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TMI Blog2006 (8) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... s (4) E/S/261/01 E/267/06 Shri A.S. Gupta (5) E/S/370/06 E/379/06 Shri S.K. Jain (6) E/S/85/06 E/81/06 Shri Rajkumar Somani 1.2 After hearing both sides in these applications and considering the matter, and the submission made at this prima facie stage it is found - (a) On the basis of an intelligence gathered and investigation conducted by the Directorate General of Central Excise Intelligence (DGCEI), New Delhi M/s. Aryama Polytex Ltd., Halol (hereinafter referred to as APL) Baska, Halol, Dist, Panchmahal, Gujarat and M/s. S R Industries Ltd. Derabassi (hereinafter reffered to as SRIL) Village Kuranwala, Sub-Tehsil Derabassi, District Patiala, both registered 100% Export Oriented Units (EOU) were issued with show cause notice No. DGAE/DZU/37/98, dated 1-1-01 which sought to recovery duties of excise to the extent Rs. 84,73,849/- on the clearances of PTY without payment of any duty during the period 5-1-96 to 8-5-97, effected by APL on the strength of CT 3 certificates presented by SRIL to APL, as detailed below :- CT 3 No. Dated Rate Per Kg. (in Rs.) Qnty (MT) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 18/96, dated 26-12-96 and 352/96, dated 25-9-96 for procuring 25 MT each was forged; that on receipt of such CT 3 certificate, APL cleared 90 MT of PTY under cover of AR 3A forms without payment of duty under exemption Notf. # 1/95-CE, dated 4-1-95; that, however, the said PTY never reached the factory premises of SRIL at Derabassi but was instead diverted to the local Bhiwandi market; that to cover up this illegal diversion of PTY, SRIL arranged for re-warehousing certificates on the AR 3As which were forged by Y. K. Joshi, the then Manager (Personnel Admn.) SRIL, at the instance of Shri R. C. Mahajan, MD, SRIL; that the said forged re-warehousing certificates were produced to the department at Halol, as evidence of receipt of goods; that the PTY cleared from APL was disposed off in the domestic market with the assistance of the brokers, S/Shri Arun Gupta, Rajkumar Somani S. K. Jain and the sale proceeds, thereafter, was distributed amongst APL, SRIL and the brokers, as above that classification lists filed by SRIL, showed cotton Yarn as the only raw material for the manufacture of terry towels; that PTY was never declared as input; that statements of the following persons wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iver and Abhinav Rathore, a non-existent person it is observed that the reason for opening such fictitious bank accounts in the name of M/s. SR Industries (without the word Limited ) and closely matching with the EOU name SRIL was with an intention of throwing wool over the eyes of Government bodies, investigative agencies, statutory auditors and/or other interested persons who were likely to raise objections to the illegal activities of SRIL. The Investigations bring out that the said accounts were used for depositing the sale proceeds illegally accrued from diversion of PTY to the local market. (v) It was observed that the brokers played the role of introducing both the parties APL SRIL to each other, arranged for the contracts between both the parties and actively associated themselves in acting as conduits for passing on the sales proceeds from Bhiwandi to SRIL, New Delhi and from thence to APL, Halol by way of DDs, thus completing the cycle of diversion of goods. (b) The gravemen of the charge and modus operandi was not found to be disputed by the noticees; that no one appeared for APL and other noticees. Noticee Nos. 5 to 8 to the show cause notice was a consi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot bring ourselves to uphold the duty demands as arrived on consignee i.e. M/s. SRIL, especially when the case of Revenue is, admittedly, goods to have never reached the consignee persons placed custody. The AR 3 re-warehousing particulars with forged nature, along with no evidence of payment and receipt of diverted sales flowing back to SRIL would prima facie absolve them from pre-deposit condition. 2.2 When duty demand on SRIL are prima facie not been upheld, we find no reasons to prima facie upholds penalty as, arrived on the present appellants before us. Penalty would be related to duty demands which may be upheld after regular hearing. At this prima facie stage we find that the present appellants to have made out a case for waiver of duty demand along with penalty, interest, as arrived at. 2.3 The applications, of the present appellants before us, are allowed by ordering full waiver of pre-deposit under the provision of section 35F of the Central Excise Act, 1944 along with stay of recovery pending all these appeals. These applications disposed accordingly. 3.1 (a) Now we take up the following application in appeals filed against order no. 171/Commr (AH) 05 dated 27- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce was that both the noticee companies, SRIL and SPL had conspired with the other noticees and diverted polyester texturised yarn (PTY/PFY) to the local Bhiwandi market; that SRIL unauthorisedly got the CT-3 certificate # 102/96, dated 24-2-96 for procuring 104 MT duty free Polyester Texturised Yarn (PTY/PFY) from SPL, issued by the Range Superintendent at Derabassi by mis-representing to him, even though PTY/PFY was not the raw material required by them since it was not used in the manufacture of their finished goods i.e., terry towels, which were made from 100% cotton yarn; that on receipt of such CT 3 certificate, SPL cleared 104 MT of PTY/PFY under cover of AR 3A forms without payment of duty under exemption Notifn 31/95-C.E. dated 4-1-95 that however the said PTY/PFY never reached the factory premises of SRIL at Derabassi but was instead diverted to the local Bhiwandi market; that to cover up this illegal diversion of PTY/PFY, SRIL arranged for re-warehousing certificates on the AR 3 As which were forged by Shri Y. K. Joshi, the then Manager (Personnel and Admn.) SRIL, at the instance of Shri R. C. Mahajan, MD, SRIL; that the said forged re-warehousing certificates were produc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0,000/- 5 dt 11-3-96 to 9 dt 30-3-96 Rs. 30,18,490/- 351/96 25-9-96 20 Rs. 90/- Rs. 18,00,000/- 16 dt 3-10-96 to 1 dt 13-10-96 21 dt 18-10-96 Rs. 17,04,596/- Rs. 39,00,000/- Rs. 47,23,086/- (c) Penalty was also sought to be imposed on the aforesaid two noticee companies under Section 11AC of the Central Excise Act, 1944; under Rules 9(2), 173Q 226 of the Central Excise Rules, 1944 and under Section 117 of the Customs Act, 1962. Penalty under Rule 209A of the Central Excise Rules, 1944 was sought to be imposed on the other noticees 3 to 8, S/Shri R. C. Mahajan MD, SRIL Satyendra Singh Gupta, MD, GPL; Arun S. Gupta, broker and Proprietor of Arun Enterprises, New Delhi; Y. K. Joshi, Ex-Manager (Pers. Admn), SRIL; Shyam Bihani, broker and S. K. Jain, broker and Proprietor of Priyankit Textiies, New Delhi. Interest was also sought to be levied @ 20% p.a. under Notifn 34/96-C.E. (N.T.), dated 9-10-96 under the provisions of Section 11AB of the Central Excise Act, 1944 on the two noticee companies, SRIL GPL. 4.2 The gist of the notice was that both the noticee companies, SRIL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 06 R.C. Mahajan (5) E/S/367/06 E/376/06 S.K. Joshi (6) E/S/194/06 E/210/06 Y.K. Joshi On similar issues after confirming the material it is found. (b) On the basis of an intelligence gathered investigation conducted by the Directorate General of Central Excise Intelligence (DGCEI), New Delhi M/s. Shree Sanand Textile Industries Ltd. near GIDC Industrial Estate, Sanand Viramgam Highway, Sanand, District Ahmedabad (hereinafter referred to as SSTIL) and M/s. S. R. Industries Ltd., Village Kuranwala, Sub-Tehsil Derabassi, District Patiala (hereinafter referred to as SRIL) both registered 100% Export Oriented Units (EOU) were issued with show cause notice no. DGAE/ DZU/37/98/1053 to 1060, dated 20-4-2001 which sought to recover total duties of excise to the extent Rs. 1,08,11,515/- on the strength of CT 3 certificates presented by SRIL to SSTIL as below: CT#3# Dated Qty MT Rate per Kg. Value AR#3A# Duty 171/96 29-3-96 15 Rs.81/- Rs. 12,15,000/- 45 Rs.91/- Rs. 40,95,000/- 60 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shi, the then Manager (Personnel Admn), SRIL, at the instance of Shri R. C. Mahajan, MD, SRIL; that the said forged re-warehousing certificates were produced to the department at Sanand, District Ahmedabad as evidence of receipt of goods; that the PTY/PTIY cleared from SSTIL, was disposed off in the domestic market with the assistance of the brokers, S/Shri Arun Gupta and S. K. Jain the sale proceeds, thereafter, was distributed amongst SSTIL, SRIL and the brokers, as above. 5.3 The Commissioner has determined duty demands on M/s. SRIL, SSTIL and imposed penalties under Rule 209 on the said appellants as also penalties under Rule 209A on the other appellants hearing. After considering that the similar situation is hearing above waived not prima facie upheld the order of duty demands on the consignee in case of CT 3 removal from the EOU the duty demands and penalties on SRIL cannot be upheld and prima facie the same are required to be waived to hear this appeal. Since the duties on consignor i.e. M/s. SSTIL are at this prima facie stage also required to be upheld we would directed them to deposit the amount of Rs. 38,76,065/- towards duty, to hear their appeal. Since the major ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 of the Customs Act, 1962. Penalty under Rule 209A of the Central Excise Rules 1944 was sought to be imposed on the other noticees 3 to 7, S/Shri RC Mahajan MD, SRIL Ketan M. Shah, Director, PTPL, Arun S. Gupta, Broker Proprietor of Arun Enterprises, New Delhi; Y. K. Joshi, Ex-Manager (Pers. Admn), SRIL; S. K. Jain, broker S. K. Jain, Broker Proprietor of Priyankit Textiles, New Delhi. Interest was also sought to be levied @20% p.a. under Notifn. 34/96-C.E. (N.T.), dated 9-10-96 under the provisions of Section 11AB of the Central Excise Act, 1944 on the two noticee companies, SRIL PTPL. 6.2 The gist of the notice was that both the noticee companies, SRIL PTPL had conspired with the other noticees and diverted polyester filament yarn (PFY) to the local Bhiwandi market; that SRIL forged the signature of the Signature of Superintendent, Derabassi on CT-3 certificate # 294/96, dated 21-6-96 for procuring 40 MT of duty free PFY from PTPL, even though PFY was not the raw material required by, since it was not used in the manufacture of their finished goods, i.e., terry towels, which were made from 100% cotton yarn, that on receipt of such CT 3 certificates, PTPL cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X
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