9911796707
TMI Blog2015 (11) TMI 92X X X X Extracts X X X X X X X X Extracts X X X X ..... but of width of 1 to 3. Such H.R. trimmings are used in the manufacture of MS wires. Such wires, in turn, are used for the manufacture of nails, barbing, fencing, etc. The manufacture of MS wires, nails, barbed fencing wires etc. is carried out by large number of small scale units, who are availing SSI exemption. A large number of such units are located in and around Viramgam in the State of Gujarat. Such units are located mainly in Amreli, Keshod, Lakhator, Limbadi, Malpur, Mawa, Mehsana, Vijapur, Watwa, Viramgam, etc. In fact, Viramgam appears to be the main centre. 2. The HR trimmings are sold by appellant No. 10 by online auction process. Such H.R. trimmings are bidded purchased for trading by certain traders based in Viramgam (appellant Nos. 3 to 8). Such HR trimmings are cleared by appellant No. 10 on payment of appropriate Central Excise duty and by issuing corresponding invoices indicating details of duty payments. Since the material is used by small scale industry who are not required to pay excise duty, CENVAT credit of duty paid on such H.R. trimmings are not available to SSI units. Duty paying invoices are therefore not usable by such SSI units. What was therefore, be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mumbai to Viramgam. Further fictitious documents for safe passage from Dolvi/Taloja to Viramgam were also handled by him. Benefit of fraudulently availed credit was distributed between various appellants as also brokers/dealers (such as Shri Manish Ramavtar Agarwal and Shri Pawankumar Agarwal), etc. 3. When the transactions were dealt through the registered dealer, the invoices of appellant No. 10 would indicate the name of the registered dealer and the registered dealer in turn would issue invoices to the main appellant indicating that the goods have been purchased from appellant No.10. Based upon such invoices, main appellant will be able to avail the credit of duty paid on HR trimmings. Brokers who were not registered with the Central Excise department were acting behind the screen inasmuch as the invoices issued by appellant No.10 would indicate the name of the main appellant even though the said broker would coordinate with the bidder who are generally based in Viramgam, get the goods transported to Viramgam and collect the invoices in the name of the main appellant and transmit the same to the main appellant. Further, cash for the HR trimmings will be received from the Viram ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Kalmeshwar to Viramgam. Most of the H.R. Trimmings were transported using the vehicles having Gujarat registration number. Such vehicles are not allowed to transporting freight within Maharashtra i.e. in this case, from Nagpur to Nasik or Dolvi to Nasik. Such vehicles can only carry freight from Maharashtra to Gujarat. Statements of various persons confirmed that HR trimmings were sent to Viramgam and nearby areas and only invoices are made in the name of main appellant. 6. Based upon detailed investigation, a demand notice dated 05/06/2006 was issued to the main appellant for demand, interest, and penalty as also to other appellants for penalty. The said notice required all the noticees to file the defence reply within 30 days. Para 30 of the said notice specifically directed the noticees that they, if desired, to have inspection of documents relied upon in the case, or to take photocopies thereof, they may approach the office of DGCEI on any working day with prior intimation. Some of the noticees replied to the said notice. However, the main noticee neither requested the DGCEI for copies of the relied upon documents nor collected the relied upon documents or conducted any inspec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ground that even though the show cause notice proposes recovery of interest from the main appellant, however, Commissioner in her order has not given any finding on direction on the said issue and has not confirmed the same. 9. The case was posted for hearing on number of occasions by this Tribunal. However, there was no representation from the main appellant and appellant No. 2 and in the interest of justice, case was adjourned number of times. Advocates for other appellants, however, did appear on such dates. Thereafter it was decided to serve the hearing notice through the office of the jurisdictional Excise authorities. Hearing notice for hearing before this Tribunal on 29/04/2015 was served by pasting on the door of the factory and drawing a panchanama dated 28/04/2005 as per Section 35C of the Central Excise Act by the jurisdictional excise authorities. On the date of hearing on 29/04/2015. A fax was received requesting for adjournment so as to enable them to find the papers and appear before this Tribunal for arguments. Keeping in view the request of the main appellant and appellant No.2 the case was adjourned for 12/05/2015 and the hearing notices were again served through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is the responsibility of the department to supply the relied upon documents along with show cause notice and non-relied upon documents within a reasonable period of six months. It was further submitted that the Commissioner in his finding has stated that scrap was indeed received by the appellant from M/s. Shree Durga Iron & Steel Company Pvt. Ltd., Mumbai; M/s. Surajbhan Rajkumar Co. Pvt. Ltd., Mumbai and M/s. Jai Ambe Steel Co., Mumbai, all of them are registered dealers. It was submitted that from the above it is clear that it is not the case of the department that no scrap was received from the registered dealers, and credit cannot be denied to the appellant when such credit was taken based on invoices issued by the dealers. In support of their contention, this Tribunals judgment in the case of R.S. Industries vs. Commissioner of Central Excise 2003 (153) ELT 114 and Bhairav Exports vs. Commissioner of Central Excise 2007-TIOL-160-CESTAT-MUM were quoted. It was further submitted that the appellant have taken reasonable steps contemplated in law and, therefore, they are entitled for the credit. 11. It was submitted in the grounds of appeal that Explanation to sub-rule (2) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other companies by issuing the change of name letter. It was further submitted that the customers found by the commission agent Shri Manish R Agarwal and the lifting of HR trimmings under cover of excise invoice of M/s. IIL from their factory and its onward deliveries were made by Shri Chandrakant Nathwani, proprietor of M/s. Shri Khodiyar Transport as transport booking agent. It was further submitted that the appellants were only selling their right to lift the goods in favour of the buyer which the commission agent brought and they were only receiving a commission of Rs. 150/- to Rs. 200/- PMT. It was further submitted that the demand consist of four parts and they are concerned only with the first part and the demand in the first part amounts to Rs. 5,15,511/-. It was further submitted that even this part of the demand was based upon not only them but along with 5 to 6 other Gujarat based bidders. Thus, the said amount of Rs. 5,15,511/- was for all the six bidders. As against the demand of Rs. 5,15,511/- the adjudicating authority has imposed a penalty of Rs. 5 lakhs each under Rule 26 for the partner as well as on the partnership firm ignoring the role played by any one of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ery of the goods from M/s. IIL. The customers were found by Shri Manish Agarwal and the delivery was made to the ultimate buyer through Shri Khodhiyar Transport of Shri Chandrakant Nathwani. It was submitted that the appellant has explained in his statement the said position about the participation in auction and transferring the rights to procure the goods at fixed price by issuing a letter to change in name which is permitted under the said auction scheme and is a regular business practice. The appellant has therefore neither dealt with the goods physically nor they have dealt with any excise invoice and in view of the said position no penalty under Rule 26 can be imposed. It was further submitted that the amendment made from 01/03/2007 cannot be made applicable in this case as the matter pertains to a period prior to 01/03/2007. The two case laws quoted in the case of appellant No.3 were reiterated. It was also submitted that the penalty has been imposed on the partnership firm as well as on the individual partner. It was submitted that the partnership firm does not have independent existence separate from partner, therefore, penalty should not be imposed on both of them. In sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nshul Steel Scrap Corpn. 2011 (264) ELT 535 (Tri.-Del.) and Commissioner of Central Excise vs. Mini Steel Traders 2014 (309) ELT 404 (P&H). were quoted. It was also submitted that there was no proposal in the show cause notice for holding the goods liable for confiscation and there is no finding for confiscation and hence no penalty can be imposed. It was further submitted that the proposal and confiscation order is for the inputs i.e. scrap which is used by JSPL on which no duty was paid and there is no proposal for confiscation of H.R. trimmings. In other words H.R. trimmings so cleared has not been proposed for confiscation and in view of this fact no penalty can be imposed under Rule 26. For imposition of penalty both on the partner as well as partnership firm case laws were quoted for appellant No.4 were reiterated: (a) Commissioner of Central Excise, Surat vs. Alfa Synthetics 2009 (241) ELT 480 (Tri.-Ahm); (b) Moontex Dyeing & Printing Works vs. Commissioner of Central Excise, Surat 2007(215) ELT 46 (Tri.-Ahm.); (c) Harish Dyeing & Printing Works vs. Commissioner of Central Excise, Surat 2001 (138) ELT 772 (Mum.); (d) Vinod Kumar Gupta vs. Commissioner of Central Exci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined and transported by the appellant are duty-paid goods and covered under excise invoice and it cannot be said that the goods when dealt by the appellant as transport commission agent are liable for confiscation. For invoking the provisions of Rule 26 itself require that the goods be liable for confiscation and the appellant should be aware that the said goods are liable for confiscation. It was also submitted that they had bona fide belief that the goods which are being dealt by them are duty-paid and not liable to confiscation. It was submitted that, as the transport agent the appellant has taken due precaution to ensure duty paid goods lifted and delivered. This itself shows that there was no mala fide intention on their part and there are no grounds for invoking Rule 26 to impose penalty on them. It was further submitted that there is no proposal and confiscation order for the HR trimmings which are cleared from the factory from the premises of M/s. IIL and for which the address was shown in the bill. Thus, the HR trimmings which should have been diverted has not been proposed to be confiscated nor has it been confiscated under Rule 25 of the Central Excise Rules and accordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of DGCEI. However, they have never bothered to either inspect these documents or take Xerox copies of the documents. Now at the Tribunal stage, they are claiming that it is the duty of the department to supply copies of the relied upon documents along with notice. It was further submitted that the advocate of the appellant No. 1 during adjudication proceedings withdrew his vakalatnama and the advocate has stated that he has no instruction as to whether the appellant has made any effort to carry out any inspection of documents or to get copies of the documents. In view of such approach it cannot be said that principle of natural justice had been violated. It was further submitted that even before this Tribunal the conduct of the appellant has been very very poor. He did not respond to the notices sent from the Tribunal. Even after the notice was sent through the jurisdictional Central Excise authorities he has invariably asked for adjournment by sending fax on the date of hearing and though in his fax dated 28/05/2015 he has stated that they have engaged the advocate but on 25/06/2015, they have now stated that the matter may be decided based upon their memo of appeal. Under the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other place within Maharashtra. Thus, these vehicles could not have been transported the HR trimmings from Kalmeshwar, Nagpur or Dolvi/Taloja, Mumbai to Nashik. These vehicles could only transport goods from Maharashtra to Gujarat. Further the registration number of vehicles on enquiry with the RTO, it was found some of the vehicles were in fact two-wheelers and three-wheelers or oil tankers or vehicles which are not suitable for transporting scrap. The learned AR also quoted this Tribunals decision in the case of Bhagwati Steel Cast Pvt. Ltd. vs. Commissioner of Central Excise reported in 2013 (293) ELT 417 (Tri.-Mum.) in which case, the Tribunal has analyzed clearly the scheme of MODVAT credit and the steps to be taken by the appellant. In view of the above factual position the appeal of both the appellants are required to be dismissed. 25. As far as appellant Nos. 3 to 10 are concerned, during the hearing on 15/05/2015, the learned AR submitted that para 27 of the show cause notice very clearly states that these appellants were concerned themselves with removing, selling, storing, concealing, transporting and otherwise dealing with the aforesaid HR trimmings in a manner which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed fictitious transport company. Other fictitious documents were also made so as to avail safe passage of the goods from the manufacturing unit to the user in and around Viramgam. 27. As far as appellant No. 10 is concerned it was submitted it is true that they have paid the full duty as per law. However, the fact remains that the goods were transported in vehicles having Gujarat based registration who were not allowed to carry the freight between their units located in Maharashtra to the consignees address which was also located in Maharashtra. Thus, it indicates that they were aware that the goods are going to Viramgam. It was also submitted that during the search, documents were recovered from the appellants office wherein it was indicated that due to rain in Viramgam they were not getting good biddings. This also clearly indicate that they were aware their HR trimmings were used by various units in and around Viramgam. Under these circumstances it was incorrect on their part to change the name of the consignee to the main appellant who was based in Nasik. In view of the above the goods cleared by them were liable to confiscation and hence they are liable to penalty. 28. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1994 used in or in relation to the manufacture of excisable goods. 73.2 Rules 11 of the Central Excise? Rules, 2002 stipulates that no excisable goods are to be removed from a factory or warehouse except under an invoice signed by the owner of the factory or his authorised agent. Sub-rule (2) of the said Rule stipulates that the invoices shall be serially numbered and shall contain registration number, address of the concerned Central Excise Division, name of the consignee, description, classification and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. The proviso to the said rule provides the dispensation of the copies of the invoices i.e., original copy for the buyer, duplicate for the transporter and triplicate for the assessee. Sub-rules (4) to (6) deal with certain procedural requirements relating to invoices and sub-rule (7) provides that the provisions of said Rule shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. Similar provisions were stipulated in the Central Excise Rules, 2001 and also the Central Excise Rules, 1944 to the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tipulated duty by the producer/manufacturer of such goods and the goods should be received by the manufacturer availing credit in his factory and the inputs or capital goods so received should be utilised in or in relation to the manufacture of final products. In respect of inputs received from a first or second stage dealer, an additional condition is stipulated to the effect that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoices issued by him. It is further stipulated that the burden of proof regarding admissibility to Cenvat credit shall lie upon the manufacturer taking such credit. Sub-rule (2) of Rule 7 of the Cenvat Credit Rules, 2001/2002 (as they stood at the relevant time) further stipulated that a manufacturer/producer taking Cenvat credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken Cenvat credit are goods on which appropriate duty of excise as indicated in the document accompanying the goods has been paid and the manufacturer shall be deem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is reportedly being misused. Therefore, I propose to restrict the issue of Modvatable invoices by dealers up to two stages. Suitable provisions are also being made in the Modvat Rules for charging of interest in the case of wrong availment of Modvat credit and for mandatory penalty for misuse of Modvat facility." It is in this background and context, the issues involved in the present case need to be examined." 31. At the outset we observe that the main appellant is engaged in the manufacture of MS ingots for which they require iron and steel scrap. The goods involved in the present case are HR trimmings. These are nothing but HR coils having varying width from 1 to 3. These goods are not iron and steel scrap in the conventional sense. These may be waste and scrap as far as manufacturer M/s. Ispat Industries is concerned but can be used for the manufacture of MS wires which has vide variety of applications like in the manufacture of nails, fencing wire, etc. It is also common knowledge that such HR trimmings fetch higher value than the scavenger scrap or bazaar scrap. There is no reason for any prudent MS ingots manufacturer to use such HR trimmings in coil form for melting. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... We find that the main appellant has not produced any independent evidence whatsoever to support that the H.R. trimmings covered by the invoices were received by them except the copy of the invoices. 35. Further, we note appellant No.2, when faced with the said question could not give any reply. He submitted that he will check up the position and submit the detailed cost data sheet. However, as mentioned earlier, in spite of six summonses over a period of 1= years, the cost data sheet to justify the use of HR trimmings in the manufacture of ingots was not submitted. Mr. Jaiprakash Bhartia did not even respond to the summons and did not present himself for the investigation for examination. After the issue of show cause notice also, for over eight months he did not ask for the copy of any of the relied upon documents. He did not approach the office of the DGCEI for inspection of the documents, perhaps, keeping in view the fact that gist of some of the statements are already included in the show cause notice and the show cause notice clearly indicated that the goods transported were in the Gujarat based registration number vehicles and other evidences. It was only during the hearing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to support that vehicle number mentioned in the invoices were in fact went to Gujarat Viramgam area with the HR trimmings. 37. Further, we find that it is undisputed that consignments were transported through the trucks having Gujarat registration Number. For the transportation of the goods within the State of Maharashtra such trucks cannot undertake this activity. None of the appellants have contradicted this allegation or said anything about this allegation. We also find that the incriminating documents recovered from M/s. SKT i.e. the office of the transport commission agent Shri Chandrakant Nathwani (appellant No. 9) clearly indicates the vehicle number, date, weighment of the goods, the destination where the goods are unloaded and other details. Shri Nathwani in his statements explained the contents of this register and have admitted that consignments were invariable going to Viramgam. It is also clear that in large number of cases Shri Chandrakant Nathwani was coordinating with M/s. Ispat Industries Ltd.s office to get the name of the consignee/buyer changed based upon the letter from the original bidder. The Register A5 and A7 recovered from M/s. SKT are reliable evi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f these rules or the notifications issued under these rules; or (b) does not account for any exciseable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage or any exciseable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the exciseable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand] whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice." "Rule 26. Penalty for certain offences : (1) Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tioned earlier, the traders were actively involved with the goods. They were also actively involved in getting the names of the consignee changed to the main appellant with an idea that the main appellant can avail the CENVAT credit. Further, since the invoices were not indicating their name but were indicating the name of the main appellant the goods are liable to confiscation as this contravenes Rule 25. Another submission of the learned counsel was that the show cause notice or the impugned order does not propose confiscation of the goods or held liable to such confiscation of such goods, we are unable to appreciate this position. Para 27 of the show cause notice, proper confiscation of HR trimmings and, therefore, appellants at sr. No. 3 to 8 are liable for penal action under the provisions of Rules 26 of the said Rules. We have no doubt that the HR trimmings so diverted to Viramgam were liable to confiscation and the appellants Nos. 3 to 8 have dealt with the goods 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. 44. We also note that the Honble High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for confiscation. However, we find force in the contention of the learned counsel for the appellants that few bidders put together have bidded for the goods on which duty involved is ? 5,15,511/- and, therefore, the penalty imposed upon each of the individual should be on the lower side. We also observe that the individual appellants have not furnished any detail about the exact quantum of duty relating to the goods dealt by them. 46. Appellant has also contended that the penalty cannot be imposed on partner as well as on the partnership firm. We find that this issue is dealt by this Tribunal in appellants own case in the case of Nasik Strips Pvt. Ltd. vs. 2010 (256) ELT 307, specifically in para 6(c) of the order. Therefore, we do not find any need to again discuss the issue. However, keeping in view the overall facts and circumstances of the case, we reduce the penalty on appellant No. 3 to 8 from ? 5 lakhs each to ? 1 lakh each. 47. As far as appellant No.9 is concerned, he was the main transporter 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 was also made fictitious LRs in the n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nvolved in various judgments quoted and we do not consider it necessary to discuss each of these judgments. 50. Appeal of the Revenue is on the ground that the Commissioner has not passed any order relating to interest under Section 11AB of the Central Excise Act, 1944. As we have confirmed the duty amount, it goes without saying that the appellant will be required to pay interest as per the provisions of Section 11AB of the Central Excise Act, 1944. The appeal of the Revenue on the said count is allowed. 51. In the result the appeals are dispose of as below: Appeal No. Name of the Appellant Final Order 1. E/1572/2007 Jai Prakash Strips Limited Appeals rejected 2. E/1573/2007 Jai Prakash Bhartia - 3. E/90/2008 Akshar Trading Co. Penalty reduced to Rs. 1 lakhs each 4. E/91/2008 Harkishan B. Soneji - 5. E/1584/2007 Jyoti Products - 6. E/169/2008 Memon Associates - 7. E/170/2008 Mohsin H. Memon - 8. E/1601/2007 Arun Acharya - 9. E/1602/2007 Chandrakant Nathwani Penalty reduced to Rs. 2 lakhs 10. E/1469/2007 Ispat Industries Limited Penalty reduced to Rs. 50,000/- 11. E/1453/2007 Commissioner Appeal allowed. 52. Appeals disposed of in the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
