TaxTMI 
TaxTMI 
TaxTMI 
2015 (8) TMI 345
X X X X Extracts X X X X
X X X X Extracts X X X X
....h H.R. trimmings are used in the manufacture of MS wires. Such wires in turn, are used for the manufacture of nails, barbing, fencing, etc. The manufacture of MS wires, nails, barbed fencing wires etc. is carried out by large number of small scale units, who are availing SSI exemption. A large number of such units are located in and around Viramgam in the State of Gujarat. Such units are located mainly in Amreli, Keshod, Lakhator, Limbadi, Malpur, Mawa, Mehsana, Vijapur, Watwa, Viramgam, etc. In fact, Viramgam appears to be the main centre. 2. The HR trimmings are sold by appellant Nos. 6 and 7 by online auction process. Such H.R. trimmings are bidded purchased for trading by certain traders based in Viramgam (appellant Nos. 3 and 4). Such HR trimmings are cleared by appellant Nos. 6 and 7 on payment of appropriate Central Excise duty and by issuing corresponding invoices indicating details of duty payments. Since the material is used by small scale industry who are not required to pay excise duty, CENVAT credit of duty paid on such H.R. trimmings are not available to SSI units. Duty paying invoices are therefore not usable by such SSI units. What was therefore, being done was tha....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s operandi was being followed for clearance of H.R. trimmings from Uttam Galva, Khopoli and Zenith Ltd., Khopoli. 3. Based upon such invoices, M/s. Silver Ispat Pvt. Ltd., will be able to avail the credit of duty paid on HR trimmings. Brokers such as appellant No.2 who were not registered with the Central Excise department were acting behind the screen inasmuch as appellant No.2 would locate the buyers of invoices such as M/s. Silver Ispat Pvt. Ltd. in the present case, thereafter ensure that the invoices issued by appellant No. 6 and 7 would indicate the name of M/s. Silver Ispat Pvt. Ltd., the said broker would coordinate with the appellant No. 3 and 4 i.e. bidder who are generally based in Viramgam, get the goods transported to Viramgam and collect the invoices in the name of M/s. Silver Ispat Pvt. Ltd., and transmit the same to M/s. Silver Ispat Pvt. Ltd. Further, cash for the HR trimmings will be received from appellant No. 3 and 4 many a times, through angadia services, and there after the said cash will be sent either to M/s. Silver Ispat Pvt. Ltd., so that he can issue the account payee cheque/bank drafts to the appellant Nos. 6 and 7. Sometime it is also possible that suc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....lmeshwar to Viramgam. Most of the H.R. Trimmings were transported using the vehicles having Gujarat registration number. Such vehicles are not allowed to transporting freight within Maharashtra i.e. in this case, from Nagpur to Nasik or Dolvi to Nasik. Such vehicles can only carry freight from Maharashtra to Gujarat. Enquiries in respect of some consignment with Bhilad check post confirmed that vehicle Nos. mentioned in the invoices of JSW etc., these vehicles passed through the check-post i.e. entered into Gujarat. Statements of various persons confirmed that HR trimmings were sent to Viramgam and nearby areas and only invoices are made in the name of M/s. Silver Ispat Pvt. Ltd. Statements of few end-users were also recorded. 6. Based upon detailed investigation, a demand notice dated 02/01/2007 was issued to M/s. Silver Ispat Pvt. Ltd., for demand of fraudulently availed credit, interest, and penalty as also to present appellants for penalty. 7. learned counsel for appellant No. 8 at the outset mentioned that Shri Sampatraj Ladha, appellant No. 8 and the Director of the M/s. Silver Ispat Pvt. Ltd. has expired on 13/11/2014 and in support of this contention he produced Xerox cop....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r confiscation. For invoking the provisions of Rule 26 itself require that the goods be liable for confiscation and the appellant should be aware that the said goods are liable for confiscation. It was also submitted that they had bona fide belief that the goods which are being dealt by them are duty-paid and not liable to confiscation. It was submitted that, as the transport agent the appellant has taken due precaution to ensure duty paid goods lifted and delivered. This itself shows that there was no mala fide intention on their part and there are no grounds for invoking Rule 26 to impose penalty on them. It was further submitted that there is no proposal and confiscation order for the HR trimmings which are cleared from the factory from the premises of M/s. IIL and for which the address was shown in the bill. Thus, the HR trimmings which should have been diverted has not been proposed to be confiscated nor has it been confiscated under Rule 25 of the Central Excise Rules and accordingly no penalty under Rule 26 can be imposed on the appellant. 12. The learned counsels for appellants No. 6 and 7 submitted that they have cleared the HR trimmings after bidding as per the direction....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on that Shri Manish Agarwal was a broker based in Mumbai who used to find buyers for Central Excise invoices for taking credit without receipt of the goods. It was submitted that in his statement dated 24.12.2004 he was admitted that he has made available customers for purchase of Central Excise invoices only for availing credit. He has also submitted that Virmagam based dealers used to send cash amount by Angadia service which were converted into demand drafts payable in favour of M/s. Ispat Industries Ltd. He has also agreed to the contents of the statements made by Shri Mohammed Master, Shri Harshadbhai Desai and Shri Chandrakant Nathwani and the role played by him. It was further submitted that even though in his statement, appellant No. 2 has not specifically mentioned about M/s. Silver Ispat Pvt. Ltd. but his statements were general in nature and relating to 1000s of transactions. 13.2 As far as appellant No. 3 and 4 are concerned it was submitted that although both are Viramgam based traders, it is an admitted position that they used to bid for the goods in the online auction. They have also admitted in their statement that they used to apply for change of billing address a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt touch with Viramgam based traders as also the brokers based in Mumbai e.g., Shri Manish Agarwal, appellant No. 2 in this case. It was also submitted the records recovered from his office indicated the actual destination as also the purported destination of the goods. Further, fictitious LRs in the name of Sidhvinayak Road Carriers, Raipur were also recovered. In view of these facts, appellant No.5 was concerned with the physical transportation of goods and hence is liable to penalty under Rule 26. 13.5 As far as appellant Nos. 6 and 7 are concerned, it was submitted that both are the manufacturers of HR trimmings. It was submitted that they very well knew that such HR trimmings are sent to Viramgam based traders and it was Viramgam based traders who would opt in the e-auction but still appellant No. 6 and 7, would change the billing address. It was also submitted that in almost all cases, the vehicle transporting the goods were having Gujarat based registration and it was obvious that such vehicles cannot transport goods from one point to another point within Maharashtra. Still the appellants loaded the goods on such vehicle. They knew use of H.R. trimmings, still they changed ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....awn is that no H.R. trimmings were received by M/s. Silver Ispat Pvt. Ltd. and Shri Ajay Kumar Baheti was fully aware of the fact that credit was being taken on the basis of invoices without receiving the goods covered by such invoices. Under the circumstances he is liable to penalty under Rule 26 of the Central Excise (No.2) Rules, 2001/2002. The penalty imposed is not on the higher side. We therefore, dismiss the appeal of the appellant No.1. 16. As far as appellant No.2 is concerned, he is a Mumbai based broker. His role was to find suitable customers who are interested in purchasing the invoices without receiving the corresponding goods. Even though in his statement, appellant No. 2 has not specifically mentioned about M/s. Silver Ispat Pvt. Ltd., Shri Sampatraj Ladha has narrated about one person with the name Chandresh. The person named Chandresh could not be located. Viramgam based traders who were the bidders and actual buyers of the H.R. trimmings have named appellant No. 2 as the person with whom they were in touch for the selling of invoices and also sending the money, etc. Keeping in view the over all facts, including the facts that there is no confessional statement r....
X X X X Extracts X X X X
X X X X Extracts X X X X
....n the knowledge that such goods are liable to confiscation. Under the circumstances, the penalty imposed on them is correct. Penalty imposed is also not on the higher side. Appeals are therefore dismissed. 17.1 We also note that the Hon'ble High Court of Gujarat in the case of Sanjay Vimalbhai Deora vs. CESTAT reported in2014 (306) ELT 533 (Guj.) has held that a person would render himself liable for penalty for indulging in activities mentioned in Rule 26 of the Central Excise Rules, 2002, even if goods are not confiscated or had not been rendered liable for confiscation. We also note that as in that case, even in the present case all the appellants have full knowledge about every stage of removing, keeping, selling, concealing the excisable goods and the same would not have been possible without their active participation and connivance with each other. We also note that the said judgment of the Hon'ble Gujarat High Court has been upheld by the Hon'ble Supreme Court as reported in 2014 (309) ELT A131 (SC). Further, the Hon'ble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. CCE reported in 2011 (266) ELT 436 (P&H), held as under:- 9. As regard....