9911796707
TMI Blog2015 (1) TMI 888X X X X Extracts X X X X X X X X Extracts X X X X ..... teel and seized several records, also recorded statements. It was found that the said M/s. Chamak was removing Re-rolled products clandestinely without payment of central excise duty. 3.1 On the basis of information, on 31-10-1996, a search was conducted at the appellant's premises and records were seized, statements recorded. A Show Cause Notice dated 20-3-1998 was issued proposing demand of duty of Rs. 12,30,308/- along with interest and penalty on M/s. Chamak and its Managing Director. It has also proposed a penalty on the appellant under Rule 209A of the erstwhile Central Excise Rules, 1944 for their involvement in the evasion of the duty by M/s. Chamak. Adjudicating authority confirmed the demand of duty Rs. 12,30,308/- and imposed penalty of equal amount under Rule 173Q of the said Rules on M/s. Chamak and also imposed penalty of Rs. 1,25,000/- on Shri R.K. Sonthalia, Managing Director of M/s. Chamak. There is a penalty of Rs. 10 lakhs on the appellant under Rule 209A of the said Rules. The adjudicating authority observed that the appellant diverted huge quantities of shredded scrap without any bills and documents to M/s. Chamak Holding Ltd., and facilitated to manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in the impugned order. He submits that the adjudicating authority had sent various letters to collect the documents, which were refused by them and, therefore, there is no violation of principles of natural justice. 5.1 He submits that Rule 209A of the erstwhile Rules is pari materia to Rule 26 of the Central Excise Rules, 2002. He relied upon the decision of the Hon'ble Punjab and Haryana High Court judgment in the case of Vee Kay Enterprises v. Commissioner of Central Excise reported in 2011 (266) E.L.T. 436 (P&H). He also relied upon the decision of the Tribunal in the cases of Commissioner of Central Excise, Ahmedabad v. Navneet Agarwal reported in 2012 (276) E.L.T. 515 (Tri.-Ahmd.) and Amex Alloys Pvt. Ltd. v. Commissioner of Central Excise & Service Tax, Coimbatore reported in 2013 (296) E.L.T. 229 (Tri.-Chennai). 6. After hearing both sides and on perusal of the records, I find that the submissions of the learned Counsel of the appellant are mainly on two counts. Firstly, penalty under Rule 209A cannot be invoked to the Company. Secondly, penalty under Rule 209A cannot be imposed on a person, who has not dealt with goods, liable for confiscation. For the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion of the corporation/company. In a given situation, if the Board of Directors decide between themselves, and pass a resolution to engage in the act of evasion of the duty on excisable goods it would be an act of individuals who did so for their personal gain. The corporation/company, stands to no gain out of misdemeanors of the individuals i.e. Board of Directors. In the eyes of law, the corporate entity being a person would be held responsible for the act of the natural persons. But in order to punish the guilty individuals, the veil of corporate entity had to be lifted to understand the correct picture. Precisely for these reasons only the provisions of Rule 209A came into statute, in order to punish the guilty acting behind the veil of corporation/company. If in a given situation a parcel booking clerk of the Indian Railways, in order to have some personal gain, colludes with others to book the goods without any duty paying documents (though he has knowledge that the goods have to be booked on the basis of duty paying documents) and the goods are seized by the authorities at the destination point, can the Indian Railways be penalized under the provisions of Rule 209A of the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quire possession of the goods in any manner as mentioned in Rule 209A and, therefore, penalty cannot be imposed. The allegation is that the goods were sold by the appellant to M/s. Chamak without any documents to manufacture final products and to remove clandestinely. The contention of the learned Counsel is that the appellant-company was not involved in any manner for manufacturing and clandestine removal of the goods and imposition of penalty under Rule 209A is not warranted. 7.1 The expression "in any other manner deals with, any excisable goods, which he knows or has reason to believe are liable to confiscation" in Rule 209A, have wide amplitude. The words "in any other manner" particularly indicate that there is no requirement of dealing of the goods directly, otherwise, Rule 209A would become meaningless. In the present case, the appellant-company diverted huge quantities of shredded scrap without any document to M/s. Chamak for the purpose of manufacturing and clearance of Re-rolled products clandestinely. 7.2 In the case of Vee Kay Enterprises (supra), the Hon'ble Punjab and Haryna High Court, while dealing with Rule 26(1) of the Central Excise Rules, pari mater ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 two thousand rupees, whichever is greater. (2) Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of Cenvat credit under the Cenvat Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. 7. Learned counsel for the revenue supported the impugned order. 8. Question for consideration is whether penalty could be levied on the person who did not actually deliver the goods and merely issued a fake invoice which enabled wrong availing of Cenvat credit and the extent of penalty which coul ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
