule 209 of Central Excise Rules, 1944/Rule 25 of Central Excise Rules, 2001/2002, as well as under Rule 209A of Central Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/2002. Issue-wise Detailed Analysis: 1. Whether the appellants were the actual persons behind AJP and its operations: The Tribunal found substantial evidence indicating that the appellants were indeed the persons behind AJP and its operations. Key points include: - The proprietor of AJP, Shri M.K. Gautam, was a pujari in the house of Shri R.K. Garg on monthly wages of Rs. 2,000/- to Rs. 3,000/-, and had no knowledge of the intricacies of manufacturing and marketing Gutka and Pan Masala. - Statements from Shri M.K. Gautam dated 26-4-02, 4-11-03, and 12-3-04, where he repeatedly stated that he was only a frontman, and the real owners were the Gargs. - Evidence from Shri Dev Kumar Sharma, Accountant of ST, stating that the Gargs were the actual owners of ST. - Documents signed by Shri Vinod Bansal, Manager and Authorized Signatory of AJP, as Authorized Signatory of ST, indicating control by the Gargs. - The Tribunal noted that the standard of proof in departmental proceedings is the preponderance of probability, and the evidence presented made the Department's case most probable. 2. Whether penalties are imposable on the appellants: Given the finding that the appellants were the actual persons behind AJP and ST, the Tribunal held that penalties were indeed imposable under Rule 209A of Central Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/2002. Key points include: - The Tribunal cited the Hon'ble Supreme Court's judgment in Commissioner of Police, New Delhi v. Narender Singh, which established that the standard of proof in departmental proceedings is preponderance of probability. - The Tribunal also referenced the Supreme Court's judgment in Collector of Customs, Madras v. D. Bhoormull, which held that the burden of proof in departmental proceedings does not require mathematical precision but should establish a degree of probability that a prudent man may believe in the existence of the fact in issue. - The Tribunal found that the evidence, including the statements of Shri M.K. Gautam and Shri Dev Kumar Sharma, the signing of documents by Shri Vinod Bansal, and the address discrepancies, sufficiently demonstrated the appellants' involvement. - The Tribunal reduced the penalties from Rs. 25 crores, Rs. 21 crores, and Rs. 21 crores to Rs. 5 crores each for Shri D.D. Garg, Shri R.K. Garg, and Shri S.K. Garg, respectively, considering the total penalty imposed was disproportionately high compared to the duty demand. Conclusion: The Tribunal upheld the duty demand of Rs. 33.20 crores against AJP and confirmed that the appellants were the actual persons behind AJP and ST. Penalties were imposed on the appellants under Rule 209A of Central Excise Rules, 1944/Rule 26 of Central Excise Rules, 2001/2002, but were reduced to Rs. 5 crores each to meet the ends of justice. The appeals were disposed of accordingly.
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