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TMI Blog2013 (11) TMI 1472X X X X Extracts X X X X X X X X Extracts X X X X ..... eeta Goyal. M/s. BTP has excise registration for manufacture of hosiery goods and exports the same. Shri Kuldeep Singh is an authorized signatory of BTP. M/s. Shirdi Overseas Imports and Exports (hereinafter referred to as 'M/s. Shirdi) is a proprietorship concern of Shri R.K. Goyal, which also has registered premises at 851, Industrial Area A, Ludhiana for manufacture of hosiery goods. M/s. CIPL as well as M/s. BTP also have central excise-registration as registered dealers and for this purpose, they are registered at 863, Industrial Area, Ludhiana. The premises of M/s. CIPL. M/s.BTP and M/s. Shirdi were visited by the jurisdictional central excise officers of the Central, Excise Commissionerate, Ludhiana in November, 2004. After scrutiny of the documents recovered from the premises, inquiry with the Directors of M/s. CIPL and also inquiry with their employees and various suppliers of raw materials as per their records and the persons claimed to be the job workers, a show cause notice dated 14.7.2008 was issued to M/s. CIPL, M/s.BTP, M/s Shirdi, Sh. R.K. Goyal, Mrs. Geeta Goyal, their employees and a number of other noticees, which included the persons claimed to be the suppliers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2 The matter was adjudicated by the Commissioner of Central Excise, Ludhiana vide order-in-original No.9/LDH/11 dated 31.3.2011 by which the Commissioner confirmed the cenvat credit demand of Rs.5,59,50,128/-against the main appellant, M/s. CIPL along with interest under Rule 14 of the Cenvat Credit Rules,2004, read with Section 11AB of the Central Excise Act, 1944 and besides this, imposed penalty of equal amount on them under Section 11 AC read with Rule 15(2) of the Cenvat Credit Rules. 2004. Besides this, penalties of various amounts were imposed on other noticees under Rule 26 of Central Excise Rules, 2002. The penalties imposed under Rule 26 on the persons with whom we are concerned in these appeals are as under:- (1) Shri R.K. Goyal, Director, M/S. CIPL Rs.5,59,50,128/- (2) Smt. Geeta Goyal, Director, M/S. CIPL Rs.5,59,50,128- (3) Shri D. P. Singh, Accountant, M/S. CIPL Rs.10,000/- (4) Shri Kuldeep Singh, PA to Sh. R.K. Goyal Rs.10,000/- (5) Sirdi Overseas Imports & Exports Rs.2,30,558/- (6) Brawn Textile Processors Rs.20,66,426/- (7) M/s. V.K. Kalra, Hosiery Works, Ludhiana Rs.31,04,034/- (8) M/s. Knit Fab, Ludhiana Rs.10,000/- (9) Perfect Desi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty, but has demanded the duty on some technical ground, as in that case the appellant had failed to produce the proof of export and that in view of the above submissions, Commissioner's order confirming the cenvat credit demand and imposing penalty on M/s. CIPL is without basis. With regard to other appellants, M/s. Shirdi Overseas, M/s. R. Knit Fab, M/s. BTP, M/s. V.K. Kalra Hosiery Works, M/s. Perfect Designers. Shri D.P. Singh, Shri Kuldeep Singh, Shri R.K. Goyal and Mrs. Geeta Goyal, it was pleaded that there is absolutely no justification for imposing any penalty on them under Rule 26 of the Central Excise Rules, 2002. Shri Singh, therefore, pleaded that all the appellants in this group of appeals have strong prima facie case in their favour and, hence, the requirement of pre-deposit of cenvat credit demand, interest thereon and penalty from the main appellant, M/s. CIPL and the requirement of pre-deposit of penalty from the other appellants may be waived for hearing their appeals and recovery thereof may be stayed till the disposal of the appeals. 4. Shri Nagesh Pathak, Id. Departmental Representative opposed the stay applications by reiterating the findings of the Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave capacity to process the goods claimed to have been processed by them. In some cases, the transportation of the inputs from the premises of M/s. CTPL to their job workers and back has been shown in the vehicles, which on inquiry were found to be Moped, Scooters, three wheelers etc. in which the goods could not be transported. c) The cenvat credit so availed was used for payment of duty on the goods which were shown to have been exported under rebate claim. Thus, cenvat credit taken in a fraudulent manner has been encashed, (d) Exports were done through various firms controlled by Sh. R. K. Goyal and their associates. 7. Prima facie, we find that the above allegations are backed by the following evidence on record, which, in brief, is as under:- 7.1 Evidence of availment of cenvat credit on the basis of bogus invoices or bogus transactions (a) credit of Rs. 18,59,969/- has been availed by M/s. CIPL in respect of polyester fabrics claimed to have been received from M/s. Yash Trading, Surat (para 1.3 of the impugned order). Investigations revealed that the goods claimed to have been sent by M/s. Yash Trading to M/S. CIPL had been received ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . However, on inquiry, this transaction appeared to be bogus as M/s. Sejal Overseas could not give the details of the payment received by them from M/S. CIPL. Though M/S. CIPL have shown payment of Rs.2,33,39,229/- by way of transfer from M/s. Raj International on 30.10.2004, inquiry revealed that the cheques issued by M/S. CIPL in favour of M/s. Raj International were withdrawn on the same day in favour of different parties. Similarly, balance amount of Rs.44,15,301/- is shown to have been paid to M/s. Sejal Overseas by transfer from M/s. SPS Enterprises, Delhi. But this transaction also appears to be bogus. (f) Cenvat credit of Rs. 18,44,998/- has been availed by M/S. CIPL on the basis of invoices for fabrics issued by M/s. Paro Textile, City Light Complex, Surat (para 1.92 of the impugned order), M/s. Paro Textile City Light, Surat, in turn, claimed to have purchased these fabrics from M/s. Systemaic Corporation, C-1/B/7813, GIDC, Ankleshwar, a registered dealer but on inquiry at that end, this entity was found to be fictitious, as at that address a 100% EOU M/s. Sarvottam Marketing Yarn Pvt. Ltd. was there, which was in existence at that address since 2001. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Rs.31,04,034/- has been taken by M/S. CIPL on the basis of invoices issued by M/s. V.K. Kalra Hosiery Works (12 invoices) regarding supply of knitted fabrics (para 1.126 to 1.130 of the impugned order). However, inquiry at the end of M/s. V.K. Kalra Hosiery Works and with M/S. CIPL revealed that the transport particulars of the goods as per the records of V.K. Kalra Hosiery Works, and as per records of the M/S. CIPL do not match and besides this, the particulars of fabrics claimed to have been supplied by M/s V. K. Kalra Hosiery and claimed to have been received by M/S. CIPL also do not match. Moreover, bulk of the amount for the goods claimed to have been purchased by M/s. CIPL from M/s. V.K. Kalra Hosiery was outstanding, which also is not possible, if the transactions are genuine. Therefore, it appeared that these transactions of M/S. CIPL with M/s. V.K. Kalra Hosiery are also bogus. (j) M/S. CIPL imported 3,48,500 Kgs. of Polyester Chips under B/E dated 3.5.2006, 4.5.2006, 27.6.2006 in respect of which they have taken cenvat credit of Rs.36,11,412/- (para 1.199 of the impugned order-in-original). Since they did not have capacity to convert the polyester chips ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... k (a) As discussed in para 4.6.1 to 4.6.13 of the impugned order, in the factory of M/S. CIPL, the machinery available was very limited and that too only for manufacture of certain types readymade garments and most of the machinery was non-functional. Since M/S. CIPL claimed that they have got manufacturing done through job workers, inquiry was made with the job workers. (b) One of their job worker is M/s. Impact International, Ludhiana through whom the M/S. CIPL claimed to have got Acrylic Polyester Blended Blanks and Acrylic Sweaters manufactured for export. Shri Rajiv Bajaj is the proprietor of M/s. impact International who in his detailed statement dated 1.5.2007 has stated in clear terms that no manufacturing had been done and only on the instructions of Shri R.K. Goyal, documents have been fabricated to show the manufacturing of synthetic blankets and garments for M/S. CIPL, M/s. BTM, M/s. Shirdi Overseas, etc. and as such, the documents have been created for manufacture of goods worth about Rs.100 Crores (para 1.149 to 1.153 and para 4.7.2 of the impugned order). He clearly stated that Shri R.K. Goyal issued cheques for job work for certain amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Commissioner's order confirming duty demand of Rs.1,26,05,140/- by which the appellant were directed to deposit an amount of 75% of the duty demand, does not in any manner support the plea of M/s CIPL that there was manufacturing activity in their factory to the extent being claimed by them to justify the consumption of the quantity of raw materials in respect of which cenvat credit has been taken as, in this case, the duty demand had been confirmed as M/s.CIPL had failed to produce proof of export in respect of goods exported under bond. In fact, the facts mentioned in another stay order No.1931/2012-EX(BR.) dated 12.11.2012 passed by this Tribunal in respect of appeal No. E/1953/2012 with stay application No.E/Stay/2594/2012 filed by M/s Shri Sai Garments against an order passed by Commissioner, Central Excise, Raipur show that during 2005-06, M/s Shree Sai Garments, Belgaon, had taken bogus cenvat credit of Rs.5,68,86,949/- on the basis of invoices issued by some parties in Surat and had shown bogus manufacture and clearance of polyester fabrics to M/s Shirdi, Ludhiana under their invoices and thereby passing on cenvat credit of about Rs.5.57 crores. In the stay order dated 12.1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... above factual position, we are of the view that so far as the main Appellants - M/s. Cannon Industries Pvt. Ltd. (CIPL) and their Directors, Shri R.K. Goyal and Mrs. Geeta Goyal are concerned, this is not the case for waiver from the requirement of pre-deposit. 12.1 While M/s.CIPL face cenvat credit demand of at least Rs.5 crores with interest under Section 11AB and equal amount of penalty under Section 11 AC Shri R.K. Goyal and Mrs. Geeta Goyal face penalty of Rs.5,59,50,128/- each under Rule 26 of Central Excise Rules, 2002 for being involved in illicit diversion of cenvated imported goods referred to in para 7.1 (j) for 7.1. (1) of this order, as they have knowingly dealt with these goods which were liable for confiscation. The net cenvat credit amount recoverable from M/s. CIPL, if the withheld rebate claim of about Rs.1.27 crores is rejected, would be about Rs.3.73 crores plus interest which would be quite substantial by now, besides penalty under Section 11 AC and, therefore, conditions must be imposed to safeguard the Revenue's interests in respect of this amount i.e. Rs.3.73 crores plus interest thereon plus penalty under Section 11 AC of about Rs.5 Crores. 12.2 Though t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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