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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 ..... eir turnover for 2001-02 and 2002-03 as Rs. 85,63,438/- and Rs. 78,85,538/- respectively. b) There were instances of repetition of sales invoice/ serial numbers/irregular serial numbers of invoice and also missing of invoice serial numbers issued for sales purposes. c) Shri Ajith Raj Jain, Director of ACPL, in a statement dated 15.03.2006, admitted that they used to suppress clearances of manufactured goods by raising invoices under the same serial numbers twice and by destroying the second invoice on completion of the transaction. d) During the year 2001-02, ACPL had reported in their sales tax returns, clearances of sale value of Rs. 1,75,23,061/- to nine customers. After allowing deductions of sales tax paid, abatement of duty free clearances for SSI units upto Rs.one crore, and considering the balance amount as cum-duty value, the assessable value worked out to Rs. 61,60,040/-, on which central excise duty liability not paid worked out to Rs. 9,85,606/-. e) For the year 2002-03, they had made clearances on their own to various customers involving sale value of Rs. 1,37,90,166/-. f) Apart from the above, during 2002-03, ACPL had additionally got manufactured and cleare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r) confirmed the proposals made in the SCN for duty demand of Rs. 85,35,518/- with interest liability thereon, on ACPL and also imposed the following penalties:- * Rs. 85,35,518/- under Section 11 AC ibid on ACPL * Rs. 45,00,000/- (Rs.Forty five lakhs) penalty under Rule 26 of Central Excise Rules, 2002 each on Shri Ajith Raj Jain, Smt. A. Latha Jain and Shri Umed Raj Jain. * Penalty of Rs. 1,00,000/- (Rs.One lakh) under Rule 26 ibid each on Shri B. Rajasekar and on Shri P. Murugalingam * Penalty of Rs. 2,00,000/- (Rs.Two lakhs) under Rule 26 ibid on Shri M. Purushothaman * Penalty of Rs. 4,00,000/- (Rs.Four lakhs) under Rule 26 ibid each on Shri K. Mohan Lal, Shri H. Punaram and Shri S. Premchand Jain Aggrieved, all these appellants have filed the aforesaid appeals. 5. The matter came up for hearing on 18.01.2017, Shri S. Jaikumar, Ld. Advocate, on behalf of all the appellants has interalia made the following submissions:- i) For the year 2001-02, against the duty demand of Rs. 9,85,606/- they admit their duty liability of Rs. 9,32,882/, after deducting the value of clearances of Rs. 2,56,762/- pertaining to 2000-01 wrongly included by Revenue. ii) With regard to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he case. For the year 2001-02, appellants have more or less admitted and accepted their duty liability demanded thereof for the period except raising a contention that against duty demand of Rs. 9,85,606/-, the correct duty liability should be Rs. 9,32,882/-since the clearances pertaining to 2000-01 amounting to Rs. 2,56,762/- have been wrongly included by Revenue. However, no clinching evidence in support of this contention is available. On the other hand, it is established that for the period 2001-02, against the total value of clearances declared in the sales tax returns, namely Rs. 85,63,438/-, value of actual clearances were more than double at Rs. 1,75,23,061/-. The adjudicating authority has deducted sales tax paid thereon, extended SSI exemption limit of Rs. One Crore, and has also been generous in extending cum-duty benefit to arrive at the duty demand of Rs. 9,85,606/- for the period. It is also leads to the inescapable conclusion that ACPL was in the habit of hiding more than half of their clearances, which in any way cannot be attributed to inadvertence or genuine error but will necessarily have to be given the colour of intentional omission and suppression to evade dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (Jewellery shop) Yes. Smt. Paras Bai Mother of S.Premchand Jain, Brother Murugan Packaging Industries P. Murugalingam Manager-M/s. Sapna Packaging Industries No. But working in a unit owned by the father of Shri Ajit Raj Jain Mohan Cartons K. Mohanlal Pawn broker shop No. Sekar Packers B. Rajasekaran Supervisor M/s. Appollo Bright Steels (P) Ltd. No. But working in a unit in which Shri Umed Raj Jain and his wife are the directors 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 Rs. 3000/- per month could have owned a manufacturing unit doing business of more than Rs. 52 lakhs during 2002-03, and has logically concluded that Shri M. Purushotaman was only a "d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ept for registering the unit under TNGST and opening an account in TNSE Bank as advised by Shri Umed Raj Jain, he was not involved in any manufacturing activity or clearance of the corrugated boxes in the name of M/s. Sekar Packers. The adjudicating authority in para 60.4 of the impugned order has raised obvious questions as to how the person who is getting only a salary of Rs. 4000/- at present was the proprietor of a Company which has done business of more than Rs. 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 Interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the adjudicating authority:- "60.10. Keeping in view the above, if one looks at the back ground of the proprietors of 7 dummy units, their financial strength, expertise in the manufacturing, marketing of corrugated box as also their activities before and after 2002-2003 and their present employment as also 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) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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. In the event, the determination of total duty liability of Rs. 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 Rs. 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 Rs. 45 lakhs each on each of these appellants under Rule 26 of the Rules. In their appeals, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to a conditionality that excisable goods have to be placed under confiscation under the Act/Rules. On the other hand, what the rule propounds is that a person who is involved either directly or indirectly, by way of possession, or transporting, removing, depositing etc. 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 Rs. 45,00,000/- (Rupees Forty five thousand only) on Shri Umed Raj Jain and Rs. 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 appellan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relatively not very high. For these reasons, there is no merit in these appeals and they will have to be dismissed, which we hereby do. 12.4 Smt. Lata Jain, the Director of ACPL (Appeal E/134/2007) is aggrieved by imposition of penalty of Rs. 45 lakhs 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 be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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