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TMI Blog1997 (10) TMI 258X X X X Extracts X X X X X X X X Extracts X X X X ..... the credit reversed by them should be deemed to be final. This unconditional admission is at variance with their earlier conditional reversal of Modvat credit. The above statement attributed to the Director of the Noticees has not been disputed at any point of time during further proceeding of the case. The Noticees, thus, are convinced about the fictitious nature of the documents. In the show cause notice sufficient evidence has been adduced to prove that the documents are not genuine. It is accordingly held that the relevant documents are not genuine and Modvat credit could not have been taken on their strength. The Noticees have, therefore, correctly reversed the credit. The Director of the Noticees has admitted in his statement dated 18-12-1990 that they are not aware if M/s. Balwinder Steel Corporation is a partnership or proprietary firm or the cheques were handed over to the partner or proprietor of the firm. He has given the name of one broker as Bittu and the cheques for the payment of the goods was given to employee of the firm. In their statements Ashish Gupta and Y.P. Aggrawal have admitted that the gate passes were got printed by them and rubber stamps of the Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (BED Rs. 4,01,821.00 + SED Rs. 20,080.55) wrongly taken by the Noticees and subsequently reversed, be recovered from them under Rule 57-I of the Central Excise Rules, 1944. I also impose a personal penalty of Rs. 1,05,000/- (Rs. one lakh and five thousand only) on the Noticees under Rule 173Q(1)(bb) of the Central Excise Rules, 1944. This Order is issued without prejudice to any other action of which the Noticees may be liable under the Central Excises and Salt Act, 1944 or any other law for the time being in force." 2. Being aggrieved by this Order, the appellants have filed the present appeal before us. 3. The facts of the case are that the appellants are manufacturers of steel ingots. They had been availing Modvat credit on iron and steel scrap purchased from the market for use in the steel ingots on the strength of Central Excise duty paying documents issued/endorsed in their favour. Verification of gate passes on which the appellants had taken the Modvat credit was undertaken to ascertain whether the Modvat credit has rightly been taken. Out of the 9 gate passes, 4 gate passes were purported to be issued by M/s. Hind Auto Clutches and other 5 gate passes by M/s. Laxmi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d ever collected the cheques or what was the constitution of he firm; that he never doubted the gate passes were fake; that the supplies against the bills were F.O.R. 4. Shri Subhas Bansal, Director of the appellants firm in his statement recorded on 11-8-1993 stated that the Modvat credit amounting to Rs. 4,21,901.55 was reversed by them; that it should be treated as final reversal/debit and they would not seek refund/recredit of this amount because on enquiry conducted by the department as well as by the Noticees themselves in the matter had revealed that all the 41 gate passes against which M/s. Balwinder Steel Corporation had sold scrap to them and against which they had taken Modvat credit were fake/fictitious documents. 5. The department on further investigations found that these 3 firms namely M/s. Balwinder Steel Corporation, M/s. Sonu Iron Store and M/s. Dee Kay Steel Corporation were non-existent and fake; that this was found on enquiries conducted with the Sales Tax Authorities. The statement of Shri Ashish Gupta was recorded on 24-1-1991, 25-1-1991 and 29-2-1991. In his statements he admitted that he along with Shri Yash Pal Aggrawal was running three fake firms in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re also conducted from M/s. Hind Auto Clutches and M/s. Laxmi Manufacturers; that on being shown original copies of 18 fake gate passes (out of above 41 fake gate passes) purportedly issued by M/s. Hind Auto Clutches, Shri H.R. Sethi, General Manager stated that they had not issued those gate passes; that they had not made any sale of M.S. scrap to M/s. Balwinder Steel Corporation; that they deal with only M/s. H.M.T. Pinjor and M/s. Swaraj Mazda Limited. 8. Shri Ravinder Kumar, Managing Director of M/s. Laxmi Manufacturers (P) Ltd., in his statement stated that on being shown 23 gate passes purportedly issued by M/s. Laxmi Manufacturers (P) Ltd. that their firm had no dealing with M/s. Balwinder Steel Corporation; that they were not aware of existence of any such firm; that the gate passes were not issued by their firm. 9. Shri Gurbax Singh, partner of M/s. Mathroo Photostate in his statement recorded on 21-6-1991 stated that he had made rubber stamps of Central Excise Department when Shri Yash Pal Aggrawal approached him posing as a departmental man. 10. Shri L.D. Gupta in his statement stated that he had introduced Shri Yash Pal Jain, whom he knew as a friend of his son, S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Shri Subhas Bansal, learned Advocate submits that the statements had been dictated word by word by the Superintendent who forced him to write such statement word by word as dictated and, therefore, the statement of Shri Subhas Bansal cannot be treated as admission and cannot be relied upon. He submits that a statement made and signed by a person before any Central Excise Officer of a Gazetted rank during the course of any enquiry or proceeding under this Act shall be relevant, for the purpose of proving, in any prosecution for any offence under this Act, the truth of the facts which it contains. He submits that sub-section (1)(b) of Section 9D provides that When the person who made the statement is examined as a witness in the case before the Court and the Court is of opinion that, having regard to the circumstances of the case, the statement should be admitted in evidence in the interests of justice. He submits that sub-section (2) provides that The provisions of sub-section (1) shall, so far as may be, apply in relation to any proceedings under this Act, other than a proceeding before a Court, as they apply in relation to a proceeding before a court. He submits that before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he show cause notice and therefore, the demand is time barred. The learned Counsel also cites and relies upon the decision of the Apex Court in the case of CCE v. Tin Plate Co. of India Ltd. [1996 (87) E.L.T. 589] wherein the Apex Court held that issue of show cause notice under Section 28(1)(b) of the Customs Act, 1962 is mandatory; that the demand notices and subsequent reply to the objection are not treatable as show cause notice. 16. Summing up his arguments, learned Counsel submits that the department has not been able to make a case either on limitation or on merits and therefore prays that the appeal may be allowed. 17. Countering the arguments of the appellants, Shri P.K. Jain, learned SDR submits that there was no violation of principles of natural justice inasmuch as ample opportunity of presenting their case was granted to the appellants; that the appellants were not entitled to deemed Modvat credit inasmuch as the investigation in the case led to conclude that the materials (inputs) were never received in the factory; that the availment of Modvat credit on the strength of gate passes was not warranted inasmuch as gate passes were fake and that no raw materials (inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was known to the appellants and the appellants could not clearly state as to how the cheques were being sent and what was the address of the broker. He submits that this clearly shows that the appellants were a part of the conspiracy to perpetuate the fraud on Revenue. He submits that the decision of this Tribunal in the case of Upper Doab Sugar Mills [1987 (32) E.L.T. 124] cited and relied upon by the appellants will not be applicable to the facts of the present case. The learned SDR submits that reasonable precautions are required to be taken by the appellants that the investigation brought out that no goods travelled under the fake GP-1s and thus there was deliberate suppression and concealment of the facts. He submits that so also is the case with reference to the Apex Court decision in the case of H.M.M. Limited cited and relied upon by the appellants. The learned SDR submits that the decision of the Apex Court in the case of Tinplate Company of India Limited is not applicable to the facts of the present case. 20. Summing up his argument, the learned SDR submits that the detailed investigation clearly brought out the fact that the GP-1s on the strength of which Modvat credi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that he did not like to come out with the facts and that he knew that GP-1s purchased from Shri Ashish Gupta and Shri Y.P. Aggrawal were fake. Shri `Bittoo was no one other than Shri Ashish Gupta son of Shri L.D. Gupta and his partner was Shri Y.P. Aggrawal alias Shri Yash Pal Jain. 24. The main thrust of the arguments of the learned Counsel was that they had paid the cost of the goods through crossed cheques and that they had no means of knowing that GP-1s were fake. Investigations into the case show that no doubt the crossed cheques were deposited into current account No. 2326 of M/s. Balwinder Steel Corporation; that the amount was withdrawn; that this current account No. 2326 was opened by Shri Y.P. Aggrawal in the name of Shri Yash Pal Jain, proprietor of M/s. Balwinder Steel Corporation. It was also found that Shri Y.P. Jain was introduced by Shri L.D. Gupta, the father of Shri Ashish Gupta. The statement of Shri Y.P. Aggrawal and Shri Ashish Gupta clarify the position that the amount was withdrawn immediately and was handed over in cash to the appellants. Thus, these investigations brought out very clearly the fact that the appellants were fully aware that GP-1s on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ides on the question of relevancy of the statement sunder Section 9D of the Central Excise Act, 1944. We have taken into consideration the various statements recorded. There is no missing link in the investigations, the investigations have brought out clearly the fraud committed by the appellants on the Revenue. We note that in the quasi-judicial proceedings rigours of applicability of strict rules and procedure of Evidence Act are not applicable. In the instant case, we hold that denial of cross examination has not vitiated the case of the appellants. 29. On the question of statement of Shri Bansal, Director of the appellants company, alleged to have been dictated by the Central Excise Authorities, we note that the statement has not been retracted. We also note that Shri Bansal is an educated person and wrote the statement in his own handwriting and we hold that the statement is true and voluntary. 30. On the question of denial of natural justice, we note that the case was posted for personal hearing; that the appellants attended the personal hearing as they were granted the personal hearing on 10-2-1995 when their Advocate appeared and reiterated his submission already made ..... X X X X Extracts X X X X X X X X Extracts X X X X
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