TaxTMI 
TaxTMI 
2013 (10) TMI 406
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.... the appeals. 3. Brief facts giving rise to these appeals are that the officers of Directorate of Central Excise Intelligence received information that M/s Musk Tobacco (India) Ltd. is indulging in evasion of central excise duty by not accounting for their products and selling the goods without issue of invoices. Various locations of the company including its godowns and transporter's premises were searched. The officers found cigarettes of various brands namely ''777', ''Commander', ''Captain', recovered from the factory premises. Apart from these brands, cigarettes of ''Perfect' brand owned by M/s R.K. Cigarettes (P) Ltd. were also recovered. Huge quantity of shells, sliders, wrappers were also found, which showed that the company was also manufacturing goods for brands owned by others. The search at the godown resulted in recovery of ''Captain' brand cigarettes. The persons present in godowns stated that the goods were received without any invoices from M/s Musk Tobacco and accordingly the goods were seized. 4. The officers also carried out search at the Baba Roadlines and recovered 4000 packets of ''Perfect' brand belonging to M/s R.K. Cigarettes, which were seized. Certain d....
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....impose a penalty of Rs. 1,00,00,000/- (Rupees crore Only) on Shri Raj Kumar Gupta, H-5 Maharani Bagh, New Delhi, under Rule 26 of Central Excise Rules, 2002. 5. I impose a penalty of Rs. 1,00,00,000/- (Rupees crore Only) on Shri Vidyut Gupta, H-5 Maharani Bagh, New Delhi, under Rule 26 of Central Excise Rules, 2002. 6. I impose a penalty of Rs. 1,00,00,000/- (Rupees crore Only) on Megha Gupta w/o Shri Upkaran Gupta, Director, M/s Musk Tobacco India Pvt. Ltd., Manpur Nagaria, P.O. Neoli, Distt. Kashi Ramnagar under Rule 26 of Central Excise Rules, 2002. 7. I impose a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs Only) on Shri Raghu @ Raghuvar Dayal S/o Shri Ram Lal Village Nangla Patia P.O. Neoli, Distt. Kashi Ramnagar under Rule 26 of Central Excise Rules, 2002. 8. I impose a penalty of Rs. 10,00,000/- (Rupees Ten Lakhs Only) on Shri Shankar Pal @ Shankar Pal Pradhan S/o Shri Jamuna Prasad, Village Nangla Patia P.O. Neoli, Distt. Kashi Ramnagar under Rule 26 of Central Excise Rules, 2002. (VANADANA K JAIN) COMMISSIONER CENTRAL EXCISE & SERVICE TAX LUCKNOW" 6. It is pertinent to state here that the Commissioner, Central Excise and Service Tax, Lucknow in his order dated 28.9.2....
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.... means the company was being controlled by the family members of Shri Raj Kumar Gupta. Since they hold the majority of the shares, the profit accrued from the company would go to the family only. (ii) Shri Raj Kumar Gupta adopted an elaborate system for procurement of shells, sliders through middlemen viz. Shri Inderjeet Yadav of Kolkata and M/s J. K. Printers for M/s Musk Tobacco what he had already done for M/s R.K.Cigarettes, Varanasi earlier. Same system of procurement and payment through Shri Inderjeet Yadav to Shri Sipani of M/s J.K.Printers remained continued for M/s Musk Tobacco also because of experience of these persons and the shells and Sliders were being dispatched to Bareilly and then to Soron the nearest Railway Station to M/s Musk Tobacco. All other raw materials were procured by following the same pattern. Since the goods were procured clandestinely the payments were made by cash. Shri Sipani and Shri Inderjeet Yadav in their statements, also confirmed the same. The goods landed at M/s Musk Tobacco, as established already, clearly indicate that it was Capt. R.K.Gupta who was making all payments and the suppliers recognized M/s Musk Tobacco through Capt. Raj Kumar ....
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....tatement dated 27.12.07 and 31.12.07 have admitted that the maintenance, repair etc. were supervised by none other than Shri Vidyut Gupta. They had, strangely, no knowledge about procurement of tobacco, the main raw materials, which was also looked after by Shri Vidyut Gupta. (vi) Further procuring of raw material and sales of clandestinely cleared cigarettes were being controlled by Shri R.K.Gupta directly. The suppliers of shell and sliders, Shri Jitendra Kumar, Sipani @ Munnaji and Inderjeet Yadav have categorically named Capt. R.K.Gupta as the person placing orders, finalizing rates and making payments. (vii) Shri Raj Kumar Gupta kept the records relating to M/s Musk Tobacco and M/s Cayman Tobacco in other places like the residence of Shankar Pal and Shri Raghu, as they were their trusted persons. Neither Shri Vidyut Gupta nor Shri Raj Gupta came forward to explain the details found in the documents recovered from the residence of Shankar Pal. It was well disguised affair to keep all the documents of their secret transactions in the residence of their trusted persons to avoid detection. (viii) The involvement of Capt. R.K.Gupta in M/s Musk Tobacco is clearly visible from the....
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....ration in Memorandum & Article of Association and were required to ensure proper maintenance of books of accounts under Section 209 of Companies Act, 1956. It was incumbent upon them to ensure that Central Excise procedure in relation to production are followed and the goods manufactured are cleared on payment of duty. But as discussed above that M/s Musk Tobacco was involved in a massive evasion of duty while they were in the helm of affairs. I conclude that these two Directors failed to discharge their duties lawfully, which resulted in evasion of Central Excise duty. They were aware that the clandestinely removed Cigarettes were liable to confiscation. Therefore, they are liable to penal action under Rule 26 of the Central Excise Rules, 1994. Shri Shankar Pal Pradhan and Shri Raghu @ Raghuvar Dayal were involved in the act of concealing and keeping of the important records relating to clandestinely production, clearance and procurement raw materials of M/s Musk Gupta Pvt. Ltd. The role of Shri Shankar Pal Pradhan has already been discussed in detail, who was an employee of the Gupta Agricultural Farm and simultaneously involved with manufacturing activities of the unit of M/s M....
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....n employee of Gupta Farm owned by Shri R.K. Gupta. Shri Rahul Chauhan, Director of M/s Musk Tobacco confirmed that it was not production and dispatch register of M/s Musk Tobacco but did not show the details in their records. The prima facie suppression of production and clandestine removal was thus established. The CESTAT also observed that the Commissioner has found that the applicants were dispatching finished goods to different destinations through road/ railway transport. During the search of Baba Roadlines on 26.9.2007, Perfect brand cigarettes were found without invoices. Shri Kamal Singh Yadav, person in charge of transport company stated that these goods were received by them from M/s Musk Tobacco. Prima facie it was found that the production was suppressed by M/s Musk Tobacco and goods were cleared clandestinely and that M/s Musk Tobacco was also manufacturing other brands of cigarettes. 9. Shri B.P. Singh Thakrey submits that the CESTAT has grossly erred on facts and in law in directing the appellants to deposit Rs.1 crore for staying balance amount of duty and penalty against all the applicants. The CESTAT has failed to consider that the appellants have very strong pri....
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....cates that there is demand or non-payment of duty, and must also indicate that the grounds for invoking extended period of limitation are present. 10. We have gone through the show cause notice and the order passed by the Commissioner, Central Excise and do not find any error of law in issuing of the notice or any prima facie error in the findings recorded by the Commissioner with regard to clandestine removal of the excisable goods. The modus operandi adopted by Shri R.K. Gupta with the help of other appellants prima facie demonstrates that there was premeditated exercise to remove the excisable goods without payment of duty and that extended period of limitation was invoked in show cause notice to which the appellants gave their reply. 11. In Benara Valves Ltd. & Or. v. Commissioner of Central Excise & Anr., (2006) 13 SCC 347 the Supreme Court explained the limitations on the exercise of discretionary jurisdiction under Section 35F of the Central Excise Act, 1944. In paragraphs 11 to 15 the Supreme Court has laid down the scope and ambit of the expressions 'undue hardship to such person' and 'safeguard the interests of the Revenue'. Paragraphs 11 to 15 of the judgment are quote....