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TMI Blog2017 (4) TMI 737X X X X Extracts X X X X X X X X Extracts X X X X ..... ersionary, albeit futile, tactics to draw attention to perceived deficiencies in investigation and adjudication. But nothing has been demonstrated by the appellant to show that they were pure as the driven snow or that they had no unaccounted clearances. On the other hand, investigation has successfully unearthed a well planned subterfuge of deceit and deception planned and executed by the manufacturer appellant with the nefarious intent of evading central excise duty that was enjoined of them to discharge, adversely affecting the exchequer. The maxim Acta Exteriora Indicant Secreta Interiora (outward acts show the secret intentions) is thus verily applicable to the appellants. Appeal dismissed - decided against appellant. - E/MISC/360/2007 & E/133/2007 and E/134/2007 to E/142/2007 - 40407-40416/2017 - Dated:- 7-3-2017 - Shri Dr. Satish Chandra, President And Shri Madhu Mohan Damodhar, Member (Technical) Shri S. Jaikumar, Advocate for the appellants Shri S. Nagalingam, AC (AR) for the respondent ORDER Per Madhu Mohan Damodhar All the aforesaid appeals since emanating from the same impugned order, they are taken up together for common disposal. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s repetition of invoice numbers involving value of ₹ 66,933/-; these were also liable to be added to the declared value of ₹ 2,12,13,406/- for the purpose of determining excise duty for year 2003-04. i) It further appeared that ACPL was not eligible to claim SSI duty free exemption of Rs. One crore during 2003-04, since the turnover of 2002-03 had exceeded the prescribed limit of Rs.Three crores. After allowing deductions of sales tax and considering balance value as cum-duty price, ACPL was therefore liable to pay additional excise duty of ₹ 14,71,729/- for 2003-04. 3. Accordingly, a SCN dated 06.07.2006 was issued, interalia, to ACPL, proposing total demand of differential excise duty amounting to ₹ 85,35,518/- along with interest liability thereon, equal penalty under Section 11AC of the Central Excise Act, 1944 and penalty under Rule 25 of the Central Excise Rules, 2002. Notice also proposed imposition of penalties under Rule 26 of the Rules to the following persons (the other appellants herein): a) Shri Ajith Raj Jain and Smt. A. Latha Jain (Directors of ACPL) b) Shri Umed Raj Jain (Proprietor of Apollo Packers), c) Shri B. Raja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are independent and distinct units. v) Mere fact that the appellant has done job work cannot be a reason to allege that the other units are dummy units. vi) During the cross-examination, witnesses have interalia deposed that they had purchased the raw materials in their respective companies, the said raw materials have been sent to ACPL for conversion into corrugated boards on job work basis and thereafter the said units had undertaken stitching activities on such corrugated boards and then sold the corrugated boxes to their customers. vii) Clubbing of clearances not sustainable except of M/s. Apollo Packers, hence clearances of 2002-03 is within limit of Rs.Three crores and ACPL is therefore entitled to SSI exemption benefit for the year 2003-04. viii) Appellant admits duty liability on account of duplication of invoices in 2003-04, to the extent of ₹ 16,16,181/-. differential duty admitted on this count is only ₹ 91,469/-. ix) Hence total admitted duty liabilities are as follows : S. No. Details Amount 1. Demand pertaining to the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red value of their clearances for 2002-03 as ₹ 1,37,90,166/-, additional undeclared clearances amounting to ₹ 4,08,76,172/- were effected through seven dummy units floated by them, the sum of these clearances amounting to ₹ 5,46,66,338/-. At this stage, it would be useful to reproduce the details incorporated in para-11 of the show cause notice, indicating therein the names of the alleged dummy units and sales value of their clearances in 2002-03 as under:- S. No. Name of the Dummy Unit Sale Value (Rs.) 1 Sekar Packers 48,50,562/- 2 Apollo Packers 28,45,027/- 3 Mohan Cartons 85,29,129/- 4 Amman Cartons 52,40,868/- 5 Sachin Packaging Industries 86,31,818/- 6 Paras Packers 83,95,781/- 7 Murugan Packaging Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appolo Packers S. Umed Raj Jain Jewellery shop Yes. Brother The following table, again in para-11 of the show cause notice, makes for interesting reading; 9.1 Shri M. Purushotaman, Proprietor of M/s. Amman Cartons, who had claimed to be a building contractor, however admitted during cross examination that he was a driver in a rental tempo and that he is now assisting his father who is a maistri in civil construction work. In para60.5 of the impugned order, the adjudicating authority has very appropriately questioned as to how such a person who earns only ₹ 3000/- per month could have owned a manufacturing unit doing business of more than ₹ 52 lakhs during 2002-03, and has logically concluded that Shri M. Purushotaman was only a dummy person in the hands of ACPL. 9.2 In respect of M/s. Sachin Packaging Industries, Shri H. Punaram, Proprietor, who had initially claimed to have a pawn broker shop, however admitted during cross examination that he came from Rajasthan to do some business. The adjudicating authority has, in para 60.7 of the impugned order has rightly questioned as to how such a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s getting only a salary of ₹ 4000/- at present was the proprietor of a Company which has done business of more than ₹ 48 lakhs during 2002-03. In a statement dated 13.09.2005, Shri B. Rajasekaran, has admitted the payments received by him and remitted to the bank account would be withdrawn by him and handed over to Shri Umed Raj Jain. Further, B. Rajasekarans statement that he was not involved in any activity in relation to manufacture and clearance of corrugated boxes etc., have not been rescinded by him during cross examination. The obvious conclusion is that M/s. Sekar Packers was a dummy unit created by ACPL. 9.7 In respect of M/s. Appolo Packers, the appellants have already conceded that the clearances thereof will have to be added to that of ACPL, which equates to an admission that the unit was a dummy unitof ACPL. 9.8 Interestingly, except for M/s. Sachin Packaging Industries, all the other units were started and closed in the financial year 2002-03 itself. However, during investigation, ostensibly to justify the existence and manufacturing by these units, purchase invoices of stitching machines were produced by each of these units. However, when investigat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o various machines that are required for the manufacturing of corrugated boxes and the facilities that were available with Apollo Corrugators and in all these 7 dummy units, the only inevitable conclusion is that the 7 units wee dummy units having no manufacturing activity or any other facility and were created on paper to evade Central Excise duty. All the people who were cross examined are even today under the direct/indirect control/part of family members of promoters of M/s. Apollo Corrugators Pvt. Ltd. 61. From the foregoing factors, it is clearly evident that ACPL had, with the active assistance of Shri Umed raj Jain (former Director of ACPL and also brother of Shri Ajit Raj Jain, present Director of ACPL) persuaded seven individuals to float seven dummy proprietary units (including one in the name of M/s. Apollo Packers under the proprietorship of Shri Umed Raj Jain) and on the pretext of labour activities on account of the said seven dummy units manufactured and cleared goods from ACPL without discharging the duty due thereon. After existence of a very short period of these dummy units, the practice of labour activity in their names wee discontinued by ACPL. The cumula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (outward acts show the secret intentions) is thus verily applicable to the appellants. In the event, the determination of total duty liability of ₹ 85,35,518/- by the adjudicating authority in the impugned order under 11A(2) of the Act, on ACPL along with interest liability thereon in terms of Section 11 AB ibid, imposition of equal penalty of ₹ 85,35,518/- under Section 11AC ibid are very much in order and does not call for any interference. 12.1 Coming to the remaining appeals filed by the other appellants, they are in relation to penalties imposed on each of them in the impugned order, under Rule 26 of the Central Excise Rules. 12.2 Appellants Shri Umed Raj Jain (Appeal E/138/2007) and Shri Ajith Raj Jain, Director of ACPL (Appeal E/141/2007) are aggrieved by the imposition of penalty of ₹ 45 lakhs each on each of these appellants under Rule 26 of the Rules. In their appeals, they have interalia contended that as the duty demand itself is not sustainable, penalty imposed on them is also not sustainable. They submit that there is no specific allegation or other evidence as to how they had rendered themselves liable for such penalty. The appellants also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or in any other manner dealing with excisable goods and who has the knowledge that consequence of such said acts or omissions on his part could result in the impugned goods becoming liable for confiscation under the Act/Rules is then exposed to imposition of penalty under this rule. Only, the person implicated/concerned should have the knowledge of possible confiscation of the impugned goods. Both these appellants being the fulcrum of the entire modus operandi, they cannot claim they were unaware that the goods so cleared unaccounted or clandestinely would have been liable to confiscation. In the event, we are of the considered opinion that imposition of penalties of ₹ 45,00,000/- (Rupees Forty five thousand only) on Shri Umed Raj Jain and ₹ 45,00,000/- (Rupees Forty five thousand only) on Shri Ajith Raj Jain, under Rule 26 ibid is fully justified and do not call for any interference. 12.3 The other appellants, namely, Shri B. Rajasekar (A.No. E/139/2007), Shri P. Murugalingam, (A.No.E/140/2007), Shri H. Punaram (A.No. E/135/2007), Shri M. Purushothaman (A.No. E/142/2007), Shri K. Mohanlal (A.No.E/137/2007) and Shri S.Premchand Jain (A.No. E/130/2007), have fil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hs under Rule 26 of the Rules. In her appeal, she has inter alia submitted that non-payment of duty even after crossing the SSI exemption limit is not with any intention to evade payment of duty but only due to ignorance. She has also pointed out that the main appellant has paid the duty liability admitted by them. She contends that there is no specific allegation as how the appellant had rendered herself liable for penalty under Rule 26 of the Rules except for a passing reference in para-21 of the SCN. The appellant has also reiterated the objection concerning inapplicability of penalty under Rule 26 on the grounds that there is no proposal in the notice for confiscation of excisable goods. In this regard, the contention concerning inapplicability of penalty under Rule 26 on account of non-proposal in the SCN for confiscation of excisable goods, also made by other appellants Shri Umed Raj Jain and Shri Ajith Raj Jain, have already been analyzed supra and found without merits. However, there is some merit in the other contention of the appellant that there has been no allegation in the notice or giving grounds therein for imposition of penalty on her. No doubt, the appellant is a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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