TaxTMI 
TaxTMI 
2009 (6) TMI 165
X X X X Extracts X X X X
X X X X Extracts X X X X
....deposit amount was reduced to Rs. 21,00,000/- by the High Court. 3. The 1st appellants are a job-worker of M/s. Cadbury India Ltd (CIL). The appellants receive duty paid raw materials from CIL and manufacture cocoa Liquor/paste as well as bulk chocolates out of the raw materials in their Unit No. 1. The cocoa liquor/paste is used partly to manufacture bulk chocolate in their Unit No 1 or cleared to CIL for manufacture of chocolates. The bulk chocolate manufactured in their Unit No. 1 is cleared to their Unit No. 2, located nearby. All the clearances from Unit No. 1, either to Unit No. 2 or to CIL, are required to be made on payment of duty. Unit No. 2 takes Cenvat credit in respect of the duty paid on the bulk chocolates received from Unit No. 1, does re-packing/labelling to smaller packs (which process amounts to manufacture), and clears the smaller packs of chocolates to CIL on payment of duty. 4. The 2nd appellant is an employee of the 1st appellants and was working as General Manager during the relevant period. 5. In respect of SCN dated 14-6-2004, the facts, in brief, are that a case was detected by the Anti-Evasion unit of the Central Excise Pune-II Commissionerate i....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... MGPs, purportedly to Unit No. 2, relate to the period after April, 2002. The Ld. Joint. CDR also submitted that during the impugned period, the appellants had made a. number of clearances to Unit No. 2 under the cover of the central excise invoices and on payment of duty and as such they were aware about the correct legal requirements. They deliberately removed some goods, intermittently, without any records and without payment of duty, to prevent detection. 10. For the above reasons, we are inclined to agree with the submissions of the learned Jt. CDR. and are convinced that 63 consignments valued at Rs. 1,33,58,197/- involving a duty of Rs. 21,37,310/- were removed clandestinely from Unit No. 1, without recording in the statutory records, without issue of any central excise invoices and without payment of any duty. We, therefore, uphold the Order of the Commissioner confirming the demand of duty of Rs. 21,37,310/- in this regard. 11. So far as the SCN dated 14-3-2005 is concerned, the facts in brief are that during the Central Excise Audit of the appellants' factory (Unit No 1) in June, 2004, it was found that the appellants had reflected less clearances and correspondingl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ise duties will be the date of presentation of the cheque in the bank subject to its realization. 13. The Ld. Jt. CDR has submitted that TR-6 challan is merely a mode of depositing the central excise duties to the Government account. After the cheque/draft accompanying the TR-6 challan is cleared by the bank, the amount is considered to have been credited to the Government account. The CBEC's Circular dated 3-10-2003 should be understood in that context. The TR-6 challans, as in the instant case, do not mention the purpose or the period to which the deposits relate. After depositing the duty through the TR-6 challans, the assessee takes the credit of that amount in his PLA and only when the debits are made in the PLA for specific consignments/clearances or for any pending arrears, interest, etc., it is considered that the duties for that particular consignment/clearance have been paid or for those arrears have been discharged. Until and unless the amount deposited through TR-6 challan is appropriated, by means of debits in the PLA, towards duty for any permissible periodic clearances (monthly) or towards any arrears of revenue, it cannot be said that the duties for that particul....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... amount involved for the intervening period was confirmed vide the O-in-O No. 29, dated 24-4-2000, and this was, therefore, clearly not payable as the Order itself was non-est. The Ld. Jt. CDR submitted that this contention cannot be accepted because the O-in-O dated 24-4-2000 has not been set aside till date, but, on the contrary, the appeal filed by the appellants against the said O-I-O dated 24-4-2000 was rejected, as time barred, by the Commissioner (A) vide O-I-A No. PII/BKS/268/2005, dated 6-6-2005 and their further appeal before the CESTAT (Appeal No E/3456/2005) was rejected vide Final Order No. A/269-270/07/C-II/EB, dated 27-4-07. 16. The Ld. Jt CDR further submitted that so far as the appellants' contention is concerned that Mr. Hebalkar had debited the arrears towards Order dated 24-4-2000, on his own and it could not be considered as an act of the company, it is on record that the appellants had themselves (and not Mr. Hebalkar, in his personal capacity) filed a refund application for the said amount, totalling Rs. 96,17,210/- Having filed the refund application, the appellants cannot claim that the said debit was not authorized by the company or that it was not on b....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e company cannot be held responsible for the acts of an employee, who exceeded his brief. He has relied in the judgment of CESTAT, Bangalore in the case of MNS Exports Pvt. Ltd. v. CC, Bangalore [2005 (190) E.L.T. 124 (Tri.-Bang.)]. The Ld. Counsel also submitted that at the time of his cross-examination before the adjudicating authority on 10-1-2006 (and not 10-10-2004, as wrongly mentioned in the impugned adjudication order), Mr. Hebalkar had mentioned that he had not acted on the directions of his boss Mr. Ketkar. 20. The Ld. Jt CDR submitted that in the above case of MNS Exports supra, three employees of the company, which was a 100% EOU, in connivance with the local Customs Inspector, had imported the goods in the name of the EOU but the goods never reached the bonded premises of the EOU and were diverted elsewhere directly from the Air Cargo Complex. In fact, the imported goods did not even belong to M/s. MNS Exports but were arranged by someone else in the name of MNS Exports. Each person involved in the fraud was to receive some consideration in the deal. In this background, it was held by the Tribunal that no liability could be fastened on the 100% EOU as the employees ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty, do not affect their principals." 24. We also note that in his statements dated 30-7-2004 and 8-10-2004, Mr. Hebalkar had clearly admitted that it was not only his boss Mr. S.W. Ketkar, General Manager, who was aware of the manipulations done by him in the PLA and ER-1 returns, but also the management. It is only at the time of his cross examination on 10-1-2006, i.e. after over 15 months, that he has changed his version. The statements dated 30-7-2004 and 8-10-2004 were recorded u/s 14 of the Central Excise Act, 1944, and such statements are admissible as evidence. These statements were never retracted by Mr. Hebalkar. Thus, not much credence can be given to his submissions at the time of his cross examination, 15 months later, on 10-1-2006. 25. Another submission made by the Ld. JCDR also needs due consideration to understand the responsibilities of a principal vis-à-vis his agent. It is on record that the central excise Ant-Evasion Unit had detected, in February, 2003, the matter relating to the non-accountal and the non-payment of duties of over Rs. 21 lakhs, largely, relating to the year 2002, as covered by the SCN dated 14-6-2004. Thereafter, in June, 2004, the cent....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e period, the manipulations done by Mr. Hebalkar in the present cases also stand reconciled and accepted by the Department and, therefore, the question of any short levy did not arise. We are unable to agree with this contention of the learned counsel, as this O-I-A/dated 9-2-2009, does not at all advance their case. It is not clear from the O-I-A as to whether the appellants had brought to the notice of either the adjudicating authority or the Commissioner (Appeals), in the said case, that the revised ER1s have ignored the debits made towards the arrears of revenue arising out of the O-I-O No. 29, dated 24-4-2000 or that their request had already been rejected by the Commissioner. Further, there is no provision under the Central Excise law for filing a revised ER-1 return especially when an offence case has been booked against an assessee on the basis of the returns already filed and the case stands established against the assessee through a reasoned adjudication order. In fact, filing of the revised ER1s by changing/modifying the entries made in earlier ER1s could amount to further manipulation of records. There has to be some sanctity to the returns filed before the Department, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that Mr. Ketkar had not abetted the manipulations of Mr. Hebalkar and that Mr. Hebalkar had done all the entries on his own without Mr. Ketkar's direction or knowledge. We have examined these contentions already and do not accept the same in view of our findings in paras 21 to 26 above. 30. The learned counsel for the 2nd appellant has also argued that since Mr. Ketkar had not physically dealt with the goods, which had been allegedly cleared without payment of duty, penalty could not be imposed on him in view of the Larger Bench decision of the Tribunal in the case of Steel Tubes of India Ltd. v. CCE, Indore, reported in 2007 (217) E.L.T. 506(Tri.-LB). We have examined this contention also. In the said case, no goods were involved and only the invoices had moved. We find that the Government has already reacted to this decision by inserting sub-rule (2) in Rule 26 of the Central Excise Rules, 2002, w.e.f. 1-3-2007, by providing a penal clause even for those persons, who issue excise invoices without actual delivery of any goods]. The present case is not one of issue of the invoices without delivery of goods. Hence, the case of Steel Tubes (supra) is distinguishable. Further, a si....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ner dealing with prohibited goods" are of very wide import. It is neither desirable nor necessary to define all manner of connection with the prohibited goods which might come within the meaning of the words "in any way concerned in any manner dealing with such goods ". It will depend on the facts found in each case whether it can be said that any person was concerned in dealing with such goods. We shall therefore confine ourselves to the facts of the present case and see whether on these facts it can be said that Sitaram was in any way concerned in any manner dealing with the goods. Now the evidence which has been accepted by both the courts is that Sitaram had gone with a large sum of money to purchase the gold which was known to be smuggled and to have been imported into India against the restrictions imposed on the import of gold. It has also been proved that Sitaram did so after previous arrangement with the Chinese accused. If the constable who was following Sitaram had not interfered the deal would have gone through and Sitaram would have paid the money and purchased the smuggled gold. This was a case therefore where by means of previous arrangement with a person in possessi....