TaxTMI 
TaxTMI 
2019 (6) TMI 1273
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.... 2.1 On the basis of information received, it was found that M/s Resham Exports evaded customs duty by diverting duty free imported/indigenously manufactured goods to the local market without payment of Customs/Central Excise duty. The officers of SIB, (Exports), Mumbai and Central Excise Commissionerate, Vadodara visited the premises of M/s Resham Exports on 08/06/2000. At the time of visit, it was found that the unit was closed and a panchnama was drawn on 08/06/2000. The said Panchnama also recorded that there was no representative person of the company, and therefore, no detailed inspection of the unit could be done. Subsequently, on 29.11.2001, the premise of M/s Resham Export was visited again and still no authorized person or representative was available. Therefore, the lock of the factory was broken and the premise was searched. It was found that the premises had six no. of plane power looms in old and rusted condition and one pirn winding machine. The documents available in the unit were seized. 2.2 Ld. Counsel pointed out that during the search, Revenue obtained CT-3 no. 2 & 3 both dated 25/04/2000 issued to M/s Resham Exports issued for duty free POY from the appellan....
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....sel pointed out that diversion, if any, was done by the representative of M/s Resham Export and they cannot be held responsible for the acts of M/s Resham Exports. 2.4 Ld. Counsel for the appellant pointed out that in the case of Hytaisun Magnetic Ltd. 2008 (229) E.L.T. 634 (Tri.-Ahmd.) in similar circumstances, the penalty has been set aside. 3. Ld. AR relies on the impugned order. 4. We have gone through rival submissions. The proceedings were initiated against M/s Resham Exports for diversion of goods procured from the appellant vide SCN Nol. V.Ch-54(15)23/R-V/D-Halol/Commnr/2004 dtd 09.12.2004. In the said proceedings, a penalty was imposed on the appellant for the involvement in supplying goods to a non-functional EOU. A second SCN No. V.Ch.54(15)22/R.II-Mak/Commnr/2004 dated 09.12.2004 was issued to the appellant demanding duty in respect of supplies made to by them to M/s Resham Exports in respect of which the re-warehousing certificate was not received. The third SCN No. Ch.54 (15) 25/R-II/D-MKR/2004 dated 23.12.2004 was issued to the appellant seeking the denial of Cenvat Credit taken by them during the material period on the ground that the finished goods were il....
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....bove discussions and in the facts of the case, I do not find any reason to interfere with the impugned order in original and hold as follows a regards the present appeals:- (a) In regard to the Show Cause Notice dated V.Ch-54(15)23/R-V/D-Halol/Commnr/2004 dtd 19.9.2004, the imposition of penalties by the adjudicating authority on M/s. Modern Petrofils, M/s Filatex India Ltd., and Shri Puneet Rungta are upheld. (b) In respect of the Show Cause Notice no. V.Ch.54(15)22/R.II-Mak/Commnr/2004 dtd 09.12.2004, the demand of duty alongwith interest and penalty on Modern, and the penalties imposed on Shri Puneet Kumar Rungta and Shri Abhinandan Kataria are upheld." 4.1.2 Thus, in fact, Member (Technical) differed with Member (J) only in respect of penalty imposed on appellant in respect of first SCN dated 09/12/2004 and penalty imposed on Shri Abhinandan Kataria in second SCN. Thereafter the following difference of opinion was crystallized by the bench for reference to third Member. "(i) Whether with regard to Show Cause Notice V.Ch-54(15)23/R-V/D-Halol/Commnr/2004 dtd 19.9.2004, the penalty imposed on M/s Modern Petrofils is to be set aside and penalty on M/s ....
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.... 156A & 156B reads as follows: "156A. Procedure in respect of goods removed from one warehouse to another. - (i) The consignor shall prepare an application for removal of goods from a factory or a warehouse to another warehouse in quadruplicate in the proper form, mentioning clearly such information as the Commissioner may be general or special order, require. (ii) The consignor shall also prepare a gate pass in the proper form in respect of the goods proposed to be removed from his factory or warehouse. (iii) The consignor shall send the original, duplicate and triplicate application and original gate pass along with the consignment to the warehouse of destination. (iv) The consignor shall send quadruplicate application along with a copy of the gate pass to the Officer-in-charge of his factory or warehouse within twenty four hours of the removal of the consignment. (v) On arrival of the goods at the warehouse of destination, the consignee shall, within twenty four hours of the arrival of goods, verify the same with all the three copies of the application. The consignee shall send the original application to the officer in charg....
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....n the transporter hired by the appellant is performing the duty of transferring material to EOU on their behalf. The perusal of Rule 156A clearly indicated that the role of the consignee starts only after the arrival of the goods at the warehouse destination. 4.5 In respect of show cause notice no. V.Ch-54(15)23/R-V/D-Halol/Commnr/2004 dated 09.12.2004, penalty of Rs. 80 lakhs has been imposed on appellant under Rule 25 (1) of Central Excise Rules, 2002 (Rule 173Q of erstwhile Central Excise Rules, 1944). In respect of this Show Cause Notice, the impugned order concludes that the appellant were aware of the fact that the goods cleared by them to the M/s Resham Exports are being diverted. Para 8.4 of the impugned order deals with the following issue: "Whether in all the cases of dispatch of POY by M/s Modern and M/s Filatex to M/s Resham, its illicit diversion by M/s Resham was with the knowledge of M/s Modern and M/s Filatex and whether Shri V.K. Sharma, Sr. Manager (Commercial). M/s Modern was also aware of the illicit diversion of the duty free goods by M/s Resham and whether M/s. Modern, M/s Filatex and Shri V.K. Sharma are liable for penalty?" Thus, it is seen th....
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....e delivered by the transporter at the consignee's address as mentioned in the LR, failing which the consignor would be liable to pay the duty. But in this case, as discussed above, the goods instead of being delivered at the consignee's address i.e the factory premises of M/s. Resham at GIDC, Halol, were delivered to the consignee's partners/persons at Golden Chokadi, Vaodara and at Kadodara, near Surat. Since no transporter on his own will deliver the goods at a place other than that mentioned in the LR, obviously in this case, this has been done on the instructions received from the consignors. Therefore, the claim of M/s. Modern and M/s. Filatex that they had no knowledge about the illicit diversion of the goods dispatched by them is a blatant lie. The involvement of M/s. Modern is also clear from the fact that in case of 45 consignments of POY dispatched by them during the period from 01-06-2000 to 08-06-2000, as detailed in Annexure-A to the SCN No.2 neither the duplicate copies of the AR-3As bearing the consignees signatures has been produced by them nor the original copies of AR-3As signed by the consignee and countersigned by the Jurisdictional Range officer/Sector officer ....
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.... The absence of any action taken by M/s. Modern and M/s. Filatex against their respective transporters is a clear indication of their connivance. As regards not recording the statements of drivers, the same could be recorded only if the Manager/Proprietor of the transport companies had given their names and address, but the same were not given by them inspite of being asked. I, therefore, hold that both M/s. Modern and M/s. Filatex were fully aware of the illicit diversion of the duty free POY dispatched by them to M/s. Resham, but still they continued to make such dispatches. The appellants have relied on the decision in the case of Hytaisun Magnetic Ltd. (supra). It is seen that in the said case there were no circumstances which indicate the appellant's knowledge or reason to believe that the documents received by them are forged. In the instant case, the facts cited above indicated that the appellants were aware of the diversion from the facts and circumstances of this case. Thus, the decision in the case of Hytaisun Magnetic Ltd. is not applicable to the facts of this case. The appellants have also relied on the decision in the case of Santogen Textile Mill Ltd. 2007 (214) E....
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....ulam Shaikh. From the above discussion, it is clear that in 99 out of 100 cases, the consignments of POY dispatched by M/s Modern to M/s. Resham during the period from 27-04-2000 y0 08-06-20000 had never reached the factory premises of M/s Resham at Halol and had been diverted from Golden Chokadi, Vadodara. It has also been pleaded as on behalf of Shri Kataria that this diversion may have taken place on account of connivance of their drivers with the partners of M/s Resham. But if this is so, the burden of proving this is on Shri Kataria as it is Shri Kataria who during the relevant period was the manager of M/s. Vardhman, Vadodara as was overall in charge of the operations of the transport company. No driver in his senses will deliver the goods at a place other than the consignee's address mentioned in the LR and when this happens, it is obvious that this would be done with the knowledge and instructions of the management of the transport company. Therefore, if Shri Kataria claims that as per his personal knowledge his drivers, in connivance with the partners of M/s. Resham, were delivering the goods at places other than the consignee's address as mentioned in the LRs, as per the ....