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TMI Blog2024 (9) TMI 1301X X X X Extracts X X X X X X X X Extracts X X X X ..... he knows or has reason to believe are liable to confiscation under the Act or the Rules shall be liable to a penalty. Admittedly, in the facts of the case, the appellants were concerned with the removal of the goods by the Company and from the statement of Mr. Narendrabhai Solanki which was recorded during the course of investigation, there is a clear admission on his part. It cannot be said that the Adjudicating Authority or Tribunal has committed any error in invoking Rule 26 of the Rules for levy of the penalty. The contention raised on behalf of the appellants that the adjudicating authority has failed to point out which of the Sub-rule is applicable in the facts of the case is without any basis inasmuch as on perusal of Rule 26 of the Rules, it is clear that the Sub-rule (2) would never be applicable to the facts of the case as it pertains to the person who issues invoices or any other documents. The reliance placed on the decision of the Hon ble Apex Court in case of the Amrit Foods [ 2005 (10) TMI 96 - SUPREME COURT ] would not be applicable in the facts of the case as the appellants were put to notice as to the exact nature of contravention for which the appellants were ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imposed without there being any proposal and order for the confiscation of the goods in question? (D) Whether the Appellate Tribunal is justified in relying upon the statement partly, which suits the version of the adjudicating authority and brushes aside the part which is in favour of the Appellant? (E) Whether the Appellate Tribunal justified in upholding the penalty under Rule 26 of the Cenvat Credit Rules, though no mens rea was established? 4. The brief facts of the case are as under : 4.1. M/s. Shree Sardar Co-operative Sugar Industries Limited was manufacturing Sugar and was supposed to sale the Sugar as per the fixed Government quota allowed to it. 4.2. However, it was found that the said Company was clearing Sugar in excess to the quota allowed and for such excess clearance, parallel invoices were issued and no duty was paid on such excess clearance. Thus, there was a clandestine removal of the Sugar by the said Company. 4.3. The Company recorded the clandestine clearance in the books of accounts as deposit of sale proceeds against the respective customers and such clearance was not reflected in Form ER-1 returns filed under the provisions of the Act. 4.4. Accordingly, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h active knowledge and connivance of all the Noticees, whether it is Managing Director, other Directors, President, Vice-President, and other employees working under their instructions and guidance. The total quantity of such illicitly cleared Sugar is to the tune of 215845 quintals, the value of which is to the tune in excess of Rs. 25 Crores and the Central Excise duty that has been evaded is to the tune of Rs. 1.98 Crores, and hence this is not a meager quantity or amount to escape the attention and knowledge of any senior functionary of the Company, let alone Directors. It remains admitted by every person who has been subjected to investigations in the present proceedings, that the practice of over-selling has been in vogue since long in their Company, and that they were resorting to such illicit removals of Sugar manufactured in order to meet their financial obligations. 26.4. It is also pertinent to quote relevant facts revedled from the statements of the above Noticees, in as much as: a) In the statement dated 21.1.2009 of Shri Narendra C. Solanki - Managing Director discussed in Para 3.5 of the SCN, it stands admitted by him that during his tenure as in-charge Managing Dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tel - President, Shri Devendra Thakar - Vice President and Shri Kanubhai Patel Managing Director, in spite of efforts made by the investigating officers, they could not be interrogated due to their non-appearance before the officers. Hence efforts were made to ascertain from the records of The District Registrar of Co-operative Society, Vadodara who were also simultaneously carrying on certain investigation on their account, to identify their roles in commission or offence, the details of which have been discussed in Para 7 of the SCN. Therefore, it is not that no investigations were carried out in respect of these persons, but the investigations were hampered due to non-appearance of the concerned Noticees. However, the charges have been framed on the basis of concrete evidences against them as discussed in Para 7 of the SCN. In view of the above, I do not find any merits in the arguments of the Noticees in this regard. 4.6. Being aggrieved by the Order-in-Original, the appellants preferred the appeals before the CESTAT which were disposed of by the impugned order wherein, the CESTAT while confirming the penalty levied in Order-in-Original by the adjudicating authority held as und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ules, as under breach of Sub-rule (1) or (2), the penalty is levied as stated in the Order-in-Original. 5.2. In support of his submission, reliance was placed on the decision of the Hon ble Supreme Court in case of Amrit Foods Versus Commissioner of Central Excise, U.P. wherein, the Hon ble Apex Court has held that it was necessary for the respondent to put the assessee on notice as to the exact nature of the penalty to be levied. It was therefore submitted that the respondent-adjudicating authority has neither stated the relevant Rule either in the show-cause notice or in the Order-in-Original and only on the basis of the facts which are found from the records and only because the appellants are either Managing Director, President or Vice-President of the Company, the penalty is levied without adjudicating upon the involvement of the appellants for alleged clandestine removal of the Sugar by the said Company. 5.3. It was further submitted that the penalty by invoking Rule 26 of the Rules could not have been levied without there being any proposal in order for the confiscation of the goods (in question). It was pointed out from the Order-in-Original that the adjudicating authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 26 of the Rules prevailing at the relevant time reads as under : RULE 26. Penalty for certain offences- [1] Any person who acquires possession of, or is in any way concerned in transporting, removing, 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 under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or [rupees two thousand,] whichever is greater. [2] Any person, who issues - (i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or (ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. 8. On bare perusal of the above Rule, it is clear that any person who is in any way concerned in removing the excisable goods wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnment; that the Sugar sold beyond the quota is known as overselling in sugar Industry; that he admitted that during his tenure as In charge Managing Director of the assessee, the practice of overselling of sugar was taking place: that while they recorded the quantity of released quota of sugar in the Central Excise records, they did not record the quantity of overselling sugar in the Central Excise records viz. Daily stock register/ returns etc; that the quantity of released quota, as well as, overselling of sugar was cleared under the Central Excise Invoices and that they have already collected the Central Excise duty including Education cess from the customers; that the practice of overselling sugar was prevailing since long by the assessee, and such practice has also continued during his tenure: that when this practice came into his knowledge, he verbally ordered sales department to discontinue the overselling practice; that they were maintaining two sets of Central Excise Invoices and daily stock register (RG-1). While one set of invoice and daily stock register was used for Central Excise purpose another set of records was used for maintaining the records of overselling sugar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that the adjudicating authority has failed to point out which of the Sub-rule is applicable in the facts of the case is without any basis inasmuch as on perusal of Rule 26 of the Rules, it is clear that the Sub-rule (2) would never be applicable to the facts of the case as it pertains to the person who issues invoices or any other documents. The appellants being Managing Director, President or Vice-President are not required to issue any invoice or any other document and therefore, as per the allegations made in the show-cause notice, it is apparent that the adjudicating authority has invoked Rule 26 (1) of the Rules and by merely not mentioning Sub-rule (1), it cannot be said that the appellants were not put to notice about the invocation of Rule 26 (1) of the Rules which is very clear from paragraph No. 7 of the show-cause notice which reads as under : 7.1.1. During the course of investigations, vide letters F.No. IV/6-Prev./94/Gr.DEF/08-dated 6.5.2009 3.3.2010, The District Registrar, Co-operative Society, Narmada Bhavan, Vadodara was requested to provide copy of re-audit report of M/s. Shree Sugar Industries Ltd., for the financial years 2005-06, 2006-07 2007-08 along with th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further categorically admitted that two sets of invoices were being maintained by the assessee, one for regular quota and other for beyond sanctioned quota and the clearances of sugar beyond sanctioned quota was not being reported to Central Excise as he knew it was illegal. iii. Shri. Jayand Joshi in his statement recorded on 27.1.2009, inter-alia, admitted that he was a Chief Chemist and in charge of the Godown; that he had signed the that as per the direction of Shri. Parantap Joshi Managing Director and Shri, Sanjay Joshi Chief Accountant, he knowingly effected clearances of the sugar beyond release quota. He further categorically admitted that they were maintaining two sets of invoices i.e. one set for released quota and other for clearance of sugar beyond release quota and both the sets of invoices had been signed by him in the capacity of an authorised signatory. iv. Shri. Pranav Amin, in his statement recorded on 13.1.2009, inter-alia, admitted that parallel sets of RG-l were being maintained by them with the clear knowledge of Shri. N.C. Solanki - Managing Director, as well as, the Chief Chemist of assessee. He further admitted that he was fully aware about the maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 0 023, as to why appropriate penalty should not be imposed on them for their acts of contraventions as discussed above, under Rule 26 of the Central Excise Rules, 2002. 10. In view of the above, the reliance placed on the decision of the Hon ble Apex Court in case of the Amrit Foods (Supra) would not be applicable in the facts of the case as the appellants were put to notice as to the exact nature of contravention for which the appellants were made liable for penalty under Rule 26 of the Rules. As the show-cause notice and the Order-in-Original have explained in detail about the nature of the offence for which the penalty is levied, it cannot be said that there is a breach of any of the requirement for levy of penalty by the respondent-authority. With regard to the contention raised on behalf of the two appellants namely, Devendra Ambalal Thakkar and Jaykant Ambalal Patel, it is required to be noted that both of them have abstained from investigation and have not co-operated for recording their statements and in spite of that the respondent-authority is not supposed to make further inquiries when the facts are not in dispute to the effect that both of them were holding the charge o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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