TaxTMI 
TaxTMI 
2017 (4) TMI 737
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....nt facts emerged: a) ACPL had indicated their turnover for 2001-02 and 2002-03 as Rs. 85,63,438/- and Rs. 78,85,538/- respectively. b) There were instances of repetition of sales invoice/ serial numbers/irregular serial numbers of invoice and also missing of invoice serial numbers issued for sales purposes. c) Shri Ajith Raj Jain, Director of ACPL, in a statement dated 15.03.2006, admitted that they used to suppress clearances of manufactured goods by raising invoices under the same serial numbers twice and by destroying the second invoice on completion of the transaction. d) During the year 2001-02, ACPL had reported in their sales tax returns, clearances of sale value of Rs. 1,75,23,061/- to nine customers. After allowing deductions of sales tax paid, abatement of duty free clearances for SSI units upto Rs.one crore, and considering the balance amount as cum-duty value, the assessable value worked out to Rs. 61,60,040/-, on which central excise duty liability not paid worked out to Rs. 9,85,606/-. e) For the year 2002-03, they had made clearances on their own to various customers involving sale value of Rs. 1,37,90,166/-. f) A....
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....nd Jain (authorized representative of M/s. Paras Packers) 4. After due process of adjudication, the original authority, vide order dated 21.11.2006 (impugned order) confirmed the proposals made in the SCN for duty demand of Rs. 85,35,518/- with interest liability thereon, on ACPL and also imposed the following penalties:- • Rs. 85,35,518/- under Section 11 AC ibid on ACPL • Rs. 45,00,000/- (Rs.Forty five lakhs) penalty under Rule 26 of Central Excise Rules, 2002 each on Shri Ajith Raj Jain, Smt. A. Latha Jain and Shri Umed Raj Jain. • Penalty of Rs. 1,00,000/- (Rs.One lakh) under Rule 26 ibid each on Shri B. Rajasekar and on Shri P. Murugalingam • Penalty of Rs. 2,00,000/- (Rs.Two lakhs) under Rule 26 ibid on Shri M. Purushothaman • Penalty of Rs. 4,00,000/- (Rs.Four lakhs) under Rule 26 ibid each on Shri K. Mohan Lal, Shri H. Punaram and Shri S. Premchand Jain Aggrieved, all these appellants have filed the aforesaid appeals. 5. The matter came up for hearing on 18.01.2017, Shri S. Jaikumar, Ld. Advocate, on behalf of all the appellants has interalia made the following submissions:- i) For the year 2....
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....for the year 2001-02 has been accepted, cenvat credit of duties paid on the raw materials to the extent of Rs. 2,80,327/- has to be extended to ACPL. 6. On behalf of Revenue, Ld. AR, Shri S. Nagalingam (A.C) reiterated the correctness of the impugned order. 7. Heard both sides and have gone through the facts and records of the case. For the year 2001-02, appellants have more or less admitted and accepted their duty liability demanded thereof for the period except raising a contention that against duty demand of Rs. 9,85,606/-, the correct duty liability should be Rs. 9,32,882/-since the clearances pertaining to 2000-01 amounting to Rs. 2,56,762/- have been wrongly included by Revenue. However, no clinching evidence in support of this contention is available. On the other hand, it is established that for the period 2001-02, against the total value of clearances declared in the sales tax returns, namely Rs. 85,63,438/-, value of actual clearances were more than double at Rs. 1,75,23,061/-. The adjudicating authority has deducted sales tax paid thereon, extended SSI exemption limit of Rs. One Crore, and has also been generous in extending cum-duty benefit to arrive at the duty d....
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....se contentions. Name of the unit Proprietor's name Smt./Shri Present occupation Whether related to Shri. Ajit Raj Jain (brother of Shri Umed Raj) Amman Cartons M. Purushothaman Building contract No Sachin Packaging Industries H. Punaram Pawn Broker shop No Paras Packers Smt. Paras Bai (rep. by S. Premchand Jain) Smt. Paras Bai (house-wife aged 73) S. Premchand Jain (Jewellery shop) Yes. Smt. Paras Bai Mother of S.Premchand Jain, Brother Murugan Packaging Industries P. Murugalingam Manager-M/s. Sapna Packaging Industries No. But working in a unit owned by the father of Shri Ajit Raj Jain Mohan Cartons K. Mohanlal Pawn broker shop No. Sekar Packers B. Rajasekaran Supervisor M/s. Appollo Bright Steels (P) Ltd. No. But working in a unit in which Shri Umed Raj Jain and his wife are the directors Appolo Packers S. Umed Raj Jain Jewellery shop Yes. Brother The following table, again in para-11 of the show cause notice, makes for interesting reading; 9.1 Shri M. Purushotaman, Proprietor of M/s. Amman Cartons, who had claimed to be a building contractor, however admitted during cross ex....
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.... was a supervisor in M/s. Apollo Bright Steels Pvt. Ltd. and that after closure of M/s. Sekar Packers he is working in same compound again getting Rs. 4000 per month. M/s. Appolo Bright Steels is a unit promoted/controlled by relatives/family members of Shri Umed Raj Jain. The address of M/s. Sekar Packers at No. U-29/8 , Central Avenue, Korattur, Chennai-80, was found to be non-existent. Shri Rajasekaran has admitted in his statement dated 13.09.2005 that except for registering the unit under TNGST and opening an account in TNSE Bank as advised by Shri Umed Raj Jain, he was not involved in any manufacturing activity or clearance of the corrugated boxes in the name of M/s. Sekar Packers. The adjudicating authority in para 60.4 of the impugned order has raised obvious questions as to how the person who is getting only a salary of Rs. 4000/- at present was the proprietor of a Company which has done business of more than Rs. 48 lakhs during 2002-03. In a statement dated 13.09.2005, Shri B. Rajasekaran, has admitted the payments received by him and remitted to the bank account would be withdrawn by him and handed over to Shri Umed Raj Jain. Further, B. Rajasekarans statement that he wa....
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....rores provided in the SSI exemption, which will have a domino effect on the next financial year 2003-04, to the extent that SSI exemption will be unavailable to the appellant ACPL for that year. This being so, the demand of duty in respect of 2003-04 amounting to Rs. 14,71,729/- as proposed in Annexure-AIII to the SCN confirmed in the impugned order does not call for any interference. 11. We, therefore find ourselves in full agreement with the following conclusions of the adjudicating authority:- "60.10. Keeping in view the above, if one looks at the back ground of the proprietors of 7 dummy units, their financial strength, expertise in the manufacturing, marketing of corrugated box as also their activities before and after 2002-2003 and their present employment as also various machines that are required for the manufacturing of corrugated boxes and the facilities that were available with Apollo Corrugators and in all these 7 dummy units, the only inevitable conclusion is that the 7 units wee dummy units having no manufacturing activity or any other facility and were created on paper to evade Central Excise duty. All the people who were cross examined are even today und....
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.... their own manufactured clearances in the name of the dummy units." 12. Viewed in the totality of the facts before us, in our considered opinion, the contentions of the appellant are but diversionary, albeit futile, tactics to draw attention to perceived deficiencies in investigation and adjudication. But nothing has been demonstrated by the appellant to show that they were pure as the driven snow or that they had no unaccounted clearances. On the other hand, investigation has successfully unearthed a well planned subterfuge of deceit and deception planned and executed by the manufacturer appellant with the nefarious intent of evading central excise duty that was enjoined of them to discharge, adversely affecting the exchequer. The maxim "Acta Exteriora Indicant Secreta Interiora" (outward acts show the secret intentions) is thus verily applicable to the appellants. In the event, the determination of total duty liability of Rs. 85,35,518/- by the adjudicating authority in the impugned order under 11A(2) of the Act, on ACPL along with interest liability thereon in terms of Section 11 AB ibid, imposition of equal penalty of Rs. 85,35,518/- under Section 11AC ibid are very much in ....
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.... 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 rupees ten thousand, whichever is greater. A plain reading of Rule 26 will indicate that imposition of the penalty therein is not tied to a conditionality that excisable goods have to be placed under confiscation under the Act/Rules. On the other hand, what the rule propounds is that a person who is involved either directly or indirectly, by way of possession, or transporting, removing, depositing etc. or in any other manner dealing with excisable goods and who has the knowledge that consequence of such said acts or omissions on his part could result in the impugned goods becoming liable for confiscation under the Act/Rules is then exposed to imposition of penalty under this rule. Only, the person implicated/concerned should have the knowledge of "possible confiscation" of the impugned goods. Both these appellants ....
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....ad full knowledge of the entire exercise designed to evade due liability of central excise. They also cannot claim ignorance that excisable goods cleared unaccounted, in the name of "dummy units", would have been liable for confiscation. In the event, we are of the considered opinion that imposition of penalties on these appellants under Rule 26 of the Rules as ordered in the impugned order is fully justified. Further, taking into account the magnitude of the duty evasion, the penalties imposed on them are relatively not very high. For these reasons, there is no merit in these appeals and they will have to be dismissed, which we hereby do. 12.4 Smt. Lata Jain, the Director of ACPL (Appeal E/134/2007) is aggrieved by imposition of penalty of Rs. 45 lakhs under Rule 26 of the Rules. In her appeal, she has inter alia submitted that non-payment of duty even after crossing the SSI exemption limit is not with any intention to evade payment of duty but only due to ignorance. She has also pointed out that the main appellant has paid the duty liability admitted by them. She contends that there is no specific allegation as how the appellant had rendered herself liable for penalty under Ru....