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TMI Blog2015 (8) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... e are liable to confiscation. H.R. trimmings so diverted to Viramgam were undoubtedly liable to confiscation and the appellants No. 3 and 4 have dealt with such H.R. trimmings and were concerned with such goods and were in the knowledge that such goods are liable to confiscation. Under the circumstances, the penalty imposed on them is correct. Penalty imposed is also not on the higher side. - goods were being transported in the Gujarat registered vehicle while the consignee name and address is that of Maharashtra, and such vehicles cannot take such freight. We also note that from the documents recovered from the premises of appellant No. 7 that they were fully aware that the HR trimmings were consigned to Viramgam based bidder and are being used by SSI units there. Under these circumstances, it was incorrect on their part to indicate the name and address of the M/s. Silver Ispat Pvt. Ltd., as consignee who were based in Mumbai. Since they have changed the name of the consignee in spite of the fact that the goods were being transported to Viramgam or nearby area in different State, the HR trimmings cleared have therefore become liable for confiscation as discussed earlier and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y to manufacturing units of MS Ingots located in Maharashtra. MS Ingots manufacturing units require iron and steel scrap, which in turn is available in the form of bazaar or scavenger scrap which is non-duty paid. Credit of duty paid on particular goods is available only if the goods covered by the invoice is used by the availer of credit. The invoices issued by appellant Nos. 6 and 7 were therefore, being manipulated to indicate the name of certain manufacturers of MS ingots (in the present case, M/s. Silver Ispat Pvt. Ltd., whose appeal is dismissed under Section 35F of the Central Excise Act, 1944). Thus, M/s. Silver Ispat Pvt. Ltd, was purchasing the invoices without getting the HR trimmings and such HR trimmings were sold by appellant No. 3 to 4 to 100s of small scale units in and around Viramgam. Further, for selling the invoices, appellant No.3 and 4 were using the services of brokers based in Mumbai e.g. Shri Manish Ramavtar Agarwal of M/s. Manish Steel Corporation and appellant No.2. Appellant No.5 is a transport commission agent based in Nagpur. He was coordinating and ensuring that the goods cleared from appellant No. 7's unit at Kalmeshwar, Nagpur were transported t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by appellant Nos. 6 and 7. Here, the invoices alone were to be sold to such customers while the goods covered by such invoices were to move to Viramgam. 4. Thus, the case of the Revenue is that M/s. Silver Ispat Pvt. Ltd., in the present case has availed CENVAT credit on the basis of duty-paying invoices issued by appellant Nos. 6 and 7 without receiving any HR trimmings covered by such invoices. M/s. Silver Ispat Pvt. Ltd., was, therefore, not eligible to take the CENVAT credit covered by such invoices, and the act is fraudulent in nature. Appeal of M/s. Silver Ispat Pvt. Ltd. was dismissed by this Tribunal for non-compliance of provisions under Section 35F. Appellant No. 1 was the General Manager in M/s. Silver Ispat Pvt. Ltd. Appellant No. 8 was the Managing Director but has expired on 13/11/2014. Cases against appellant No. 2 to 8 are for penalty. 5. The case was initiated based upon intelligence and was investigated by the Central Excise intelligence. A number of places were searched and statement of various appellants as also other persons were recorded. During searches, certain incriminating documents were recovered, particularly from appellant No. 5's premises in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Manager he was not the person who was checking the incoming scrap and he was concerned with over all supervision of the factory and under these circumstances it cannot be said that Shri Baheti has dealt with the goods which are liable to confiscation. Under the circumstances no penalty can be imposed on Shri Baheti under Rule 26 of the Central Excise Rules, particularly for period prior to 01/07/2007. 9. Learned counsel further submitted that Shri Manish Agarwal is alleged to be the broker and the primary submission is that in his statement Shri Manish Agarwal has admitted dealing with M/s. Bhagwati Steel Cast Ltd. but he has not admitted dealing with M/s. Ispat Pvt. Ltd. It was also submitted that the show cause notice incorrectly gives the impression as if Shri ManishAgarwal has admitted all the irregularity relating to M/s. Silver Ispat Pvt. Ltd. and therefore no penalty is imposable on appellant No. 2. Even late Shri Sampatraj Ladha, Director of M/s. Silver Ispat Pvt. Ltd. has named one Shri Chandresh Shah and not Shri Manish Agarwal. In any case appellant No. 2 has not dealt with any offending goods in the present case, rather he has not dealt with any goods, at the most, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er clearance they are not responsible for the same and no penalty can be imposed on them. It was further submitted that in the case of appellant No.7, this Tribunal has set aside the penalty in the following cases: (a) A/198-299/08/WZM/SMB/C-III dated 26/02/2008 (b) A/571-572/09/WZM/SMB/C-IV dated 07/10/2009 13. The learned Additional Commissioner (AR) submitted that the appeal of the main-appellant has been dismissed for non-compliance but it would be seen from the order-in-original that there are sufficient evidence which indicates that only invoices travelled to M/s. Silver Ispat Pvt. Ltd. are no HR trimmings covered by the said invoices was ever received by M/s. Silver Ispat Pvt. Ltd. and the HR trimmings have been transported to Viramgam wherein the same have been sold to 100s of small scale units manufacturing nails, MS wires, barbing, fencing etc. He further submitted that appellant no. 8 and appellant No.1 were Director and General Manager of the company at the relevant time. He further submitted that appellant No. 1 is the son-in-law of appellant No. 8. Thus, he was nor an ordinary employee but was in fact part of the management and would be the direct beneficiary ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Angadia service. It was also admitted by them that they have purchased HR trimmings from M/s. JISCO and M/s. IIL for which they have not got proper records/documents. Delivery of the consignments were also accepted by appellant No. 4. Appellant No. 4 has also stated that he used to issue blank letterheads to Shri Manish Agarwal for giving the same to M/s. IIL, Kalmeshwar. It was also submitted that appellant No.2 has admitted that appellant NO. 4 has visited his office in Mumbai with a proposal to find out customers for the invoices. 13.3 Learned AR further relies upon the judgment in the cases of Commissioner of Central Excise vs. Navneet Agarwal 2012 (276) ELT 515 (Tri-Ahmd) and Vee Kay Enterprises vs. Commissioner 2011 (266) ELT 436 (P H); in which penalties were imposed under Rule 26. It was also held that penalty is imposable under Rule 26 of the Central Excise Rules even before the introduction of sub-rule (2) of Rule 26. Learned AR also relies upon the judgment in the case of Sanjay Vimalbhai Deora vs. CESTAT 2014 (306) ELT 533 (Guj.) for imposition of penalty. In the said case, Hon'ble Gujarat High Court has held that the person would render himself liable for penalt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nails, barged wires, fencing etc. Under the circumstances they have helped the other appellants to do the manipulation. Further the invoices issued by them did not indicate the correct name of the consignee and therefore, their goods are liable to confiscation even under Rule 25 and therefore penalty on them is correctly imposed. 13.6 It was also submitted that some of the judgments quoted by the counsels for various appellants were of a period before the judgment of Sanjay Vimalbhai Deora (supra). Learned AR also relied upon the judgment of this Tribunal in the case of Nashik Strips Pvt. Ltd. vs. Commissioner of Central Excise 2010 (256) ELT 307 (Tri-Mumbai) involving exactly same issue of clearance of HRT by JISCO involving Viramgam based dealers such as M/s. Akshar Trading Companies, M/s. Umiya Corporation, M/s. Master Traders and M/s. Memon Associates by employing the same modus operandi involving the same parties as in the present case. It was submitted that in the said case it was also held that penalty under Rule 26 is imposable on the Directors even if he has not dealt with the impugned goods and contravention of Central Excise Act, 1944 or Central Excise Rules, 2002 all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as appellants No. 3 and 4 are concerned, the main contention of the advocate for the appellants was that they are only the bidder and they are neither purchaser of the goods nor handled the goods in any way. We are not convinced with such a submission. It is an admitted position that appellant No. 3 and 4 are based in and around Viramgam and are trading in HR trimmings. They have been bidding for the same on the online auction. From the investigation it is very clear that the HR trimmings so bidded were transported to Viramgam. It is obvious that the HR trimmings covered by the invoices was purchased by them and thereafter sold by them. They have definitely involved in the sale, purchase and transportation of HR trimmings there can be no doubt that they actively handled the consignments. Rule 26 of the Central Excise Rules are applicable to any person who acquires possession of or in any way concerned in transporting, removed, depositing, keeping, concealing, selling or purchasing or in any other manner deals with any excisable goods which he knows or has reason to believe are liable to confiscation. As mentioned earlier, the traders were actively involved with the goods. They wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hable. Accordingly, we hold that the amended provisions will not apply to the acts committed prior thereto. 10. Inspite of non applicability of rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty. 18. As far as appellant No. 5 is concerned, he was the transport commission agent and was actively aware that the invoices are for various persons within Maharashtra while the goods have to go to Viramgam. Not only this, he also made fictitious LRs in the name of fictitious tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consider it necessary to discuss each of these judgments. 21. Appellant No. 8, Sri. Sampatraj Ladha, passed away during the pendency of the proceedings. Therefore, the penal proceedings against him abate and his appeal disposed of accordingly. 22. In the result the appeals are disposed of as below: Appeal No. Name of the Appellant Final Order 1. E/889/2008 Ajay Kumar G. Baheti Appeal dismissed 2. E/746/2008 Manish Agarwal Penalty reduced to ₹ 1 lakh 3. E/745/2008 Appeals dismissed 4. E/1039/2008 Harshadbhai R. Desai 5. E/748/2008 Chandrakanth Nathwani 6. E/732/2008 Penalty reduced to ₹ 1 lakh each 7. E/753/2008 Ispat Industries Ltd. 8. E/888/20 ..... 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