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TaxTMI 
TaxTMI 
TaxTMI 
2016 (1) TMI 1051
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....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 taken from the consignments and after recording....
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....ing 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. Commissioner of Customs (Export) Nhava Sheva was appo....
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.... 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. Agro Industries Ltd. Vs CC (Export) Nhavasheva (5) C/87902/13-Mum American Almonds Corp Vs CC (Export) Nhavasheva (6) C/87933/13-Mum Oxygen & Carbide Gas P. Ltd. Vs CC (Export) Nhavasheva (7) C/879....
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.... (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 Shreeji Barriels Pvt.Ltd. (7) C/87961/13-Mum CC (Export) Nhavasheva Vs Dye-Oex Dystuff & Intermediates P.Ltd. (8) C/87961/13-Mum CC (Export) Vs Nhavasheva Shree Sai Prassana Trading Co. (9) C/87961/13-Mum CC (Export) Nhavasheva Vs Shree Saibaba Chemical Industries (10) C/87961/13-Mum CC (Export) Nhavasheva Vs Shree Krishna Barrels Pvt. Ltd. (11) C/87961/13-Mum CC (Export) Nhavasheva Vs (12) C/87961/13-Mum CC (Export) Nhavasheva ....
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.... 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 officer Mr. Hitesh Mehta, penal action was dropped by the adjudicating authority and the order was not reviewed. The Tribunal also held in a similar case of Ruchika International 2015-TIOL-1224-CESTAT-MUM and Sunshine Overseas 2011 (263) ELT 617 that no penalty is imposable under Section 114 on the Officers. 7. Submissions on behalf of High Sea Sellers (i) Ld. Counsels stated that penalty is imposed under Rule 26 of the Central Excise Rules 2002 for availment of Cenvat credit by the High Sea buyers without receiving the goods in their factory and without utilizing the same in the manufacture of final products.....
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....olved 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 group companies and returned the same cash to them through the broker Mr. Liladhar Parekh. This fact is admitted by the broker also. That the statements were retracted by some. In absence of any evidence of threat/coercion/physical force, the statement under Section 108 of the Customs Act, 1962 is a valid piece of evidence, hence I hold that the same is reliable, cross examination of the Co-noticee is not going to serve any purpose, hence I reject any such demand. Thus principles of natural justice are violated in not allowing cross-examination. The demand is time barred as they have not suppressed any fact. They relied on the Ape....
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....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 cause notice against the appellant. (h) As regards credit of Rs. 16,74,067 there is no allegation that the transactions were through the appellant. (iii) If the amounts totalling Rs. 1.54 crores stated in para (ii) above are not considered, the involvement of the appellant, assuming the same is considered on the basis of statements of other persons, will come to Rs. 1.09Crores only. Therefore, the plea is that the penalty of Rs. 11 lakhs is harsh and not justified. 10. Submissions of Special Counsel on behalf of Revenue (i) The Ld. Special Counsel appearing for Revenue submitted that the Commissioner of Customs (Export), Nhava Sheva has been appointed to ....
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....nt 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 suppliers, that they supplied goods to the companies through their agents as per trade practice, the Counsel submitted that instead of transporting goods to the group companies the same were delivered at Bhiwandi. The sale was not negotiated with the group companies and the indigenous suppliers were only asked by the agents to raise invoices in the name of group companies. This shows that they are a party to the illegal transactions as there is nothing to show that the goods were actually meant for group companies. (vii) On the contention of B.R. Enterprises that they actually delivered the goods it was submitted that evidence at paras 155.1, 155.2, 155.3 of the Order show....
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....ssion 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 confiscability of goods exported as well as goods imported and cleared by DEPB Holders and the leviability to duty on the imported goods, jointly and severally on the exporters as well as the DEPB Holder. At the time of hearing, the plea taken by the Ld. Counsels is that duty liability cannot be fixed jointly and severally on the exporters as well as the importers. We agree with this contention as the Tribunal has been constantly taking this position as in the cases of Rajesh Kumar Agarwal vs CCE 2015(321)ELT 313 (Tri-Del) and Golden Tobacco Ltd. vs CCE 2015(317) ELT 313(Tri-Del) . Therefore we order remand of these cases for fresh adjudication by the Commissioner for fixing the duty liability appropriately. ....
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....he 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 duty was payable under Section 3 of the Customs Tariff Act. Therefore the provisions of confiscation under the Central Excise Rules are not applicable to them and hence penalty under Rule 26 of the Central Excise Rules cannot be imposed. However, Ld. Special Counsel submitted that what has to be seen is whether the goods per se are specified in the first and second schedule to the Central Excise Tariff and secondly, whether goods so specified are subject to a duty of excise. In other words, the goods should only be leviable to excise duty under the category of excisable goods. But it is not necessary that there should be actual levy of excise duty. He relied on various case laws. We have examined the issue carefull....
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....on 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 the goods on High seas. Therefore in our considered view the question of imposition of penalty under Rule 26 of the Central Excise provisions on goods on high seas does not arise. Having decided the legal point at hand, we do not find it necessary to go into the details of the role played by the High Sea Sellers viz-a-viz the Importers. 12.3 We now deal with the penalties imposed on the indigenous suppliers. The allegation is that only duty paying documents were sent by the suppliers to the companies whereas raw material was sold in the open market. This enabled the suppliers to avail Cenvat credit without receiving the goods. These facts have been admitted by the dealers and stockists as well as the companies who received the documents. These facts are also reveale....
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....pproached 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 "Qualigance Chemicals Account Bhagwandas Ramchandra. The goods were ostensibly meant for Qualigance Chemicals. However, since the order was placed by the intermediary Bhagwandas Ramchandra they mentioned the word 'Account.' The Commissioner recorded in the order 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 group companies and returned the same cash to them through the broker Mr. Liladhar Parekh. This fact is admitted by the broker also. That the statements were retracted by some. In absence of any evidence of threat/coercion/physical force, the statement under Section 108 of the Customs Act, 1962 is a v....
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.... 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 Commissioner cannot generalize the charge against all the officers on the basis of admission of one officer. In fact we are informed that the case of this officer Shri Zahid, who is not a party in the present case, is yet to be adjudicated. Shri Afzal Dalal also stated that he was doing the substitution with the knowledge of the officers. Due to lack of any concrete evidence against the officers who handled past consignments, it is difficult to sustain the case against them. Another allegation is that in some cases there was no manufacturing at all in the factories where containers were sealed and the officers should have been aware of this. We find that in some cases there are statements from factory staff that the factory was in existence. The point to be seen is whether the good....
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....ependently 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 the said statement in token of having seen the same; that he was shown the statement dated 21.09.2004, 14.12.2004 & 10.01.2005 of Shri Balkrishan N. Popawala, Authorized Signatory of M/s Hero Dye Chem Industries and partner of M/s Popawala & Co. and statement dated 10.01.2005 of Smt. Bharti B. Popawala, Prop, of M/s Hero Dye Chem Inds. and on perusal of the same he stated that the facts stated therein in respect to his role were true and correct and he accepted the same: that in token of having acceptance, he appended his signatures on the last page of all the statements; that he was shown statement dated 15.12.2004 and 05.02.2005 of Shri Bharat Himmatlal Shah of M/s Karan Monomer P. Ltd. and statement dated 12.01.2005 of Shri Bharat Mehta; Chemical Broker and stated that the facts stated ....
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....ia 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 10.01.2005 of Shri Vijay Sheth, Director of M/s Dye-O-Tex Dyestuff & Intermediates P. Ltd. and stated that on perusal of the statements, the facts stated in these statements were true correct and acceptable to him and in token of acceptance he appended his signature on last pages of these statements; that he was shown statement dated 31.12.2004 of Shri Jagdish Singh Arora, Director_of_M/s. D. K. Foods & Chemicals P. Ltd. and on perusal of the same he stated that it was a fact that he approached "Shri Jadish Singh Arora for showing the sales on HSS basis to M/s Chevrolet, M/s Cosmos & M/s Colosperse and informed that only the import documents were to be given to the said three parties and no goods cleared in their name were to be delivered to the respective parties} that he did not accept the fact....
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....kar, 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 correct; that he accepted the role played by him and in token of it he appended his signatures on the last page of the said statements; that he was shown statement dated 15.12.2004 of Shri Shivkant Khetan, Partner of M/s Alpic India, Mumbai and on perusal of the same he stated that he did not accept the fact stated by Shri Shivkant Khetan about his role in the said transaction; that he never met Shri Shivkaht Khetan for making the HSS agreement in the name of M/s Chevrolet; that he had never sold any consignment of chemical to Shri Shivkan Khetan and had never suggested Shri Shivkant Khetan to import acrylamide and had not suggested any indenter to Shri Khetan; that for the HSS agreement made between Shri Khetan and M/s Chevrolet one chemical broker Shri Sailesh Mehta having his office at....
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....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 the last page of all the statements; that Shri Afzal Dalai & Shri Asif Bidiwala first approached him in Dec, 2001 for arranging buyers for the sale of approx 20 MT of Titanium.Dioxide of foreign Origin; that this quantity of Titanium Dioxide was stored by them in one of the warehouses at Bhiwandi; that for the subject deal he had charged brokerage of 1% of the sales proceeds; that they again visited his office and stated that they had manufacturing units In Gujarat and they required the duty paying documents of import consignments i.e. BE, BL, etc and Central Excise Invoices in respect of indigenous consignments on regular basis; that they offered him brokerage of 1% of the transaction value which was subsequently reduced to 0.5 % and at times he was getting 0.25 %; that as per the normal tr....
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.... 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 adjudicating authority has not imposed penalty on the DEPB Holders under Section 114A as mentioned at Para-O(iv). (2) The adjudicating authority has not confirmed duty demand on DEPB Holder M/s. Corporate Chemicals and Intermediates which was required to be done as the goods were confiscated. (3) The adjudicating authority confirmed duty against M/s. Cosmos Chemicals and Intermediates to the extent of Rs. 16,73,355/- instead of Rs. 58,02,726/- (Para-S(ii) of the Order). As regards these appeals since we have already remanded the appeals of appellants in respect of duty demand/penalty against DEPB holders/importers we remand these appeals also to the Commissioner for fresh adjudication. (4) Non imposition of penalty under Rule 26 in respect of certain High Sea Sellers and certain Indigenous Su....