TaxTMI 
TaxTMI 
2010 (8) TMI 498
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....ficates for the purpose of manufacturing and exporting the readymade garments, but the said duty free procured fabrics are being diverted by them in the local domestic market and the cheaply procured final products are being exported so as to cover the exports, the factory premises were raided on 21-6-2003 and various investigations were made. As a result, it was found that either machines are not installed in the said factory or if installed were not in working conditions. A meager stock of raw materials was found. As a result of revelation made by the partner, it was found that one Shri Bilal Latif Memon, who owned the office at Surat, had sent the finished products to the said firms. It was also deposed by the partner that the goods procured under CT-3 certificates never came to their factory but were diverted in the local market and instead Shri Bilal Latif Memon arranged for sending the cheap quality scarves and made-outs procured from the local market for the purpose of export. Subsequently, the office premises of Shri Bilal Memon at Surat also put on search and various incriminating documents were withdrawn. On 26-6-2003, during the course of further investigations, state....
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....ferring the provisions of Rule 25 of Central Excise Rules, 2002 has observed as under :- "It is very clear from the wording of Rule 25 that the rule is applicable to any producer, manufacturer, registered person of warehouse or a registered dealer and their activities related with excisable goods as enumerated under (a) to (d) of Rule 25 (1) of the rules. The investigating agency has successfully proved that the goods under consideration were not manufactured by M/s. Sunshine and instead, they were manufactured and supplied by Shri Bilal Latif Memon, who infact has cleared these goods in violation of provisions of Central Excise Act, 1944, rendering the goods liable for confiscation under Rule 25. However, as M/s. Sunshine are neither producer, manufacturer, registered dealer or registered person of warehouse, therefore, no penalty is imposable on M/s. Sunshine under Rule 25 of Central Excise Rules, 2002." The reasoning adopted by the Commissioner is not clear. The goods stand confiscated at the hands of 100% EOU and it is also not clear as to whether the same were actually manufactured by a unit of Shri Bilal Latif Memon. Even if that be so, the adjudicating authority has no....
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....pheld. Reliance, for the above proposition stands made on Tribunal decisions in the case of Shivrati Textile Pvt. Limited v. CCE - 2006 (205) E.L.T. 817 (Tribunal), in the case of Shri R.G. Agarwal v. CCE - 2007 (210) E.L.T. 274 (Tribunal) and in the case of CCE v. Shri R.G. Agarwal - 2008 (88) RLT 925 (Guj.) = 2009 (234) E.L.T. 215 (Guj.). 6. Learned DR appearing for the Revenue has contested the above stand of the appellants by submitting that the partners were actively involved in the fraud committed by the partnership firm and as such separate penalties imposed upon them are required to be upheld by the Tribunal. 7. Though, we are agree with the learned DR that the investigations conducted by the Revenue clearly reflect on the mala fidies of the partners and modus operandi adopted by them in diverting the raw materials in the domestic market and exporting the cheaper quality goods to cover the fact of diversion thus making them liable to penal action but we note that the composite penalty stand imposed on the partners in terms of two different provisions of law, which operate in altogether in different circumstances. The Tribunal in the case of R.G. Agarwal v. C....
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....econd ground raised by the learned advocate that penalty on the partners as also partnership firm cannot be imposed. 9. For the similar reasons, penalty imposed on Shri Bilal Latif Memon in both the appeals under two different orders of Commissioner is required to be set aside. Otherwise also, we find that allegations against Shri Bilal Latif Memon is that he had manufactured and sent the goods to two 100% EOUs, which by itself cannot be held to be an offence. There is no discussion or any findings to the role played by Shri Bilal Latif Memon and without having statutory provisions invoked reflecting his abetment to the said units for any contravention committed by him. We are agree with the learned advocate that mere supply of indigenous goods to M/s. Al-Amin Exports or M/s. Sunshine Overseas cannot be held to be an act of omission or commission, rendering the goods liable to confiscation. The said goods become confiscable only after they were shifted by the 100% EOU to the port of export and the same were entered in the shipping bills etc. In the absence of any evidence and for the reasons recorded in the proceedings for imposition of composite penalty, we set aside the p....