2015 (10) TMI 2143 - AT - Central Excise

Clandestine removal of goods - Penalty for abetment - Penalty under Rule 26 - Held that - imposition of penalty under Rule 26 has been decided based upon the evidences available and the sufficiency of such evidences for imposition of penalty under Rule 26. - Penalty Imposed on 31 applicants is decided on the basis of evidences. - Appeal disposed of.

Summary

Issues Involved:

1. Imposition of penalty under Rule 26 of the Central Excise Rules, 2002/2004.
2. Receipt and processing of grey fabrics.
3. Utilization of CENVAT credit.
4. Manufacturing and export of processed fabrics.
5. Validity of transport and payment documentation.
6. Knowledge of liability to confiscation.

Issue-wise Detailed Analysis:

1. Imposition of Penalty under Rule 26:
All 31 appeals challenge the imposition of penalties under Rule 26 of the Central Excise Rules, 2002/2004. The penalties were imposed based on allegations that the appellants either directly or indirectly dealt with goods that were liable to confiscation.

2. Receipt and Processing of Grey Fabrics:
The appellants were categorized into two groups: processors and merchant exporters. The processors purportedly received grey fabrics and availed CENVAT credit on corresponding invoices, processed the fabrics, and either exported them or handed them over to merchant exporters who then exported them. Merchant exporters purportedly received grey fabrics along with duty-paying documents, got them processed, and exported the processed fabrics under a rebate claim.

3. Utilization of CENVAT Credit:
The Revenue's case was that two firms, M/s. Shreeman Textiles and M/s. Sajjan Textiles, availed credit on duty-paying documents without receiving any yarn. The yarn was shown to be sent to job-workers who denied doing any job-work, indicating that no yarn was received and no grey fabrics were manufactured. The transactions were only on paper, aiming to encash duty in the form of rebates.

4. Manufacturing and Export of Processed Fabrics:
Investigations revealed that M/s. Shreeman Textiles and M/s. Sajjan Textiles did not manufacture any grey fabrics as claimed. The grey fabrics were shown to be manufactured by non-existent job-workers, and the sale transactions were only on paper to facilitate rebate claims.

5. Validity of Transport and Payment Documentation:
The investigations showed that the transport and payment documents provided by the appellants were not adequately verified by the Revenue. For instance, in the case of M/s. Weizmann Ltd., the appellant provided details of the transport company and payment through cheques, but no investigation was done on these aspects.

6. Knowledge of Liability to Confiscation:
The Tribunal examined whether the appellants had knowledge that the goods received by them were liable to confiscation. In most cases, the Tribunal found that there was no evidence indicating that the appellants had such knowledge, and hence, penalties under Rule 26 could not be imposed.

Separate Judgments for Each Appellant:

Appellant No.1: M/s Weizmann Ltd.
The penalty was set aside as there was no evidence indicating that the appellant had knowledge that the goods received were liable to confiscation. The appeal was allowed.

Appellant No.2: M/s Balkrishna Textile Pvt. Ltd.
The penalty was set aside due to lack of investigation into the merchant exporters and transportation details. The appeal was allowed.

Appellant No.3: M/s Diamond Textile Mills Pvt. Ltd.
The penalty was set aside as there were no specific details or investigations against the appellant. The appeal was allowed.

Appellant No.4: M/s Maharashtra Dyeing & Printing Works
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.5: M/s Kunal Textiles
The penalty was set aside due to lack of investigation into the transportation and the merchant exporter. The appeal was allowed.

Appellant No.6: M/s Rameshwar Textile Mills Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.7: M/s Sharda Synthetic Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.8: M/s Kagzi Brothers Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.9: M/s Om Fabrics
The penalty was set aside as there was no role of the appellant in the fraud. The appeal was allowed.

Appellant No.10: M/s Nahata Fabrics Ltd.
The penalty was reduced to Rs. 50,000 due to lack of investigation at the transporter's end. The appeal was partly allowed.

Appellant No.11: M/s Sankeshwar Fabrics Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.12: M/s Blue Chip Fabrics Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.13: M/s Ronak Dyeing Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.14: M/s S.V. Business Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.15: M/s Maya Creationz
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.16: M/s Kohinoor Dyeing & Printing Works
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.17: M/s Srinathji Yamunaji Enterprises
The penalty was set aside due to lack of investigation into the procurement and transportation of goods. The appeal was allowed.

Appellant No.18: M/s G.Tex Inc.
The penalty was reduced to Rs. 1 lakh due to lack of clear evidence on the value and duty involved. The appeal was partly allowed.

Appellant No.19: M/s Vijay Fabrics Pvt. Ltd.
The penalty was reduced to Rs. 1 lakh due to lack of clear evidence on the value and duty involved. The appeal was partly allowed.

Appellant No.20: M/s Mitesh Brothers
The penalty was reduced to Rs. 1 lakh due to lack of clear evidence on the value and duty involved. The appeal was partly allowed.

Appellant No.21: M/s Filgood Exim Pvt. Ltd.
The penalty was reduced to Rs. 1.5 lakh due to clear evidence that the appellant purchased invoices and not grey fabrics. The appeal was partly allowed.

Appellant No.22: M/s Dimond Impex
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.23: M/s Navkar Exports
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.24: M/s Gulabdas & Company
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.25: M/s Parikh Impex Pvt. Ltd.
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.26: M/s Venus International
The penalty was set aside as the case was not a duplication of proceedings. The appeal was allowed.

Appellant No.27: M/s Atlas Export (India)
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Appellant No.28: M/s Angoora International
The penalty was reduced to Rs. 1 lakh due to lack of clear evidence on the quantity and duty involved. The appeal was partly allowed.

Appellant No.29: M/s Valiant Glass Works Pvt. Ltd.
The penalty was set aside due to lack of investigation and evidence. The appeal was allowed.

Appellant No.30: M/s MRK Impex
The penalty was reduced to Rs. 1 lakh due to lack of clear evidence on the value and duty involved. The appeal was partly allowed.

Appellant No.31: M/s K.S. International
The penalty was set aside as there was no evidence indicating knowledge of liability to confiscation. The appeal was allowed.

Conclusion:
The Tribunal disposed of the appeals based on the evidence available and the sufficiency of such evidence for the imposition of penalties under Rule 26. The penalties were set aside or reduced in most cases due to lack of evidence indicating knowledge of liability to confiscation.