2015 (9) TMI 680 - AT - Central Excise

Levy of penalty on Broker for abetment - Rebate of duty - export of goods under Rule 18 - Revenue contended that the rebate claims were filed by submitting false, fabricated and forged documents with an intention to fraudulently claim rebate of duty and to defraud the Government. - appellant contended that It is also submitted that they are only the commission agents. It is also argued that there is no documentary evidence on record to substantiate that the appellants are involved in the fraudulent rebate claim. - Held that - none of the conditions precedent as prescribed under Rule 26 of Central Excise Rules are satisfied for imposition of penalty. - Thus in absence of satisfaction of the condition precedent, I find that learned Commissioner is in error in imposing penalty under Rule 26 of Central Excise Rules. It have nowhere been found that the appellants have acquired possession or handled any excisable goods in any manner, rendering the goods liable to confiscation. The impugned order against these appellants is set aside. The amount deposited during investigation or pendency of appeal should be refunded forthwith, with interest as per Rules, within a period of 45 days from the date of receipt of a copy of this order.

Summary

Issues Involved:
1. Legitimacy of rebate claims filed by three firms.
2. Investigation into the fictitious nature of the firms and their addresses.
3. Financial transactions and money trail involving M/s Shreeji Traders.
4. Statements and involvement of various individuals in the fraudulent activities.
5. Imposition of penalties under Rule 26 and Rule 27 of Central Excise Rules, 2002.
6. Timeliness and validity of the show-cause notice.

Issue-wise Detailed Analysis:

1. Legitimacy of Rebate Claims:
The case involves M/s Uday Chemexpo, M/s Vighnesh Chemicals, and M/s Yogendra Chemical Industries, who claimed rebates of Central Excise duty from the Office of Maritime Commissioner, Raigad, under Rule 18 of Central Excise (No.2) Rules, 2001 & Central Excise Rules, 2002. These claims were sanctioned and paid during April 2004. However, during post-sanction verification, it was found that these firms were non-existent and their addresses were fictitious.

2. Investigation into Fictitious Firms and Addresses:
The investigation revealed that the addresses provided by the firms were either non-existent or belonged to other entities. For instance, the plot where M/s Vignesh Chemicals was supposedly located was owned by M/s Gajanan Industries, and the plots for M/s Yogendra Chemical Industries and M/s Uday Chemexpo were never allotted as there were only 206 plots in the Industrial Area.

3. Financial Transactions and Money Trail:
The investigation into the financial transactions led to M/s Shreeji Traders, whose proprietor, Shri Hemant Patel, admitted that the firm was involved in issuing bogus sales bills without physical supply of goods. The transactions were facilitated through brokers and involved depositing amounts into bank accounts and subsequently withdrawing cash after deducting a commission. The money trail showed that amounts were deposited into the account of M/s Shreeji Traders from the accounts of the three fictitious firms.

4. Statements and Involvement of Individuals:
Statements from Shri Hemant Patel, Shri Haresh Gordia, and Shri Manohar Vasudev Date indicated their involvement in facilitating the fraudulent rebate claims. Shri Hemant Patel admitted to issuing fictitious sales bills and handling cash transactions. Shri Haresh Gordia and Shri Manohar Vasudev Date, both brokers, admitted to providing details and facilitating these transactions.

5. Imposition of Penalties:
The main contention was whether penalties under Rule 26 and Rule 27 of Central Excise Rules, 2002, were applicable. The conditions under Rule 26 require that an individual must have acquired possession or dealt with excisable goods liable to confiscation. The tribunal found that none of the appellants had acquired possession or handled any excisable goods, thus the conditions for imposing penalties were not satisfied.

6. Timeliness and Validity of Show-Cause Notice:
The appellants argued that the show-cause notice was time-barred and that they were not registered with the Central Excise Department. The tribunal considered these arguments and found that the penalties imposed by the lower adjudicating authority were not justified.

Conclusion:
The tribunal allowed the appeals, setting aside the impugned order against the appellants. It ordered the refund of the amounts deposited during the investigation or pendency of the appeal, with interest, within 45 days from the date of receipt of the order. The decision was pronounced in open court.