TaxTMI 
TaxTMI 
2019 (4) TMI 238
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....eiving the goods. 2.2 They issued ARE-1s and invoices to various merchant exporters or other Rule 12B manufacturers without clearing any corresponding goods. 2.3 This facilitated merchant exporters to claim the rebate of the duty paid as per the said invoices without actually exporting the goods mentioned in the invoice. Merchant exporters never received any goods as stated in the invoice and exported locally procured non duty paid or inferior quality goods. 2.4 Appellant in i. Appeal No E/697/2010 is amongst a number of Merchant Exporters who had received the invoices and ARE-1 from the Muni Group of companies (in case of appellant from M/s Apex Corporation) and claimed rebate. (Appellant 1) ii. Appeal No E/734/2010 is a Superintendent Central Excise in-charge of Range -IV of Kalyan -I division having jurisdiction over the area where all the units of Muni Group were located. (Appellant 2) 2.5 After investigations in the matter a show cause notice dated 16th October 2008 was issued to the Muni Group of Companies and others (total 78 noticees) including present appellant. By the said show cause notice while the demands and recovery of the fraudulently availed CENVA....
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....7) ELT 538 (SC)] h. Shalimar Rubber Industries [2002 (146) ELT 248 (SC)] i. Merchant Exports (India) Ltd [2001 (128) ELT 428 (T-Del)] j. Takshila Spinners [2001 (131) ELT 568 (T-Del)] vi. Since no malafides have been attributed to the appellant, penalty under Rule 26 cannot be justified in view of following decisions- a. Santosh Textile [2007 (219) ELT 894 (T-Mum)] b. Promising Exports Ltd [2008 (226) ELT 408 (T-Kol)] c. Vetri Impex [2004 (172) ELT 347 (T-Chennai)] d. Perfect Mechanical Industries Ltd [2004 (169) ELT 219 9T-Del)] vii. It is admitted fact that appellants were not the beneficiary of the fraud committed by the Muni Group of Companies, nor have they connived in commission of the said fraud. Thus in view of decisions as below penalty on them is not justified. a. Mohibali Roshanaali Naser [1992 (59) ELT 403 (Bom)] b. Fairdeal Filaments Ltd. [2007 (215) ELT 441 (T-Ahd)] viii. Out of the total 40 ARE-1, rebate relating to 27 ARE-1 involving amount of Rs. 92,71,077/- has already been rejected. Thus there is no loss to revenue from the said 27 transactions. In case of revenue neutrality....
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.... by denying the cross examination principles of natural justice too have been violated. 4.3 Advocate appearing for the Appellant-2 submitted that the his client too has been penalized for under Rule 26 of Central Excise Rules, 2002 whereas the entire charge made out against him in the Show Cause Notice and Order in Original is for dereliction of duty and not the one of handling or being concerned with the excisable goods liable for confiscation. He vehemently submitted that there is no evidence to show that his client was part of the conspiracy. 4.4 Arguing for the revenue learned Authorized Representative pointed out the order in original in present case has been passed implicating 78 person including the Muni Group of Companies, their Directors and Constituents. A number of appeals have been filed against the said order in tribunal. Tribunal has by its Final Order No A/3314-3329/15/EB dated 29.09.2015 decided a large bunch of appeals against the said order in original. In his view all the contentions raised by the present appellants have been considered and rejected by the Tribunal in said order. He accordingly submitted that since the issue has already been decided by the ....
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....ay 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 [rupees two thousand], whichever is greater. (2) An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. 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 rupees, whichever is greater." 8.2 In the present case, there is no doubt or confusion that penalties have been imposed under Rule 26 ibid. Rule 26 as reproduced above would indicate that 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 ....
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.... have procured invoices from a source other than the actual manufacturers of the goods would indicate that these goods were in reality not duty-paid goods. If these goods were duty-paid then there was no reason for the appellants-merchant exporters/manufacturers under Rule 12B to undertake the above mentioned fraudulent activity of approaching Muni Group of Companies and getting the invoices from them so as to create a fraudulent cover that the goods are duty-paid and are manufactured by Muni Group of Companies. In fact, the whole purpose of this exercise was to finally encash duty purported to have been paid (which in reality was never paid to the Government) on the goods through the invoices of Muni Group of Companies and share such booty between Muni Group of Companies and the appellants. In our considered view, there can be no doubt that penalty under Rule 26 is imposable in the facts of the case. 8.4 Even in respect of Rule 12B manufacturers, they have procured the invoices from Muni Group of Companies and the goods from some other source. Here again, goods procured from some other sources would be non-duty paid goods otherwise, there was no need for them to get the invoice....
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....s even though they may not have the manufacturing facility themselves, but they were treated as manufacturer under the Central Excise law and hence penalty under Rule 26 as it was existing prior to 01/03/2007 can be imposed. Even in respect of merchant exporter they were not the dealer in the normal sense i.e., who were passing on the CENVAT credit along with the invoices. In fact all such dealers are required to get themselves registered with the excise department and thereafter only they could issue cenvatable invoices. The merchant exporter were not that type of registered dealer with the excise department but they were the person who were party to the fraudulent claim of rebate with the connivance of the Muni Group of Companies either claiming the rebate in their name or giving the right to claim rebate to Muni Group of Companies. Hence the position is different and the penalty under old Rule 26 can be imposed on them. 8.8 Some of the learned counsels have submitted about the one adjudication order passed by the Commissioner, Mumbai wherein he has taken a view that penalty under Rule 26 cannot be imposed. In our view this is not the correct position in law as there are goods....
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....d baseless. b) Receiving goods for export at Surat, or at any other places other than Nhava Sheva/Mumbai Port from units of Muni Group situated in Bhiwandi Taluka of Thane Dist was not economically feasible, as the goods were to be exported from Nhava Sheva/Mumbai ports. Further, none of the Merchant Exporters could produce transport documents for movement of goods from Bhiwandi, Dist. Thane, to Surat, or their respective places. Four of the exporters have produced LR's claiming it to be the transport document for such movement. However on verification this transporter viz. M/s. Chetak Roadlines has been found bogus as at the address given on the LR, there is no such office. The exporters also could not furnish details of whereabouts of such transporter nor did produce the transporter to establish movement of goods from Bhiwandi to Surat and other places. (b)(i) This indicates that no goods were ever received by them from the premises of units of Muni Group, Bhiwandi. (b)(ii) On the other hand from the submissions of the CHA's, who dealt with the export consignments, the transporters have been identified in many cases, who in turn identified the places from where the goods....
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.... the export documents issued by the units of Muni Group, for exporters on payment of some commission charges for such supply of documents. f) The Superintendent, in charge of the jurisdiction where Shri K.K. Gupta had obtained the registrations for the units of Muni Group, during examination has clearly admitted that in respect of M/s. Apex Corporation, in the quarter ending December-03, he has issued duty payment certificates for the clearances shown in the quarterly return of the period, in excess of the debits shown therein. His examination has also shown that he was engaged in certifying irregularities of units of Muni group by misusing official machinery and capacity to project the transactions of the units to be genuine. The irregularities were in the form of report towards existence of premises and factory building, issuing unwarranted duty payment certificates, to unauthorized persons, issuing duty payment certificates in excess of debits shown in returns, abetting in forgery of signatures of Inspector posted in his range, denying his own signatures on the host of ARE1s which were opined by the experts to be his signatures only, probably after realizing the repercussions....
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.... by presenting and exporting from the Docks other excisable goods along with these documents so as to make the authorities to believe that the said other goods had duly been cleared on payment of duty under the documents presented before Customs and Rebate/Refund sanctioning authorities." 5.4 Commissioner has in para 93(i) of his order discussed the role of Appellant 1 as follows: "i) M/s. Cannon Industries have without substantiating the claim have stated that 'all' firms are in existence, overlooking the fact that the registrations were issued to the firms in terms of erstwhile Rule 12B of Central Excise Rules, 2002, but owing to their fraudulent operations they are declared fake. They have also overlooked all the copies of relied upon document including panchnama and statements, which establish wrongness of the transactions with Muni group. Further, whether the rebate benefits were taken by them or Muni group and whether duty components was paid by them or not the transactions when established as fraudulent, render them penalty. In their final reply while clarifying they have claimed that representative of Apex had approached them delivered the goods at Delhi, which were e....
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....so, certified the post registration verification of M/s. Muni Trade Pvt Ltd, w.e.f. 26.03.04, when the premises was taken on lease from 01.04.04, thus ignoring that when registration was taken even the premises was not taken on rent. He has also, certified the duty payment shown by M/s. Apex Corporation, for quarter ending Dec, 03 in excess of the credit availed and duty debited in the return, which was received by him. The duty debit for the month November, 03 was Rs. 32,44,339, where as he issued duty payment certificates in excess to the tune of Rs. 6,99,840/-, as admitted by him in his statement. He has also, overlooked the large scale operation shown by the units of Muni Group in their ARE1s and invoices, which were submitted to the Range Office, under Self removal procedure scheme, after clearance and did not undertake any, verification of input credit or other enquiry. In fact in the report on Cenvat credit availed and utilized, submitted to the division, he deliberately omitted to report the figures pertaining to Muni Group, to avoid disclosure of heavy transactions to division. Further during investigation, when confronted with a number of ARE1s bearing stamp of M.K. Patel....
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....rejected is in manner admission of fact that the exports were made by them fraudulently against the documents issued by the Muni Group of Company. We do not find any merits in the submission of the Appellant -1 to the effect that the since refund claims have been rejected there is no loss of revenue and has case against them is revenue neutral. In fact but for the investigations undertaken the rebate claims would have been allowed in the favour of claimant. iii. We also do not find any merits in the submission of the appellant that the case was decided against them by the Commissioner in violation of principle of natural justice, as they were not allowed cross examination of certain officers and co-noticees. It is settled law that adjudicating authority is bound to consider the request for cross examination and in case he finds that the cross examination is not warranted in the facts of particular case he can reject the same by assigning the reasons for same. iv. In case of Surjit Singh Chabbra [1997 (89) ELT 646 (SC)], Apex Court has held that: "2. It is contended by learned counsel for the petitioner that the petitioner is entitled to cross-examine the Panch witnes....
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....out corroboration from other independent evidence. Except the statement of Dudani, there is no other independent evidence. Mr. Dudani's evidence cannot be pressed into service to arrive at the conclusion that the petitioner is involved in the passing off foreign currency out of India. 4. It must be remembered that the statement made before the Customs officials is not a statement recorded under Section 161 of the Criminal Procedure Code, 1973. Therefore it is a material piece of evidence collected by Customs officials under Section 108 of the Customs Act. That material incriminates the petitioner inculpating him in the contravention of the provisions of the Customs Act. The material can certainly be used to connect the petitioner in the contravention inasmuch as Mr. Dudani's statement clearly inculpates not only himself but also the petitioner. It can, therefore, be used as substantive evidence connecting the petitioner with the contravention by exporting foreign currency out of India. Therefore we do not think that there is any illegality in the order of confiscation of foreign currency and imposition of penalty. There is no ground warranting reduction of fine. v. Thus....