TaxTMI 
TaxTMI 
2010 (9) TMI 74
X X X X Extracts X X X X
X X X X Extracts X X X X
....ition, penalties of Rs.30,00,000/- (Rupees Thirty Lakhs only) each stands imposed upon Shri Arvindkumar Ganeshmal Dugar and Shri Shreyaskumar Ganeshmal Dugar, Managing Director and Joint Managing Director of M/s. Shree Ganesh Knit (India) Ltd. Further penalty of Rs.30,00,000/- (Rupees Thirty Lakhs only) stands imposed on Shri Babulal Chimanlal Shah, Manager and Authorised Signatory of the other company. 2. As per facts on record M/s. Shree Ganesh Knit (India) Ltd. is engaged in the manufacturing/processing of textile cotton or manmade fabrics falling under Chapter Heading 52, 54 & 55 of the Central Excise Tariff Act, 1985. As a result of intelligence received by the Revenue, their factory was visited by the officers on 01.01.97, who conducted various checks and verifications. As a result of the stock of fabrics lying in the factory was found short than the recorded balance to the extent of 1,19,631 L. Mtrs. involving duty of Rs.4,06,745/-. The said shortages were admitted to have been removed clandestinely without issuance of any central excise invoice. The appellant accordingly deposited a part amount of duty of Rs.94,000/- and agreed to pay the balance amount subsequently. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....bhai Amrutlal Mewada, Dying and Finishing Master of the manufacturing unit was recorded on 02.01.97 who deposed that he was in-charge of washing department, the work for which was getting done on contract basis by M/s. Ramesh Washing Contractor. On being shown the contract bills raised by Shri Rameshbhai Babulal Marwadi, he admitted that his signatures are appearing on the said bills and after putting has signatures the same were forwarded to accounts department for payment purposes. He further agreed with the statement of bill-wise details of the work done by M/s. Ramesh Washing Contractor showing the various columns as bill number, date, amount of bill, amount received, amount deductible etc. and confirmed that the same have been received by the said washing contractor and put his signatures on these pages. The invoices of the said contractor were also accepted by him to be genuine which were signed by him and forwarded to accounts department. Similarly he admitted to the various other documents showing the production of the goods and payments of the same to Shri Rameshbhai Babulal Marwadi. Statement of Shri Babulal Chimanlal Shah, authorised signatory was also recorded on 11.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....so proposed confirmation of demand of duty of Rs.4,06,745/- in respect of shortages detected at the time of visit of the officers. The said show cause notice stands culminated into the impugned order passed by the Commissioner vide which he has confirmed the demands of duties and imposed penalties, as detailed in the first paragraph of the order. 9. Shri Willingdon Christian, learned advocate appearing for the appellant has placed written submissions on record in respect of M/s. Shree Ganesh Knit (India) Ltd., which are mainly on the ground that the entire case of the Revenue is based upon the recovery of documents from the premises of Shri Rameshbhai Babulal Marwadi, which is a third party and the allegations of clandestine removal cannot be based upon the same. Reliance in this regard placed upon various decisions of the Tribunal. He has also submitted that as Shri Rameshbhai Babulal Marwadi had access to all the documents of the appellant company, it would have been easier for him to prepare the document with the help of xerox copies. It stands further submitted in the written submissions that despite the recovery of incriminating documents from the possession of Shri Rameshb....
X X X X Extracts X X X X
X X X X Extracts X X X X
....i Babulal Chimanlal Shah, Manager and Authorised Signatory of the company. 12. The above facts stand further corroborated by recovery of the said bills from the office premises of the company located in cloth market, Ahmedabad and with the statement of the Managing Director Shri Arvindkumar Ganeshmal Dugar and Shri Shreyaskumar Ganeshmal Dugar. Not only that the bill books recovered from the premises of Shri Rameshbhai Babulal Marwadi stand also admitted by Shri Vishnubhai Mohanbhai Prajapati having admitted that bill book No.12 belongs to his company M/s. Dipesh Finishing Contractor and reflects upon the bills raised by his company for carrying out various processes like printing, bleaching, dying etc. In fact we find that the Commissioner, in his impugned order has dealt with each and every submission of the appellant in detail. The fact of recovery of documents from the residential premises of Shri Rameshbhai Babulal Marwadi, the corroboration of the same by Shri Bhairusingh Ajitsingh Parihar, Shri Dilipbhai Amrutlal Mewada, Shri Babulal Chimanlal Shah, Shri Vishnubhai Mohanbhai Prajapati, Shri Shreyaskumar Ganeshmal Dugar, Shri Arvindkumar Ganeshmal Dugar coupled with the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Pioneer Silk Mills Vs. UOI reported in 1995 (80) ELT 507 and subsequently confirmed by the Hon ble Supreme Court in the case of Collector of Central Excise, Ahmedabad Vs. Orient Fabrics Pvt. Ltd. reported in 2003 (158) ELT 545 (S.C.). It was held in the said decisions that there is no provision for penalty or confiscation under the Additional Duties of Excise (Goods of Special Importance) Act, 1957. Learned advocate submits that though the above plea was raised before the adjudicating authority, he has observed that since the provisions of the said Act were amended w.e.f. May 1994 and the show cause notice was issued on 30.07.97, when the amended provisions were in force, the decision of the Delhi High Court in the case of Pioneer Silk Mills will not have any applicability to the facts of the present case. Learned advocate draws our attention to the Hon ble Supreme Court s judgment in the case of Orient Fabrics Pvt. Ltd. wherein it was held that as the words offences and penalties have consciously been inserted in the said Act by way of substitution of sub section 3(3) of the said Act w.e.f. May 1994, and the cause of action for imposing the penalty and directions of confiscation ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on in the case of Mahindra Ugine Steel Co. Ltd. Vs. CCE Pune reported in 2007 (80) RLT 55. 17. For better appreciation we reproduce the provisions of Rule 209A of the Central Excise Rules. 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 ten thousand rupees, whichever is greater. 18. As is clear from the above reading of Rule 209A, the same would get invoked if any person is charged with the dealing of the excisable goods in any manner enumerated therein with a knowledge or with a reason to believe that the goods dealt with by him are liable for confiscation. As such the essence of the said rule is that the person charged must have either the knowledge or a belief that the goods in question are liable for confiscation. The actual confiscation of the goods is not required. With the above understanding of the statutory provisions, the only thing required to be se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e being placed before Shri Shreyaskumar Ganeshmal Dugar and he was verifying all the reports including the production report prepared and submitted by Shri Dilipbhai Amrutlal Mewada. On the above basis Commissioner has come to a clear finding that he was in active knowledge and was in fact Master minding the manufacture/processing of the fabrics and removal of the same in clandestine manner. As such it is evident that he was in the active knowledge and was supervising the entire dealings with regard to the clandestine manufacture and removal. He is admittedly liable to penalty under Rule 209A of the Central Excise Rules. 21. Further on going through the decisions of the Tribunal relied upon by the learned advocate, we find that either there was no finding of fact as regards knowledge of clandestine removal on the part of the Managing Directors or the allegations of clandestine removal were dropped against the manufacturing unit itself. The ratio of the same is not applicable to the facts and circumstances of the case. 22. However having held that the said appellants were not liable to penalty till May 1994, we reduce the penalty imposed upon the said two applicants Shri Arvin....