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2010 (9) TMI 74

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..... duty of Rs.2,87,27,466/- stands confirmed against the said appellant on the findings of clandestine removal during the period August 1992 to December 1995 along with imposition of penalty of identical amount under Section 11AC of the Central Excise Act, 1944 read with Rule 173Q1 of Central Excise Rules, 1944. In addition, penalties of Rs.30,00,000/- (Rupees Thirty Lakhs only) each stands imposed upon Shri Arvindkumar Ganeshmal Dugar and Shri Shreyaskumar Ganeshmal Dugar, Managing Director and Joint Managing Director of M/s. Shree Ganesh Knit (India) Ltd. Further penalty of Rs.30,00,000/- (Rupees Thirty Lakhs only) stands imposed on Shri Babulal Chimanlal Shah, Manager and Authorised Signatory of the other company. 2. As per facts on record M/s. Shree Ganesh Knit (India) Ltd. is engaged in the manufacturing/processing of textile cotton or manmade fabrics falling under Chapter Heading 52, 54 55 of the Central Excise Tariff Act, 1985. As a result of intelligence received by the Revenue, their factory was visited by the officers on 01.01.97, who conducted various checks and verifications. As a result of the stock of fabrics lying in the factory was found short than the recorded ba .....

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..... sor of M/s. Shree Ganesh Knit (India) Ltd., in his statement recorded on 02.01.97 was shown the papers recovered from the factory and admitted that the same were written in his hand writing and contained the actual quantity of the fabrics processed as per the details mentioned therein. Statement of Shri Dilipbhai Amrutlal Mewada, Dying and Finishing Master of the manufacturing unit was recorded on 02.01.97 who deposed that he was in-charge of washing department, the work for which was getting done on contract basis by M/s. Ramesh Washing Contractor. On being shown the contract bills raised by Shri Rameshbhai Babulal Marwadi, he admitted that his signatures are appearing on the said bills and after putting has signatures the same were forwarded to accounts department for payment purposes. He further agreed with the statement of bill-wise details of the work done by M/s. Ramesh Washing Contractor showing the various columns as bill number, date, amount of bill, amount received, amount deductible etc. and confirmed that the same have been received by the said washing contractor and put his signatures on these pages. The invoices of the said contractor were also accepted by him to be .....

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..... enty Seven Thousand Four Hundred and Sixty Six only) against them along with confirmation of interest, confiscation of land machinery etc. and imposition of penalty upon the said unit as also upon the other appellants in terms of the provisions of Rule 209A of the Central Excise Rules, 1944. The noticee also proposed confirmation of demand of duty of Rs.4,06,745/- in respect of shortages detected at the time of visit of the officers. The said show cause notice stands culminated into the impugned order passed by the Commissioner vide which he has confirmed the demands of duties and imposed penalties, as detailed in the first paragraph of the order. 9. Shri Willingdon Christian, learned advocate appearing for the appellant has placed written submissions on record in respect of M/s. Shree Ganesh Knit (India) Ltd., which are mainly on the ground that the entire case of the Revenue is based upon the recovery of documents from the premises of Shri Rameshbhai Babulal Marwadi, which is a third party and the allegations of clandestine removal cannot be based upon the same. Reliance in this regard placed upon various decisions of the Tribunal. He has also submitted that as Shri Rameshbha .....

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..... naging Director puts his initials on the same. Thereafter payments were made to Shri Rameshbhai Babulal Marwadi. As such it cannot be said that the Revenue s case is solely based upon the recovery of the documents from Shri Rameshbhai Babulal Marwadi s residence. The above facts also stand admitted by Shri Babulal Chimanlal Shah, Manager and Authorised Signatory of the company. 12. The above facts stand further corroborated by recovery of the said bills from the office premises of the company located in cloth market, Ahmedabad and with the statement of the Managing Director Shri Arvindkumar Ganeshmal Dugar and Shri Shreyaskumar Ganeshmal Dugar. Not only that the bill books recovered from the premises of Shri Rameshbhai Babulal Marwadi stand also admitted by Shri Vishnubhai Mohanbhai Prajapati having admitted that bill book No.12 belongs to his company M/s. Dipesh Finishing Contractor and reflects upon the bills raised by his company for carrying out various processes like printing, bleaching, dying etc. In fact we find that the Commissioner, in his impugned order has dealt with each and every submission of the appellant in detail. The fact of recovery of documents from the resi .....

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..... visions of Additional Duties of Excise (Goods of Special Importance) Act, 1957. The period involved is from August 1992 to December 1995. The provisions of the said Act did not contain any penal provisions during the relevant period upto May 1994, as held by the Hon ble Delhi High Court in the case of Pioneer Silk Mills Vs. UOI reported in 1995 (80) ELT 507 and subsequently confirmed by the Hon ble Supreme Court in the case of Collector of Central Excise, Ahmedabad Vs. Orient Fabrics Pvt. Ltd. reported in 2003 (158) ELT 545 (S.C.). It was held in the said decisions that there is no provision for penalty or confiscation under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Learned advocate submits that though the above plea was raised before the adjudicating authority, he has observed that since the provisions of the said Act were amended w.e.f. May 1994 and the show cause notice was issued on 30.07.97, when the amended provisions were in force, the decision of the Delhi High Court in the case of Pioneer Silk Mills will not have any applicability to the facts of the present case. Learned advocate draws our attention to the Hon ble Supreme Court s judgment in .....

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..... position he places reliance on the Tribunal s decision in the case of Atul Ltd. Vs. Commissioner of Central Excise, Valsad reported in 2005 (189) ELT 189 (Tri. Mumbai), in the case of Raj Petroleum Products Vs. CCE, Mumbai reported in 2005 (192) ELT 806 (Tri. Mumbai) as also on the Tribunal s decision in the case of Mahindra Ugine Steel Co. Ltd. Vs. CCE Pune reported in 2007 (80) RLT 55. 17. For better appreciation we reproduce the provisions of Rule 209A of the Central Excise Rules. Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. 18. As is clear from the above reading of Rule 209A, the same would get invoked if any person is charged with the dealing of the excisable goods in any manner enumerated therein with a knowledge or with a reason to believe that the goods dealt with by him are liable for confiscation. As such t .....

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..... daily reports of the various processes done by the factory was being received by him and after seeing the same he was returning them. Further the statements of Shri Rameshbhai Babulal Marwadi, Shri Dilipbhai Amrutlal Mewada, Dying Finishing Master are to the effect that the said bills etc. were being placed before Shri Shreyaskumar Ganeshmal Dugar and he was verifying all the reports including the production report prepared and submitted by Shri Dilipbhai Amrutlal Mewada. On the above basis Commissioner has come to a clear finding that he was in active knowledge and was in fact Master minding the manufacture/processing of the fabrics and removal of the same in clandestine manner. As such it is evident that he was in the active knowledge and was supervising the entire dealings with regard to the clandestine manufacture and removal. He is admittedly liable to penalty under Rule 209A of the Central Excise Rules. 21. Further on going through the decisions of the Tribunal relied upon by the learned advocate, we find that either there was no finding of fact as regards knowledge of clandestine removal on the part of the Managing Directors or the allegations of clandestine removal were .....

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