TaxTMI 
TaxTMI 
TaxTMI 
2015 (10) TMI 2143
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....010, E/1195/2010, E/1208/2010, E/1209/2010, E/1210/2010, E/1221/2010, E/1223/2010, E/1224/2010, E/1237/2010, E/1242/2010, E/1244/2010, E/1325/2010, E/1039/2010, E/1103/2010, E/1162/2010, E/1178/2010, E/1187/2010, E/1188/2010, E/1194/2010, E/1198/2010, E/1204/2010, E/1205/2010, E/1222/2010, E/1238/2010, E/1243/2010, E/1214/2010, E/1305/2011 Shri P.K. Jain, Member (Technical) And Shri S. S. Garg, Member (Judicial) For the Appellant : Shri Shridev Vyas, Advocate, Shri J. C. Patel, Advocate, Shri N.K. Tiwari, Consultant, Shri M.A. Saiyed, Advocate, Shri K.I.Vyas, Advocate, Shri Vipin Kumar Jain, Advocate , Shri A.V.Naik, Advocate , Shri Rajesh Agarwal, Proprietor, Shri Mayur Shroff, Advocate , Shri D.H. Nadkarni, Advocate , Shri C.S. Biradar, Advocate, Shri N.S. Patel, Advocate , Shri Sachin Chitnis, Advocate, Ms. Anjali Hirawat, Advocate , Shri R.V.Shetty, Advocate Shri Ajay Kumar, Joint Commissioner (AR) : For the Respondent ORDER Per: P.K. Jain: All the 31 appeals listed below are against imposition of penalty under Rule 26 of the Central Excise Rules, 2002/2004: S. No. Appeal No. Appellant Penalty (Rs. ) 1 E/1013/2010 Weizmann Ltd. 2,00,000/- 2 E/1044/2010 ....
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....rt to their own weaving units wherein the yarn was weaved into grey fabrics and the grey fabrics was cleared on payment of duty utilising the credit on yarn. Case of the Revenue is that the yarn itself has not been received and the purported job-workers were either not known or in case of three job-workers, who were known have denied having done any job-work on behalf of M/s. Shreeman Textiles and M/s Sajjan Textiles. Addresses or names of other purported job-workers could not be given by Shri Suresh Raj Purohit, who was the proprietor of the two firms. Further, the two premises of M/s. Shreeman Textiles and M/s Sajjan Textiles, though supposed to have 24 and 28 looms, no electricity was consumed during the period and even as per their own admission only 2% of the grey fabrics were manufactured in their own premises and remaining 98% from the job-workers (non-existent as mentioned earlier). Based upon these evidences as also keeping in view the fact that no yarn was received, case of the Revenue is that no grey fabrics were manufactured. The transactions of sale of grey fabrics to various processors or merchant exporters were only on invoices, purportedly indicating the payment of ....
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....ements. Further, in respect of certain yarn purported to have been received by M/s. Shreeman Textiles and M/s Sajjan Textiles no invoices could be produced by Shri Suresh Purohit. During investigation, initially Shri Purohit was available and produced certain documents but thereafter he stopped cooperating and did not respond to the summons. 4.2. Another aspect that was found during the investigation that Shri Raj Purohit has stated in his statement that all the buyers had taken delivery from their manufacturing units and transportation was their responsibility and hence no transport documents are available with them. Further, by and large no such details were written in the invoices. On the other hand, merchant exporters as also the processors, in their statements have stated that the goods were delivered to the processing unit or to the merchant exporters godown and transportation was the responsibility of M/s. Shreeman Textiles and M/s Sajjan Textiles or of the merchant exporters in the case of processors. Thus, statements of main noticees and co-noticees were contradictory. 4.3. After investigation, show cause notices were issued to M/s. Shreeman Textiles and M/s Sajjan Texti....
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....extiles but these fabrics were on account of merchant exporter Movement Impex Trading Co., Parikh Impex Pvt. Ltd., and M/s. Manhattan Exports and M/s. Srinathji Yashraj Enterprises who exported the processed fabrics. In the statement he has also indicated that the goods were received along with LR and they have made payment to the transporter through cheques. It is also claimed that they have recovered the transportation charges along with the processing charges from the merchant exporters. It also appears that certain invoices, ARE-1s in respect of Movement Impex Trading Co., and Manhattan Exports were produced. We do not find any investigations have been done with reference to these four merchant exporters and whether the exporters are real or fake. It does not seem that any investigation was carried out with reference to the LRs to know from where the grey fabrics were lifted. From the investigations indicated in the show cause notice and the order-in-original, it cannot be said that the appellant was having the knowledge that the goods being received by them are liable to confiscation. Under the circumstances, in our view, no penalty can be imposed under Rule 26. The penalty im....
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....ting that the appellant had knowledge that the grey fabrics received by them along with the invoices of M/s. Shreeman Textiles and M/s Sajjan Textiles are liable to confiscation. In view of the said position, no penalty can be imposed under Rule 26 and the appeal of the appellant is allowed. 9. Appellant No. 5: Appellant No. 5, M/s Kunal Textiles, is a processing house. He has processed 48771 L.Meters of grey fabrics received from M/s Shreeman Textiles and M/s Sajjan Textiles under invoice No. 246 dated 08/10/2004. In his statement Shri Murlidhar A. Bachani stated that the said goods had been received on behalf of M/s. MRK Impex and these were received through National Transport Corporation under 4 LRs and they have paid for the transportation and the same were recovered from M/s. MRK Impex. It was also stated that the grey fabrics was processed and cleared from the factory under bond executed by M/s. MRK Impex with Maritime Commissioner. They had explained that they had no direct contact or dealings with M/s Shreeman Textiles and M/s Sajjan Textiles. We find from the show cause notice that no investigation has been done on the transportation and to ascertain from where the goods ....
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....m M/s Shreeman Textiles and M/s Sajjan Textiles were liable to confiscation and hence no penalty under Rule 26 can be imposed. Appeal of the appellant is allowed. 12. Appellant No: 8: Appellant No. 8, M/s Kagzi Brothers Pvt. Ltd., is processing house who has processed the goods on behalf of M/s. Diamond Impex. In their statement they have submitted that they have no direct contact with M/s Shreeman Textiles and M/s Sajjan Textiles. The goods were received by them on behalf of the merchant exporter who had arranged for the transportation of the goods and after processing the goods were delivered to the M/s. Diamond Impex for export along with ARE-1, invoices and NOC for claiming rebate. From the investigation or from the impugned order there is no evidence to indicate that the appellant had reason to believe that the goods received by them are liable to confiscation and hence penalty cannot be imposed under Rule 26. Appeal of the appellant is allowed. 13. Appellant No. 9: Appellant No.9, M/s. Om Fabrics, is a broker dealing in the purchase and sale of cotton yarn. Appellant is neither merchant exporter nor processor. He has neither availed credit nor dealt in any such aspect. From....
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....that the investigation have not been done at transporters end, and it is not coming out from the show cause notice how much is the credit taken by them, the penalty imposed is reduced to Rs. 50,000/-. 15. Appellant No. 11: Appellant No. 11, M/s Sankeshwar Fabrics Pvt. Ltd., is a processor of the goods. It appears that they have received the goods on behalf of the merchant exporter, M/s. Atlas Exports. No specific material is coming out in the investigation against them or any reason to conclude that the appellant had reason to believe that the goods received by them are liable to confiscation. We find from the show cause notice or from the order-in-original there is no specific details about the present appellant and is covered in general. In reply to the show cause notice the appellant has submitted that they have taken the credit on the invoice which were sent by M/s. Atlas Exports and the goods were exported by M/s. Atlas Exports after processing. It was also submitted that after processing the goods were handed over to M/s. Atlas Exports. Investigation has not brought out any evidence to indicate that the appellant had any reason to believe that the goods received from M/s Sh....
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....ough cheques from Angoora International. They produced copies of all the relevant documents ARE-1s, invoices, ledger accounts, etc. From the investigation it is clear that they were not in contact with M/s Shreeman Textiles and M/s Sajjan Textiles and have no reason to believe that the goods received by them are liable to confiscation and in view of this, no penalty can be imposed under Rule 26 and the appeal is allowed. 18. Appellant No. 14: Appellant No. 14, M/s S.V. Business Pvt. Ltd., is a processor who has received the goods from a merchant exporter M/s Gulabdas & Company. M/s. Gulabdas & Company have in turn purported to have purchased the goods from M/s Shreeman Textiles and M/s Sajjan Textiles which were delivered to the appellant at their factory and after processing they were delivered to them. Statements of Shri D.N. Naidu, who was Excise In charge of the appellant-company was recorded wherein he explained that they have been doing the processing work for M/s. Gulabdas & Company for more than 20 years and they had supplied the grey fabrics at their factory. Thereafter they have processed the grey fabrics and processed fabrics were collected and exported by them. The app....
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....vt. Ltd. It is seen from the records that no statement of any person from the appellant-firm had been recorded to understand from where the goods were actually procured and from where the invoices were received and how the goods were transported. It is also not known whether invoices/grey fabrics were directly purchased or through some other intermediary and the role of such intermediary. In the absence of any such investigation, it cannot be said that the appellant had knowledge that the goods were liable to confiscation and hence no penalty can be imposed under Rule 26. The penalty imposed is set aside and the appeal is allowed. 22. Appellant No. 18: Appellant No. 18, M/s G.Tex Inc., is a merchant exporter. Shri Pravin Ucchil, Liaison Officer of M/s G. Tex, in his statement has submitted that they have purchased the fabrics for processing at Ambica Tex Prints at Ahmedabad. They purchased these grey fabrics from one Shri Suresh Sharma but they did not know any address or whereabouts of Shri Suresh Sharma. Further, they were not able to furnish any transport or octroi documents and submitted that the fabrics were delivered by M/s Shreeman Textiles and M/s Sajjan Textiles from Bhiw....
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.... is not coming out from the show cause notice as to the value and the duty involved on such goods. Keeping in view these facts, we reduce the penalty imposed from Rs. 3 lakhs to Rs. 1 lakh. 24. Appellant No. 20: Appellant No. 20, M/s. Mitesh Brothers, is a merchant exporter. They have claimed that they had placed the order through one Shri Suresh Sharma like in the case of appellant No. 18 but they could not produce any telephone number or any whereabouts of Shri Suresh Sharma. Further, they have no documents relating to transportation and how the goods were transported to Ahmedabad from Bhiwandi and also could not produce any octroi details. Under the circumstances, the only conclusion that can be drawn is that the appellant had purchased the grey fabrics from somewhere else and invoices from some other places. Under the circumstances, we hold that there is reason for the appellant to believe that goods were liable to confiscation and penalty imposed under Rule 26 is in order. However, it is not coming out from the show cause notice as to the value and the duty involved on such goods. Keeping in view these facts, we reduce the penalty imposed from Rs. 3 lakhs to Rs. 1 lakh. 25. ....
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....cumstances of the case and the quantity of grey fabrics purchased by them, we reduce the penalty from Rs. 3 lakhs to Rs. 1.5 lakh. 26. Appellant No. 22: Appellant No. 22, M/s Dimond Impex, is a merchant exporter. Statement of one Shri Ramesh Narayan, Partner of M/s Dimond Impex was recorded, wherein he explained that one representative of M/s Shreeman Textiles and M/s Sajjan Textiles approached them in their office and upon approval of quality and price through samples shown by him they placed order and the goods were delivered to the godown of M/s Sharda Synthetics, Dombivli for processing as per their instructions. He further clarified the name of the person who came on behalf of M/s Shreeman Textiles and M/s Sajjan Textiles as Shri Deepak Bhai having his office at Room No. 7, 1st Floor, Building No. 312, Kalbadevi Road and his phone No. 39400529. He also explained that they did not visit the premises of M/s Shreeman Textiles and M/s Sajjan Textiles but have received the fabrics under the invoice of M/s Shreeman Textiles and M/s Sajjan Textile. Later on investigations were also made relating to Shri Deepak Bhai and his office was searched and statement was also recorded. From th....
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....er. We find from the investigation that no statement of any person from the appellant was recorded. However, one Shri Manish H Zaveri, is a broker for powerloom-grey textile fabrics has stated that he has supplied the grey fabrics on behalf of the appellant to M/s S V Business, Dombivli, and the goods were supplied by their commission agent such as M/s Bhaveek Synthetics and Chavan Trading Co. From the investigation it appears that Shri Manish H Zaveri dealt with M/s Shreeman Textiles and M/s Sajjan Textiles through M/s Bhaveek Synthetics and Chavan Trading but it is not coming out whether the appellant were aware that the goods supplied by their broker were in turn purchased through any commission agent such as M/s Bhaveek Synthetics and M/s Chavan Trading Co. or through M/s Shreeman Textiles and M/s Sajjan Textiles. In the absence of any evidence to indicate that the appellants were aware that the grey fabrics and invoices have come from different sources, it cannot be concluded that the appellant was aware that the goods are liable to confiscation. Hence, no penalty can be imposed on them under Rule 26. Penalty imposed is set aside and the appeal is allowed. 29. Appellant No. 2....
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....ppellant No. 27: Appellant No. 27, M/s Atlas Export (India) is a merchant exporter. It appears that no statement of any of the persons from the appellant has been recorded. It is only one Shri Prakash Gundecha, Director of M/s Blue Chip Fabrics Pvt. Ltd., in his statement has stated that they have done the processing on behalf of the present appellant and the goods were sent under the invoices of M/s Shreeman Textiles and M/s Sajjan Textiles by the present appellant. There is nothing incriminating in the said statement against the present appellant. Since no investigation has been done at the appellants end, it cannot be said that the present appellant had knowledge or reason to believe that the goods purchased from M/s Shreeman Textiles and M/s Sajjan Textiles are liable to confiscation. In view of this position, no penalty under Rule 26 can be imposed. Penalty imposed is set aside and the appeal allowed. 32. Appellant No. 28: Appellant No. 28, M/s. Angoora International, is a merchant exporter. Statement of one Shri Santosh Nair, Export Manager of the appellant was recorded wherein he submitted that they have purchased grey fabrics through a broker Shri Gopi Agarwal. He further....
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.... Excise Act, 1944. He has in his statement stated that they have purchased four consignments from M/s Shreeman Textiles and M/s Sajjan Textiles. It was submitted by them that the consignments purchased through broker Shri Dipak Kanodia. Appellant could not produce any bank statement or anything regarding payments for the goods purchased. Since the appellant has admitted that he has purchased the four consignments from M/s Shreeman Textiles and M/s Sajjan Textiles who do not have any facility to manufacture the goods as is evident from the investigation. It would be reasonable to presume that the appellant was aware that the goods being bought by him are purchased from one place and the invoices from other place. It could, therefore, be reasonable to conclude that they were aware that the goods are liable to confiscation and hence penalty under Rule 26 is imposable. However, the investigation is not clearly indicating what is the duty and value of the goods purchased by them. Keeping in view these facts, the penalty is reduced to Rs. 1 lakh. Except the said modification, the appeal is dismissed. 35. Appellant No. 31: Appellant No. 31, M/s K.S. International, is a merchant exporter.....
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....er of judgments during the arguments. The present case is a fact based case and the applicability of the case laws will entirely depends upon the facts of that case. In the present cases, the issue is only relating to penalty under Rule 26. In our view, judgment of the Punjab and Haryana High Court in the case of Vee Kay Enterprises vs. CCE 2011 (266) ELT 436 (P&H) is relevant in the facts of the present case. In any case, a bare reading of Rule 26 would indicate its applicability to any person who has dealt with the goods in any manner and has reason to believe that such goods are liable to confiscation. We have gone through other case laws. We do not consider it necessary to discuss various case laws quoted by both the sides. 38. In the result, we dispose of the appeals as under: S. No. Appeal No. Appellant Final Order 1 E/1013/2010 Weizmann Ltd. Appeal allowed 2 E/1044/2010 Balkrishna Textile Pvt. Ltd. Appeal allowed 3 E/1062/2010 Diamond Textile Mills Pvt. Ltd. Appeal allowed 4 E/1075/2010 Maharashtra Dyeing & Printing Works Appeal allowed 5 E/1185/2010 Kunal Textiles Appeal allowed 6 E/1195/2010 Rameshwar Textile Mills Pvt. Ltd., Appeal allowed 7 ....