9911796707
TMI Blog2017 (4) TMI 426X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 Shri. R. Palanisamy, 12, NGGO Colony 7th Street, Erode Yarn Broker and depot in-charge of the first appellants Appellant No.3 Penalty Rs. 50,000/- 4. E/477/2006 Shri. P. Dhandapani, Prop. Of M/s. Sakthi Reeling Unit, no.13, Pasu Pon Nagar, Thadicombu Road, Chennamanaicken patti Post, Dindigul Job Worker (Reeling Unit) for first appellants. Appellant No.4 Penalty Rs. 25,000/- 2. Show Cause Notice reveals the following basis for the purpose for its issue: "Scrutiny of the records sized from the above premises and further investigations conducted with various other job workers / customers of RRM appeared to reveal the following i) M/s. Raja Rajeswari Spinning Mills (RPM) are manufacturers of cotton yarn in various counts (ranging from 10's to 42's count) in cone form as well as in hank form. ii) RRM had 12248 spindles, seven double sided reeling machines a three single sided reeling machines. iii) RRM manufactured cotton yarn in plain reel hanks within the factory as well as through various reeling units viz. Sakthi Reeling, M/s. Arasan Textiles etc. by sending the cone yarn under cover of AR3As and got it back from the said reelers under AR3As. iv) RRM cleared ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... san Textiles and M/s. Sakthi Reeling Unit, Dindigul indicated bogus conversion of cone yarn into hank yarn. xv) The records seized from the residences of Shri. Palanisamy indicated that RRM have cleared cone yarn in the guise of hank yarn to evade payment of duty. xvi) Verification conducted with various customers of RRM indicated unaccounted clearance of cotton yarn in cone form and clearance of cone yarn in the guise of hank yarn through SVA / Shri. Palanisamy. 3. Upon adjudication by original authority following consequence arose: ORDER i) Demand of duty liability of an amount of Rs. 49,24,207/- (BED/CENVAT of Rs. 42,81,920/- & AED(T&TA) of Rs. 642287/-) (Rupees Forty nine lakhs twenty four thousand two hundred and seven only) from M/s. Raja Rajeswari Spinning Mills (P) Ltd., Vedasandur, on the cotton yarn removed illicitly during the period from 5/99 to 9/02, under the proviso to Section 11A(1) to the Central Excise Act, 1944. ii) Penalty of Rs. 49,24,207/- was imposed on M/s. Raja Rajeswari Spinning Mills (P) Ltd. Vedasandur, under Section 11AC of Central Excise Act, 1944 read with Rule 25 of Central Excise Rules, 2002. iii) Interest at the appropriate rates on the duty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unts has been admitted by Shri. Subramanian, Accountant of RRM in his statement dated 17.09.2002. b. The Worker-wise production note book, mixing cost details. Yarn Realization Statements (Chit Nos.78, 79 and 156) contained in the made up file recovered from RRM indicates the actual production of cotton yarn at RRM. On comparing the same with their accounted production it appeared, that RRM have suppressed the actual production in their books of accounts, as below: (Qty in kgs) Month Accounted production in RG-1 Actual production As per the production note book As per the Mixing cost details As per the Yarn Realization statement June, 02 5327 13728 10684 ------ June, 02 51966 59689 ---- 79594 c. From a comparison of the cone winding production details files, shift-wise spinning production and production log book recovered from RRM with the RG-1 it appeared that RRM had accounted the cone production as hank production during the period from 2/2002 to as given below: Month Actual Production (in kgs) Accounted production (in kgs) February, 2002 Cones: 72664 kgs Cones: 7402 kgs Hanks: 51080 kgs March, 2002 Cones: 55318 kgs Cones: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut indicating full address or Sates Tax RC No. etc. as illustrated below: 'Thangam Textiles, Weaver Colony, Kumarapalayam' This is further proved by the fact that the torn pieces of invoices No.81/15.09.2001 and 82/15.09.2002 issued in the name of M/s. Laxmi Textiles, Bhavani and M/s. Valli Textiles, Edapadi found available at SVA were raised in the name of unidentifiable persons but delivered to Shri Palanisamy, Agent of RRM. Further summons issued to various weavers as also to Thangam Textiles, Kumarapalayam, Lakshmi Textiles, Bhavani, P. Chinnasamy, Pallipalayam, Krishnamoorthy, Pallipalayam, Valli Textiles, Edapadi, Vijay Tex, Erode and M/s. RG Textiles, Erode were returned with postal remarks that no such person available clearly shows that all the above persons were fictitious ones and the invoices were raised on such fictitious names to cover up the actual sales of cone yarn by RRM through Shri Palanisamy. Further though the invoices have been raised against many such names as above, the payments on this count were made by Shri Palanisamy. g. The note books No.11/15, 3/15, 4/15 and 5/15 recovered from the godown premises of SVA contains the details of payments made by Shr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bales of hank yarn From the entries found in the diary of Shri Palanisamy it is seen that RRM had sent cone yarn in the guise of hanks. This modus is further corroborated by the sale pattern adopted by SVA for clearance of cone yarn in the guise of hank yarn. In his statement dated 5.10.2002, Shri Palanisamy has admitted that even though they received cotton cone yarn, bills were raised by RRM as hank yarn in the names of various parties. 12. We find that the lower authority has correctly analyzed all such facts in this regard and come to a proper conclusion that RRM had indulged in the clearance of cotton cone yarn in the guise of hank yarn to evade payment of duty. It is pertinent to note that the admissions made by Shri Palanisamy in his statement have not been since retracted by him or denied at any stage, including during adjudication process. From these evidences, the stark picture that emerges is that bills for hank yarn were raised by RRM in the name of different parties, in actuality, only cone yarn was cleared from RRM and delivered to Shri Palanisamy, who in turn sold such goods without any bills to his customers. The purported buyers of the hank yarn so raised by RRM ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r contended that statements of factory staff/Director are uncorroborated in the absence of any tangible evidence regarding clandestine receipt of raw materials, manufacture of finished goods out of these materials and clandestine removal of the same to the buyers without payment of duty. We do not find merit in this argument, considering that the investigation had yielded a cache of incriminating documents including worker-wise production note book, yarn realization statement, cone winding production detail files, shift-wise spin production file, diary of Sh. M. Mohan Kumar, Factory Manager, records retrieved from M/s. Arasan Textiles, M/s. Shakthi Reeling Unit etc., diary and note books retrieved from Sh. Palanisamy/SVA containing interalia details of receipt of cotton yarn from RRM fictitious invoices raised by RRM, etc. These documents have enabled corroboration of modus operandi and have confirmed the clandestine removals and resultant evasion of duty. From the worker-wise production note book and yarn realization statement recovered from RRM, the fact of suppression of actual production viz-a-viz. books of accounts could be established. Suppression of production has also been ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tton cone yarn into hank yarn. vi) RRM had cleared cotton yarn without issue of invoices and without payment of duty. Vii) RRM had cleared cotton cone yarn to various parties through their broker Shri. Palanisamy and through SVA, managed by Shri Palanisamy and raised invoices as hank yarn to evade payment of duty since till 29.02.2002, cotton yarn in hank form attracted nil rate of duty. viii) There was a clear nexus between RRM and Sh. Palanisamy/SVA and that invoices as cotton hank yarn was raised in the name of many fictitious persons and in actual cotton cone yarn was cleared by RRM to Sh. Palanisamy/SVA and the same was in turn sold by the latter to various customers. However tine variety of cotton yarn, whether cone or hank, is deliberately not mentioned in the bills raised by SVA. ix) RRM have received the sale proceeds directly from the broker Shri. Palanisamy for all the clearances of cotton yarn cleared to various persons through him and the sale proceeds were received in cash for the unaccounted clearances. 17. Appellants have contended before us that investigation was faulty and that there is credibility in the evidences and conclusions of the adjudicating authorit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ural events, human conduct etc. in relation to the facts of the case". The Hon'ble High Court of Madras in the case of Alagappa Cement Ltd Vs. CEGAT [2010(260) ELT 511 (Mad)] has categorically laid that plea of absence of positive proof of commitment of offence is not a defence for the author of such plea. It is settled principle of law that law does not insist upon an impossible threshold of proof to establish allegations, but if on probabilities the statutory authorities can establish evasion, the legal standards are adequately met with. 18. Viewed in the totality of the facts and circumstances of the appeals before us, in our considered opinion; the contentions of the appellant manufacturer (RRM) fail on all counts. This being so, the duty liability of Rs. 49,24,207/- evaded through such subterfuge by the appellants and demanded by the original authority under proviso to Section 11 (A) (1) of CEA, 1944, along with interest thereon, which demand been upheld by the Commissioner (Appeals) in the impugned order, does not call for any interference. For the same reasons, equal penalty imposed on the appellants under Section 11 AC ibid is also justified and appeal on this count a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llant Shri M. Ramamoorthy definitely attract the provisions of Rule 26 of the Central Excise Rules, 2002 and in consequence, the penalty imposed of Rs. 1,00,000/- on the said appellant by the original authority and upheld by the Commissioner (Appeals) in the impugned Order, does not merit interference in our view. 20. In Appeal No.E/450/2006, appellant Shri R. Palanisamy has submitted that he was not responsible for the malafide transactions of RRM; that lower authority as well as the Commissioner (Appeals) have imposed/upheld penalty on him which is excessive and unwarranted; that no SCN was issued to M/s. SVA that though he is a person acting as independent cotton yarn procurer as well as depot in charge of RRM, there were no specific charges against him in the capacity of yarn procurer; that in the absence of guilt, personal penalty could not be imposed on him under Rule 26 of the Rules. However, from analysis of the facts on record it clearly emerges that in his statements dated 17.09.2002 and 5.10.2002, the said appellant had laid bare the modus operandi followed in this case, including his own role therein. Incriminating diary and other documents recovered from the godown of ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
