9911796707
TMI Blog2009 (7) TMI 341X X X X Extracts X X X X X X X X Extracts X X X X ..... the person chargeable with duty - The next point is whether duty can be demanded under Section 11A – Held that Section 11A covers any type of short levy or non-levy for the purpose of recovery, we hold that Section 11A has been correctly applied. Once recovery is upheld under Section 11A, interest shall also be payable as per the provisions of Section 11AB - Held that penalty cannot be imposed on deceased person and if imposed cannot be recovered from legal heirs – no penalty imposable on legal heirs - suppression cannot be alleged, so demand not sustainable on limitation – Regarding personal penalty, no case that V.L. Chalke not aware that goods liable to confiscation, so penalty is imposable – penalty also imposable u/r 14A for diversion of goods - E/1240-1244/2006 - A/1322-1326/2009-WZB/AHD - Dated:- 2-7-2009 - S/Shri B.S.V. Murthy, Member (T) and Ashok Jindal, Member (J) S/Shri Prakash Shah and J.C. Patel, Advocates, for the Appellant. Shri K.M. Mondal, Spl. Counsel, for the Respondent. [Order per: B.S.V. Murthy, Member (T)]. - On the basis of intelligence collected by the officers of the Director General of Revenue Intelligence, Ahmedabad Zonal Unit that M/s. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with Shri V.L. Chalke and Shri K.K. Agarwal (present appellants) and also with the officials/ Directors/Partners/Proprietors of the sixteen supplier companies and some other concerned persons, the following facts emerged :- (a) During 1995-96 and 1997-98 period allegedly a total of sixty-one block transfers had been issued on behalf of noticee GCI, eighty-one block transfers had been issued on behalf of GI by various authorities viz. Maritime Commissioner of Central Excise, Mumbai, Assistant Commissioner of Central Excise, Division-IV, Vadodara for procuring various chemicals free of duty for export from sixteen suppliers and noticee GCI and GI, claiming to be merchant-exporters had cleared the goods from sixteen suppliers without payment of duty against these block transfers under the cover of AR4s for the purpose of export. GCI and GI subsequently also gave sixteen supplier manufacturers, the letters accepting the proof of export purported to have been issued by the Maritime Commissioner of Central Excise, Mumbai and Assistant Commissioner, Central Excise and Customs, Div-IV, Vadodara. The block transfers have been issued against the following bonds shown to have been executed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng with interest on duty, if any, is recoverable from and penalty if any imposed on GCI and GI is recoverable from Shri K.K. Agarwal (hereinafter referred to as K.K.A.) (ii) Whether Central Excise duty amounting to Rs. 4,08,04,652/-chargeable on the goods cleared from the sixteen supplier manufacturers against the fabricated block transfers produced in the name of GCI, GI and NRL as the merchant-exporter as detailed in Annexures A, B and C to the show cause notice is chargeable from GCI, GI and NRL under proviso to Section 11A(1) of the Central Excise Act, 1944 read with Rules 13 and 14A of the Central Excise Rules, 1944 and whether in addition to duty, interest on this duty at the applicable rate as per the provisions of Section 11AB of the Central Excise Act, 1944 is also recoverable. (iii) Whether GCI, GI and NRL are liable for penalty under Section 11AC of the Central Excise Act, 1944? (iv) Whether noticee Nos. 6 to 21 (sixteen supplier manufacturers) are also liable for penalty under Section 11AC of the Central Excise Rules, 1944 (Rules for short) and whether their land, building, plant, machinery, conveyance etc. are liable for confiscation under Rule 173Q(2) of the Rul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anding duty from the M/s. GCI and GI under Section 11A(1) of the Act, 1944, is entirely without jurisdiction. (c) Assuming but without admitting that the appellant is the proprietor of the said M/s. GCI and GI, it is an admitted fact that the said two firms were not the manufacturers and hence are not the persons liable to pay Central Excise duty and therefore, invocation of Section of Section 11A(1) against them is without jurisdiction and consequently the imposition of penalty under Section 11AC and interest under Section 11AB of the Act, is not sustainable against the two firms. (d) Rule 7 of the Rules, in force at the relevant time, provides that the duty is payable, inter alia, by the manufacturer and therefore, in the present case any demand under Section 11A can be only against the manufacturers and not against the appellant. (e) It appears from the order of the Commissioner of Central Excise, that he has demanded duty from the said two firms on the footing that the said two firms gave bond under Rule 14 of the Rules and by virtue thereof the duty is recoverable from the said two firms. (f) It is clearly alleged in paragraphs 20.7 and 20.8 of the show cause notice th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner of Central Excise, Vadodara has no jurisdiction to demand duty. (See Sarju Prasad - Supreme Court judgment). (n) It is submitted that the DGAE had no authority to issue the show cause notice and the Commissioner of Central Excise, Baroda has no power to adjudicate the same. (o) It is further submitted that the impugned order having proceeded on the basis that the appellant Mr. K.K. Agarwal is the proprietor of the said two firms, no separate and independent penalty could have been imposed on him in addition to the penalties imposed on the said two firms. (p) Without prejudice to the aforesaid and assuming but without admitting that the provisions of Sections 11AB and 11AC are attracted, it cannot be invoked in respect of the clearances affected prior to 28th September, 1996. (q) The Hon'ble Supreme Court of India in the case of Commissioner v. Elgi Equipments Ltd. reported in 2001 (128) E.L.T. 52 (Supreme Court) was pleased to hold as under:- Having heard learned Attorney General, we are in entire agreement with the view expressed by the High Court that Section 11AC of the Central Excise Act, 1944, is prospective in operation and the illegality committed pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44 does not come into play. (w) In any event, in view of the finding of the Commissioner of Central Excise, that the Respondents No. 6 to 21 (supplier) are not liable to penalty and the land, building, plant and machinery belonging to them are not liable to confiscation under Rule 173Q(2), the goods cleared by them cannot be made liable for confiscation under Rule 173Q(1), as clauses (a) to (d) of Rule 173Q(1) are not being contravened by them. (x) No penalty under Section 11AC of the Act, should have been imposed on the said two firms by reason of the fact that the penalty under Section 11AC of the Act, can be imposed only on the manufacturers and not on any other person. Similarly interest under Section 11AB of the Act cannot be demanded from the persons other than the manufacturers and admittedly the said two firms not being the manufacturers of the said goods, on which allegedly the duty is short paid, the imposition of penalty under Section 11AC of the Act and recovery of interest under Section 11AB of the Act, is entirely untenable. In any event, the respondent has no jurisdiction to adjudicate and pass impugned order. 8. In addition to the above points, he also submitt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only of Rs. 10 Lakhs. On appeal and remand resulting in the de novo order, penalty has been increased to Rs. 50 Lakhs. This would mean that after filing appeal, the appellant has been put in a worse position than he was earlier. He also submitted that no evidence has been put forth by the Revenue to show that Shri V.L. Chalke had received monetary benefits for having done forgery etc. and quantum of monetary benefit has also not been found out. In the absence of his receiving any monetary benefits, imposition of penalty of Rs. 10 Lakh on an ordinary clerk receiving salary of Rs. 5,000/- is not reasonable. He requests that penalty may be reduced as an alternative submission. 10. Shri K.M. Mondal, Special Counsel on behalf of the Revenue submitted the following points:- (i) Since Rule 14A of the 'Rules' is not self contained and has no mechanism for recovery/refund if duties short paid or payable, short levy is covered by Section 11A of the Act only. Rule just provides that merchant-exporter is liable to pay duty with interest but not the modalities. (ii) The appellant have argued that Shri P.N. Purohit could not be traced by the Revenue and since he has not been traced, no rec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this aspect for a considerable time and in the written submission also they had included this point when they knew fully well that an order had been passed. (iv) As regards the contention that Commissioner had travelled beyond the show cause notice in confirming the demand for duty against K.K.A., he submitted that it is well settled law that proprietor and proprietary firm are not separable from each other; that if penalty is imposed on firm, separate penalty cannot be imposed on the proprietor; further, the show cause notice has clearly stated that K.K.A. was benamidar proprietor of GCI and GI. In view of the fact that duty demand on the proprietary firm is nothing but a demand from the proprietor and if the Commissioner does not identify who is the real proprietor on the basis of investigation made and allegations in the show cause notice, and confirms duty demand against the firms, the order would be un-enforceable. On the one hand Shri P.N. Purohit could not be traced either by the Revenue or by the party, on the other hand Shri V.N. Chalke, is only an employee and is not the owner. Majority of suppliers have identified Shri K.K. Agarwal as proprietor. Further under Section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are liable to pay duty under the provision of Rule 14A of the Rules in the capacity of merchant-manufacturer. As already submitted by him, if the duty becomes payable under Rule 14A of the Rules, the procedure for recovery under Section 11A of the Act is required to be followed. (vi) As regards the claim of NRL that no duty can be demanded from them, he submits that it is on record that block transfers produced by NRL to the suppliers which were in turn used to clear the goods without payment of duty, clearly show the fraudulent activity on behalf of NRL and therefore they are liable to pay duty and the arguments advanced in respect of GCI and GI regarding bond executed before Maritime Collector also apply in this case. 11. We have considered the submissions made by both the sides and perused the records. We find that Commissioner has confirmed five issues for consideration, out of which only four issues are required to be decided by us since liability of manufacturers for penalty and confiscation of land, building, machinery and plants etc. are not upheld by the Commissioner. 12. The first issue to be decided is as to whether KKA is the real proprietor and the person control ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... P.N. Purohit of the two firms namely, GCI and GI for the following reasons :- (I) Shri K.K.A. himself in his statements recorded over a period of about 7 months during 1997-98 has clearly admitted that he had floated GCI and GI; both the firms are under his control and supervision; he has full controlling interest in these firms; that it was he who purchased goods as merchant-exporter and sold them in the local market; that Shri V.L. Chalke and Shri P.N. Purohit are his employees and under his instructions Shri Chalke had fabricated block transfer and other documents for facilitating purchases of goods for export and for local diversion. (ii) Similar statements were recorded from Shri V.L. Chalke during the period of 7 months and admittedly these statements were not retracted by him but when we notice that Shri Chalke had fled to Nepal for about 3-4 months as per his own statements; the details given by him could not have been recorded by the officers on their own; the details of bank accounts opened in his name and transactions that have been made running into crores, supported by records of the bank show his involvement; further, he also admitted forgery and gave samples of h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... est. 15. Regarding the liability of Shri K.K.A. (In view of the fact that we have already held that Shri K.K.A. is the owner and only his name would be mentioned hereafter), the main argument was that no bond was executed before the Maritime Commissioner, therefore there is no basis for demanding duty from Shri K.K.A. as a merchant-exporter. It was also argued that the duty can be demanded from the merchant-exporter only when the bond has been executed. We do not find any force in the argument advanced by ld. Advocate in this regard. Having declared to the world at large that they are the merchant-exporters and having obtained goods duty free by forged block transfer and having submitted fake proof of export in respect of consignments received from 16 suppliers, the appellants cannot be allowed to go back and allowed to claim that they are not merchant-exporters and go scot-free. This would amount to allowing appellant to claim the benefit of their own fraudulent activities which is totally against he law as well as public policy. Having claimed that they are merchant-exports and in view of the evidences available on record which show that appellants received the goods for export ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndent who could not have issued such block transfers at all as per the circular, the show cause notice in respect of supplies made against the block transfers should have been issued to the manufacturer within one year as specified under Section 11A and therefore, the show cause notice is clearly time-barred. We find considerable force in this argument. As rightly submitted by the ld. Advocate circular clearly mentions that it is the Maritime Collector who has to issue block transfers. Under Para 4.5 of the circular, no where there is a provision for block transfer in respect of bonds executed before the Assistant Commissioner. Further as per the circular B-l bond is required to be executed before the Assistant Commissioner under whose jurisdiction excisable goods intended for export are manufactured. In one of the cases we have found that the unit which supplied goods was situated outside the jurisdiction of the Assistant Commissioner before whom the bond had been executed and the block transfer issued by Superintendent was produced. If the Superintendent incharge of the factory which supplied the goods was aware of the circular and had understood it, as soon as the block transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anama dated 5-12-1997, which are not relied upon for the issuance of Show cause notice No. DEAR/BZU/205/12(4)/1/2000 dated 2-2-2000 issued by the Addl. Director General, Directorate General of Anti Evasion, Mumbai. I have also received a Monitor and related articles along with the Computer Systems. I hereby acknowledge that after receipt of the above articles/documents/ records, no documents/records/articles belonging to me or any Companies viz. Gujchem International, Gujarat Impex, Nandeshwari Rasayanee Ltd,. Sreeji Colourchem Industries, Coal Agro Products, Ganesh Dychem and others which are owned by me or in which I am Director or partner are retained by D.R.I., Ahmedabad which are not relied upon for the issuance of show cause notice dated 2-2-2000 mentioned above. Ahmedabad Dated 10-5-2000 Signed by (K.K. Agarwal) (Prop. Gujchem Int., Gujarat Impex, Director. NRL, Sreeji Colourchem Ind. and Himland Silk Mills) It is seen from the receipt that Shri K.K.A. himself stated that there are no documents lying with the D.R.I., Ahmedabad which are not relied upon for issuance of show cause notice. Acknowledgements given in September, 2005 and receipt issued on 2-5-2000 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been rejected by the Commissioner and the statements of various suppliers. Further, it has been established from bank accounts which were opened in the name of Shri V.L. Chalke but were operated by Shri K.K.A. and other than the blank denials and retractions, Shri V.L. Chalke has not been able to show any evidence to prove that he had resourses to have accounts in which transactions running into crores of rupees were made. We do not find any force in the arguments of the ld. Advocate that Revenue should have got forensic evidence regarding forgery by Shri V.L. Chalke. The documentary evidence, the statement of Shri Chalke and Statements of K.K.A. are sufficient to shift the burden to prove that he had not committed forgery to Shri V.L. Chalke and he has not discharged the same. The ld. Advocate stated that the decision of the Air Carrying Corporation P. Ltd. - 2008 (229) E.L.T. 80 (Tri. - Mumbai) in support of his contention that in the absence of finding that any goods are liable to confiscation, no penalty can be imposed under Rule 26 of Central Excise Rules, 2002 or Rule 209A of Rules (both are same), for ready reference we reproduce the relevant portion of the Rule as under :- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en imposed on Shri V.L. Chalke in the remand proceedings, whereas in the Order which was challenged and resulted in remand proceedings, penalty imposed was only Rs. 10 Lakhs. He submits that it is well settled law that a person cannot be put into bigger jeopardy after he has gone in appeal against the order and appeal has resulted in remand proceedings. We find considerable force in the arguments. Further, he also submitted that there is no evidence to show that he has greatly benefited from the mis-deeds he committed. Admittedly, he was an employee and that too a clerk working for his livelihood and having a small salary, it is impossible for him to pay such a huge amount of penalty. In view of the fact that he was merely an employee and he had done everything under the directions of Shri K.K.A. and also in view of the fact that there is no evidence to show the quantum of monetary benefit received by Shri V.L. Chalke by undertaking such activities, we are inclined to consider the request for reduction of penalty amount and accordingly reduce the same to Rs. One Lakh only. Several judgments were cited by both the sides but only judgments which were applicable and relevant to the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
