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2016 (1) TMI 1051
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.....R.) For the Petitioner : Shri V.K. Singh Spl. Counsel, Shri Ahibaran, Addl. Commr.(A.R.) ORDER Per : P.S. Pruthi These appeals relate to fraudulent claim of export incentive schemes viz. DEPB, DEEC and rebate by six companies (hereinafter referred as companies) viz M/s Cosmos Chemicals and Intermediates, M/s Colosperse, M/s Qualigance, M/s Chevrolet, declared as manufacturer exporter and M/s Clarity Intermediate & Pesticides and M/s Corporate Chemicals Intermediates declared as merchant exporters. Departments case is that these companies have claimed to have exported various chemicals, pesticides and dyes, however in fact there was no export of the declared chemicals/dyes/pesticides and the goods declared in the shipping bills have not been exported and in their place some unknown chemicals were exported. On basis of intelligence, DRI examined 3 containers in ICD Dashrath on 26.02.2004 which were cleared from M/s Cosmos Chemicals and Intermediates, Vadodara. They were found to contain a low value liquid/waste but declared in the export documents as Fenthion Tech, a costly insecticide, with an intention to avail undue benefit of DEFB scheme. On testing the samples ta....
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....3 officers who examined the past consignments during the said period were recorded wherein they inter alia stated that they followed the proper procedure of drawing samples in as much as all the selected drums were opened and one drum was selected for drawing the samples and 4 representative samples were drawn, that this was done in their presence, that the required quantity of samples drawn from the drums were put in bottles/polythene packets i.e. liquid in bottles and the powder products in poly packets, that the drums so opened were then closed and four samples were sealed by putting the samples in the thick envelopes, that thereafter the covers were sealed with brass seals of the range and wax, that the description of goods, ARE1 No., Container No., Central Excise bottle seal and shipping line bottle seal nos. were written on the envelopes and signature of authorized person/proprietor of the unit and merchant exporter where ever applicable and excise officers were appended to the envelopes. That all the particulars of ARE1, Central Excise invoices, packing list, commercial invoices were checked and verified, that thereafter stuffing of the container used to be allowed. 3. Co....
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....rs - List C (iv) High sea sellers- List D (v) Broker - List E (vi) Departmental Appeal - List F List A Central excise Officers (1) C/87992/13-Mum C. M. Tank Vs CC (Export) Nhavasheva (2) C/87993/13-Mum H. U. Mahyavanshi Vs CC (Export) Nhavasheva (3) C/87994/13-Mum D.M. Rana Vs CC (Export) Nhavasheva (4) C/87995/13-Mum V. D. Parmar Vs CC (Export) Nhavashev (5) C/87996/13-Mum H. N. Shaikh CC (Export) Nhavasheva (6) C/88018/13-Mum S.K. Jain Vs CC(Export) Nhavasheva (7) C/88241/13-Mum V. Srinivasan Vs CC (Export) Nhavasheva (8) C/88242/13-Mum K. N. Parmar Vs CC (Export) Nhavasheva (9) C/88612/13-Mum Neel Kamal Verma Vs CC (Export) Nhavasheva (10) C/88717/13-Mum S. S. Chaudhary Vs CC (Export) Nhavasheva List B - Importers (1) C/87785/13-Mum Bhuwaneshwar Refineries Pvt. Ltd. Vs CC (Export) Nhavasheva (2) C/87839/13-Mum Jmd Oils Pvt. Ltd. Vs CC (Export) Nhavasheva (3) C/87866/13-Mum N S Trading Corporation Vs CC (Export) Nhavasheva (4) C/87879/13-Mum J. R. A....
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....l Vs CC (Export) Nhavasheva (4) E/87602/13-Mum Shree Raghav Enterprises Vs CC (Export) Nhavasheva (5) E/87603/13-Mum Bronze Chem Enterprise Vs CC (Export) Nhavasheva (6) E/87719/13-Mum Uniway Trading Pvt. Ltd.Vs CC (Export) Nhavasheva (7) E/87720/13-Mum Nageshwar Enterprise Vs CC (Export) Nhavasheva (8) E/87776/13-Mum Hero Dye Chem Industries Vs CC (Export) Nhavasheva (9) E/87811/13-Mum C.J.Shsh & Co. Vs CC (Export) Nhavasheva (10) E/88004/13-Mum Cosmos Plastics & Chemicals Vs CC(Export) Nhavasheva List E (1) E/87845/13-MUM Liladhar Parekh Vs CC (Export) Nhavasheva List F - Departmental Appeal (1) C/87961/13-Mum CC (Export) Nhavasheva Vs Clarity Intermediates & Pesticides (2) C/87961/13-Mum CC (Export) Nhavasheva Vs Nicholas Piramal (3) C/87961/13-Mum CC (Export) Nhavasheva Vs Cosmos Chemical Corporation (4) C/87961/13-Mum CC (Export) Nhavasheva Vs Colosperse Chemical Corporation (5) C/87961/13-Mum CC (Export) Nhavasheva Vs Qualigence Chemicals (6) C/87961/13-Mum CC (Export) Nhavasheva Vs Sh....
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....y or the samples were substituted in case of past exports otherwise all samples would have tested negative. (ii) Shri Zahid Edrus, who is not even a party to the impugned order, is the only officer who admitted that he handed over signed slips to the representative of exporters which were later on pasted on the sample bottles. The other Officers did not make any such confession. (iii) The exporter Shri Afzal Dalal also stated that he was doing the substitution without the knowledge of the officers. (iv) The instructions relating to drawal of samples in instruction No. 6/2002 and Chapter 7 of CBEC manual were followed by the Officers. (v) The Officers are protected under Section 155(2) of the Customs Act read with Section 40 of the Central Excise Act as a notice was not issued to them within one month of intended proceedings. Nor was action taken against them within 3 months of expiry of accrual of the cause. (vi) There is no finding of any extraneous or illegal consideration taken by the Officers while allowing factory stuffing. (vii) In departmental proceedings, 6 out of 10 Officers have already been exonerated. (viii) In similar case in proceedings against an....
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....owned by the appellants did not have permit to transport the goods outside Maharashtra. The tempo was used to carry the goods to the warehouse at Bhiwandi. The goods were cleared on payment of duty. Imposition of penalty under Rule 26 is not sustainable as they had no knowledge that the goods dealt with by him will not be sent by the stockist and therefore the goods are not liable to confiscation. Further, no penalty can be imposed under Rule 26 (2) for issuing excise invoice without delivering the goods as this sub-rule has been inserted w.e.f. 1.3.2007. (iii) On behalf of M/s. Atul Ltd. it was submitted that they were not involved in the actions of the main parties. All the relevant statements and documents were provided in their reply dt. 10.1.2006 but no justification or even mention of the documents produced were dealt with by the Commissioner in his order. Even cross-examination of Mr. Jugal Kishore Jaju was denied. The Commissioner has merely recorded that It is on record that all the high seas sellers and indigenous suppliers in their statements as detailed in paras 391 (1) to 391(V) above, have admitted the fact that they received the sale amounts in drafts from the gr....
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....d the deal was through another broker. (b) Availment of credit of Rs. 96,72,000/- at Sr. No. of Annexure-A 225 to 262 & 269- was a result of transaction between the four associate companies themselves and the appellant had not played any role in these deals. (c) Availment of credit of Rs. 16,11,620/- at Sr. No. of Annexure-A 1 to 6, 184 to 213, 224, 263 to 268, 272 & 273. The transactions were not through the appellant but through Shri Pappu Kesar Director of Intel Overseas. (d) Availment of Credit of Rs. 1,21,650/- at Sr. No. of Annexure -E 19- was on basis of letter of M/s. Basal Impex but this document is not a relied upon document. (e) Regarding credit of Rs. 3,93,240/-at Sr. No. of Annexure-E 1 to 6, 8 to 11, 27 to 29- there is no allegation in show cause notice nor any finding in the order that the transactions were through appellant. (f) Credit of Rs. 12,94,563/- at Sr. No. of Annexure-I 51 to 55, 57 to 61, 64, 65- was a result of transaction among associate companies and the appellant was not involved in these deals. (g) As regards the credit of Rs. 3,04,537/- at Sr. No. of Annexure-I 1 to 9, 62, 63, 67, 68, 70 & 79 - there is no allegation in the show cau....
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....f goods claimed to have been imported by M/s. Cosmos Chemicals & Intermediates, the statement of warehouse owner where the goods were kept after clearance also shows that the same were not delivered to the associate company. (iv) The indigenous supplier only supplied duty paying documents to the associate companies whereas the material was sold in the open market. Demand drafts were sent by group companies to the indigenous suppliers and the equivalent amount was received by cash from. These activities were conducted through Shri Liladhar Parehg as admitted by him. And as also admitted by the indigenous suppliers. (v) In one case, M/s. Popawala retracted the statement but the same was not submitted to the department and there is no proof that statement was recorded under threat. Ld, Special Counsel relied on the case of Zaki Ishrati Vs. Commissioner of Customs & Central Excise, Kanpur 2013 (291) ELT 161 (All.) which held that a retraction not addressed to the officer before whom statement was given, cannot take away the effect of the statement. (vi) As regards the contention made by M/s. Sudarshan Chemicals Ind. Ltd, M/s. Atul Ltd. and M/s. Indokem Limited, all indigenous ....
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.... of raw material and non availability of infrastructure about the manufacturing status of the factories. (v) Superintendent Shri M.G. Momin & Inspector Shri Zahid admitted that they drew the samples and handed them over to the representatives of the exporters with the signed envelopes and the samples were not sealed in their presence. (vi) Provisions of Section 155 are not applicable as the officers failed to discharge their duties in good faith in compliance with the provisions of the Customs Act. 12. We have carefully considered the facts of the case and contentions of all sides. Significantly the companies are not in appeal before us. It is seen from the records that they made confession to the fraudulent operations but they neither replied to the SCN nor they appeared for personal hearing. The Commissioner quite naturally came to the conclusion that they have nothing to advance their defence. He based his findings against the companies on the basis of records, confessional statements and hard evidence that they masterminded the total operations aimed at fraudulent availment of export benefits and cenvat credit. 12.1 The first issue to be decided is the confiscabi....
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....e contention of Ld. Counsel is outrightly rejected. (ii) The contention of the counsels is that penalty cannot be imposed on the appellants under Rule 26 as they have not dealt with excisable goods. For convenience Rule 26 is reproduced below: Rule 26. Penalty for certain offences.- 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 two thousand repees, whichever is greater". Further, the definition of excisable goods under Section 2(d) of the Central Excise Act is as follows: "excisable goods" means goods specified in the [First Schedule and the Second Schedule] to the Central Excise Tariff Act, 1985 (5 of 1986) as being subject to a duty of excise and includes salt; The contention is that the goods sold on high seas were imported goods and were not manufactured in India, therefore duty was not payable under Section 3 of the Central Excise Act. The d....
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....nt of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse [or an importer who issues an invoice on which CENVAT credit can be taken] or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [five thousand rupees], whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. In the present case we find that the goods which are still on high seas cannot be held to be liable to confiscation in terms of Rule 25 above. It has not been shown, in terms of the above Rule that the High Sea Sellers have contravened any provisions of Central Excise Rules with intent to evade payment of Central Excise duty when the goods are still on High seas. It cannot be held that because the goods will be diverted and not used by the companies after clearance from Customs, the offence already stands committed on the sale of ....
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.... to a reasonable belief that the suppliers were aware of the methods adopted. In the case of Ms Atul, the statement of Darhan Sheth of the Transport Company shows that they were contacted by Ms Atul for transportation of the goods to Bhiwandi whereas the invoices were in the name of the companies. This was abnormal because the place of the company, i.e. Bhestan and Bhiwandi are in opposite directions. Even a copy of the LR for Bhiwani was sent to the consignee. Therefore we find that there could not be better proof to indicate that the supplier was aware of the modus operandi of sending invoices but not the goods to the companies. The partner of Ms Bhagwandas Ramchandrs, Shri Jugal Kishore, also stated that Shri Liladhar Parekh approached him to say that Ms Qualigance approached him with the request that they wanted only the original excise duty paying documents but not the goods. Therefore the goods were sent to Bhiwandi and sold in the local market. Whereas the defence plea is that as per commercial practice they received orders of companies through brokers. We find Ms Atul supplied the goods by writing in the invoice under the column of consignee, the description such as "Qua....
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....ules. This act of theirs facilitated the fraudulent availment of Cenvat credit by the consignee. Therefore the indigenous suppliers are liable to penalty under Rule 26. We uphold the order of Commissioner imposing penalties on the indigenous suppliers. 12.4 (i) As regards officers, the charges are that instead of sealing the samples under their signatures, they handed over signed slips bearing their signatures to be affixed on the covers containing sample bottles. Thereby they facilitated the substitution of samples by the exporter which resulted in fraudulent DEPB claims. We find that it is only in the case of the current consignments in containers which were seized that the officer namely Inspector Zahid admitted to this fact. None of the other officers who are appellants admitted to having given signed slips to the exporters. Department is relying on the statements of Shri Afzal Dalal that he used to replace the samples drawn by the Central Excise Officers who gave him the seals and blank envelopes duly signed by them. It is seen that the officers in their statements stated that the procedure of sampling was followed correctly by them. Therefore, it is our view that the Commi....
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....ion of three months from the accrual of such cause. Revenue has not challenged the fact that the time lines in Section 155(2) were not adhered to. No convincing reason has been given to us why Section 155(2) will not be applicable. Reliance is placed on the case of Rajeev Kumar Agarwal vs Commissiner 2007(217)ELT 392(Tri-Bang) (supra). We find that the appeal of the appellant officers is liable to be allowed on this ground alone. 12.5 We may now take up the case of the Broker Shri Liladhar Parekh. We find that he had given a detailed statement which is reproduced below for convenience to determine his role and liability to penalty. "he had never represented any of the four companies before any suppliers/Government agencies, but infact he used to represent the four companies independently with the suppliers and Government agencies as/ he used to sign the HSS agreements and all the other relevant documents as authorized signatory of the said four firms i.e. M/s Cosmos Chemicals & Intermediates, M/s Qualigance Chemcials, M/s Chevrolet Dyes Intermediates & Agrochem Industries and M/s Colosperse Chemcia! Corporation;) that he appended his dated signature on the last page of ....
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....tatement dated 17.12.2004 of Shri Apurva Shah,- Partner "of M/s C. J. Shah & Co. , statement dated 17.12.2004 of Shri Raghvendra M. Adhyapak, General Manager Commercial of M/s C. J. Shah & Co., statement dated 17.12.2004 of Shri Atul M. Gandhi, statement dated 17.12.2004 of Shri Hiren" Mehta, Prop, of M/s Vitrag Chemicals and statement dated 18.12.2004 of Shri Ketan N. Shah, Prop, of M/s Jmpex Dyechem, statement dated 18.12.2004 of Shri Mukesh A. Bakhai, Partner of M/s Amrit Chem, Mumbai, statement dated 24.09.2004 of Shri Ramavtar Poddar, Partner of M/s Maruti Rasayan, statement dated 31.12.2004 of Shri Ambrish Mehta, Partner of M/s Alfa Chemical Corporation and statement dated 08.01.2005 of Shri Mukesh Bahkai, Partner of M/s Amrit Chem , statement dtated 07.01.2005 of Shri .Rakesh Bhageria of M/s Bhagerial Dye Chem Ltd. and statement of Shri Rakesh Jajodia Partner of M/s Maruti Rasayan Mumbai,, statement dated 08.01.2005 of Shri Chetan R. Gupta, HUF Karta of M/s Shree Raghav Enterprises and statement dated 09.01.2005 of Shri Vipul P. Mehta of M/s ViraJ International, statement dated 09.01.2005 of Shri Mukesh Ramani, Director of M/s Knox Impex Pvt. Ltd. and statement dated 10.01.2....
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....s were handed over by him to M/s Shahastraa Exports through Shri Preyash @ Pappubhai and the equivalent cash amount was also received by him through Shri Pappubhai; that in token of having perused the above three statements he appended his signatures on the last page of all the three statements; that he was shown-statement dated 23.01.2005 of Shri Manish Chottaial Vora. Authorized Signatory of M/s Nageshwar Enterprises, statement dated 31.12.2004 of Shri Nimesh Gandhi Prop, of M/s Aruna International and statement dated 23.01.2005 of Shri Bhaskar Mehta Proprietor of M/s B. I. Mehta, statement dated 09.11.2004 and 07.12.2004 of Shri Suresh Mehta of M/s Gaurav International, statement of Shri Rajiv M. Kanani, Prop, of M/s Prachi Trading Co., statement dated 17.01.2005 of Shri Santosh W. Natekar, Partner of M/s Uniway Trading P. Ltd. and statement dated 18.01.2005 of Shri Radheyshyam Harlalka, Chemical Broker of VAdgadi, Mumbai, statement dated 19.01.2005 of Shri Chetan Parekh, Partner of M/s Cosmos Plastics & Chemicals, statement of Shri Amrit D. Patel, Partner of M/s Shah Patel & Co., Ahmedabad and he stated on perusal of these statements, that the facts stated therein were true and....
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....erprises and stated that the facts stated by Shri Suresh Jaju about his role were correct and acceptable to him; that all the goods shown to have sold to M/s Cosmos & M/s Qualigance were never physically delivered to them and only C. Ex. Duty paying documents were sent to the respective parties; that he had received 0.5 % of the value of the goods as his brokerage and all the transactions of handing DD to M/s B. R. Enterprises and returning cash to the respective parties was done by "him; that he appended his signature on the last page of statement of Shri Suresh Bhagwandas Jaju in token of its acceptance; that he was shown the statement dated 09.01.2005 of Shri Bharat Jayantilal Shah, Partner of M/s Paras Sales Agency, the statement dated 23.01.2005 of Shri Jugal Ktshore Jaju, Partner of M/s Bhagwandas Ramchandra, the statements dated 03.02.2005 of Shri Surendra Roshanal Duggal, Partner of M/s Bharat Solvents & Chemicals Corp. New Delhi and statement of Shri Hiren R, Gosalia, Prop of M/s Ramniklal Gosalia & Co. and on perusal of the same he stated that the facts stated about his role were true and correct and were acceptable to him, in token of this he appended his signature on th....
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....17205/- and Rs. 1611620/- through Pappu Kesar. The wrong availment of Cenvat credit of Rs. 96,72,000/- was a result of transaction amongst the associate companies. Neither is there any allegation in the show cause notice or finding in the order that he had brokered these deals. Similar is the case regarding Cenvat Credit availed of Rs. 1294563/-. The Credit of Rs. 121650/- held in admissible on basis of letter dt. 18.4.2005 of M/s. Basal Impex which does not even appear in the relied upon documents. Also the Cenvat Credit of Rs. 393240/- and Rs. 304537/- finds no mention in the show cause notice or the findings. We find that Shri Liladhar Parekh definitely had a hand in brokering deals in some cases with full knowledge that the goods are not to be delivered to the importers/consignments and that only the documents were to be used for availing Cenvat credit. But the cenvat Credit wrongly availed in such transactions which he dealt with is about Rs. 1 crore only as explained in above para. Therefore, the penalty of Rs. 11 lakhs imposed on him is excessive and we order that the penalty is reduced to Rs. 4 lakhs. 13. The department's appeal is on the following grounds: (1) The....