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TMI Blog2009 (3) TMI 711X X X X Extracts X X X X X X X X Extracts X X X X ..... was found that both the proprietary concerns were not carrying out any manufacturing activity and that there was no machinery for carrying out any manufacture. The residential address available on the records of the department of the proprietor turned out to be fictitious and the statement of Shri Ghadiyali was recorded on 24-5-2005 wherein he admitted that no machinery was installed in the premises of either Gauri Creation or Siddhi Creative; that no manufacture took place in either of the premises; that he had purchased Cenvat invoices showing supply of textile fabrics from fabric suppliers, without actually procuring any goods; that he issued bogus ARE1s to merchant exporters without supplying the goods mentioned therein @ 25% of the rebate amount mentioned in the ARE1s; that the exporter used to give him cheques for the value mentioned in the ARE1s, which were deposited by him in one of the bank accounts of Gauri Creation or Siddhi Creative; that thereafter he would, in turn, issue cross bearer cheques to the supplier of the invoices for the value mentioned in the invoice; that these cross bearer cheques would not be deposited in the bank by the invoice supplier but routed back ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y of equal amount on M/s. Gauri Creation and imposing penalties on the merchant exporters and Cenvat invoice suppliers and the notice dated 4-1-2007 was adjudicated vide order No. 3/2008 disallowing Cenvat credit of the amount indicated in the notice, together with interest, and imposing penalty on M/s. Siddhi Creative, the concerned merchant exporters and the Cenvat invoice suppliers. 3. The stay applications filed by M/s. Batra International, M/s. Satya International, M/s. Guria Textiles, M/s. Suvidhi Silk House and M/s. Sameer Exports, all merchant exporters, arise out of order No. 3/2008 by which penalties of Rs. 15,000/-, Rs. 3,00,000/-, Rs. 10,00,000/-, Rs. 3,00,000/- and Rs. 1,20,000/- have been imposed upon them; M/s. Harish Silk Industries, Cenvat invoice supplier, has filed appeal and application for waiver of pre-deposit of penalty of Rs. 6,00,000/- imposed in order No. 3/2008. Stay applications filed by M/s. Guria Textiles and M/s. Suvidhi Silk House, merchant exporters, for waiver of pre-deposit of penalty of Rs. 1,25,000/- and Rs. 50,000/- respectively and Shri Rajendra Doshi, employee of M/s. Suvidhi Silk House, on whom penalty of Rs. 15,000/- has been imposed, ari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Doshi, no prima facie case for total waiver has been made out for the reason that as manager of one of the merchant exporters, viz. Suvidhi Silk House, he dealt with goods, namely, non duty paid goods procured from the market and exported them under bogus ARE1s for the purpose of claiming inadmissible rebate, which goods have been found by the Commissioner to be liable to confiscation. We, therefore, direct pre-deposit of Rs. 5,000/- (Rupees five thousand only) by Mr. Rajendra Doshi within a period of eight weeks from the receipt of this order and on such deposit, pre-deposit of balance penalty shall stand waived and recovery thereof stayed pending his appeal. Failure to comply with this direction shall result in vacation of stay and dismissal of his appeal without prior notice. 6. Compliance is to be reported by Mr. Rajendra Doshi on _____.2008. (Pronounced in Court on ___.9.2008) Sd/- Ms. Jyoti Balasundaram Vice President 7. [Order per : A.K. Srivastava, Member (T)]. - Since it is an application for waiver of the pre-deposit, we are required to see as to whether the applicants have made a prima facie case. In this case, the findings of the commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ented in docks before Customs for export supported by ARE1s and Invoices of Siddhi, have already been exported and/or not physically available for confiscation will not alter the position so far as imposition of penalty under Rule 26 ibid is concerned. As the goods are not physically available, the SCN has rightly not proposed confiscation of the goods. But the Merchant Exporters who have knowingly dealt with the confiscable goods are no doubt individually liable to penalty under Rule 26 of the Central Excise Rules, 2002. The allegations levelled in the SCN, already discussed in the foregoing paras, leave no doubt about the basis of charge which warrants penalty under Rule 26 ibid. Hence the afore discussed and other similar case laws relied upon by the notices are not applicable to the facts of the instant case. 102. In the view of all the aforesaid lengthy discussions, I hold that all the afore discussed noticees excepting M/s. Wintex Mills Ltd., whose case has been discussed separately, (firms which/who have issued CENVAT invoices and Merchant Exporters who have used the bogus ARE1s to export goods procured from elsewhere) at Sr. No. 2 to 34, are individually liable to penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an individual and not on a firm or corporate entity. I do not agree with this view of hers because all these decisions of the Tribunal do not take into account the judgement of the Hon ble Supreme Court in the case of Agarwal Trading Corporation and others v. Assistant Collector of Customs, Calcutta and others [1983 (13) E.L.T. 1467 (S.C.) in which it has been held at para 7 as under : 7. The second contention that because the firm is not a legal entity, it cannot be a person within the meaning of Section 8 of the Foreign Exchange Regulation Act or of Section 167(3), (8) and (37) of the Sea Customs Act, is equally untenable. There is of course, no definition of person in either of these Acts but the definition in Section 2(42) of the General Clauses Act, 1897, or Section 2(3) of the Act of 1868 would be applicable to the said Acts in both of which person has been defined as including any company or association or body of individuals whether incorporated or not. It is of course contended that this definition does not apply to a firm which is not a natural person and has no legal existence, as such clauses (3), (8) and (37) of Section 167 of the Sea Customs Act are inapplicab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ellants in terms of the provisions of Section 35F of the Central Excise Act. Whereas the learned Vice President has held that the case is prima facie covered by the Larger Bench decision of the Tribunal in the case of Steel Tubes of India Ltd. v. CCE 2007 (217) E.L.T. 506 and the other decisions referred in the order proposed, granting total waiver of pre-deposit, the learned Member (Technical) has directed the appellants to deposit 30% of the penalties involved. 13. After hearing both sides duly represented by S/Shri V.S. Sejpal and K.I. Vyas, Advocates, for the appellants and Shri Kishori Lal, SDR, for the respondent, and after going through the order proposed by the learned Vice President and the learned Member (Technical), I find that the Member (Technical) has not otherwise disputed the applicability of the Larger Bench decision of the Tribunal in the case of Steel Tubes of India Ltd. or the decision in the case of Woodmen Industries v. CCE, Patna - 2004 (164) E.L.T. 339, but has primarily observed that all these decisions do not take into account the judgment of the Hon ble Supreme Court in the case of Agarwal Trading Corporation others v. ACC, Calcutta others 1983 (13) ..... X X X X Extracts X X X X X X X X Extracts X X X X
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