TaxTMI 
TaxTMI 
2008 (2) TMI 302
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....,00,000 3 Shri Snehal B. Patel 2,00,00,000 4 Shri Vishnu S. Patel 50,00,000 5 M/s Reliance Indus.Ltd. 1,00,00,000 6 Shri S.K. Ray 1,00,00,000 7 M/s L.G. Polymers (I) Ltd. 25,00,000 8 M/s Gujarat Carbon & Inds. Ltd. 1,50,000 9 M/s GSFC 30,000 M/s Hytaisun Magnetic Ltd. (hereinafter referred to as M/s HML) is a 100% EOU engaged in manufacture of Video Magnetic Tapes, Video Cassettes & Video Housing for Video Cassettes, falling under Chapter Heading 85 of CETA, 1985. The said appellant is working as a 100% EOU since 1992-93 onwards and were availing the facility in terms of Notification No.1/95-CE, dt.9.1.95 as amended. The said appellant was procuring the duty free indigenous raw material against CT-3 certificate for use in the manufacture of final product to be exported so as to fulfill the export obligations. 2. The appellant's factory was visited by Central Excise officers on 25.12.97, who conducted various checks and verifications. As a result, it was seen that the said appellant was not maintaining any statutory record require....
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.... Notification No.1/95-CE exempt the goods for the purpose of manufacture, packaging etc. when brought into 100% EOU, subject to the condition that 100% EOU filed a bond with his jurisdictional Assistant Commissioner, for proper accountal of receipt, storage and utilization of such goods and to pay on demand, an amount equal to the duty leviable on the goods and interest, if the goods are not proved to have been used in connection with the production of goods for export. Admittedly, in the present case, the goods were not used for the purpose for which the same were purchased. As such, if the goods are not brought into 100% EOU, the exemption ceases to be available and the consignee becomes liable to pay duty. The bond and the condition of the notification is to prevent the mis-use of the goods by the consignee. Further, admittedly the re-warehousing certificates have also been sent to the supplier of the raw material, thus indicating the receipt of the goods and that the same have been put to right use, though such re-warehousing certificates have been found to be forged. In such a scenario, duty cannot be demanded from the supplier of the raw material....
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....as been rightly demanded from the appellants and we uphold the demand." 6. In the present case, not only goods were not put to proper use but same were also procured against forged CT-3 certificates and forged re-warehousing certificates were also issued. When the appellants are themselves indulging into fraud, their plea that duty should be demanded from manufacturer supplier of the inputs, cannot be accepted. As such, we reject the said plea of the appellant. 7. It is further contended that the duty stands confirmed by the Commissioner twice. The total Central Excise duty demanded as shown in Annexure N to the SCN was Rs. 4,38,00,113 which included amounts indicated in Para 71(i) (ii) (iii) (vi) and an amount of Rs. 18,319 on goods illicitly removed and seized in the office premises. The Ld. Commissioner twice confirmed the amounts i.e. once individually as per Para 71 (i), (ii), (iii), (vi) and again as per Para 71 (vii). Further, against the C.E. duty demanded of 4.38 crores, Commissioner has imposed a penalty of Rs. 9.06 crores under Section 11AC. It is, therefore, submitted that the impugned order dt.24.1.01 passed by the ld. Commissi....
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.... upon Shri B.A. Patel, Shri Snehal Patel and Shri Vishnu Patel, it is seen that they were actively indulging in preparation of forged CT-3 certificates and re-warehousing certificates. They have taken law into their own hands had prepared the Supdtt.'s stamp and forged the signatures of the Supdtt. incharge. There are admissions on record, by way of their statements that the duty free indigenous raw materials procured by them by issuing forged CT-3 certificates were diverted in the local market and not used in the goods to be exported. The entire scheme was followed with ulterior motive of monetary gains and all three were active participants in that. The said appellants knew what they were doing and the said fraud played upon the exchequer with conscious mind and scheming forgery does not call for any leniency as regards penalties are concerned. However, we find that the present penalties stand imposed upon the appellants by the adjudicating authority keeping in view the demand of around 9 crores against M/s HML, which already stand remanded by us for re-quantification, we would desire the adjudicating authority to refix the penalty amounts afresh....
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....nd remanded to the adjudicating authority for de-novo consideration, in the light of the observations made by us in the preceding paragraphs. The other small issues viz. confiscation etc. would also be considered afresh by him. All other appeals i.e. of M/s GSFC, M/s Gujarat Carbon & Industries Ltd., M/s Reliance Industries Ltd., M/s L.G. Polymers (I) Ltd., and Shri S.K. Ray are allowed. 14. [Assent per: M. Veeraiyan, Member (Technical) - I agree with the order proposed by my ld. Sister Mrs.Archana Wadhwa, Member(Judicial). I also record my findings and observations on certain aspects of the case. 15. The four appellants M/s.Hytaisun Magnetic Ltd., a 100% EOU, Shri B.A.Patel, its CMD, Shri Snehal B.Patel, one of the Directors and Shri Vishnu S Patel, Excise Clerk have fraudulently diverted the duty free material received for M/s.Hytaisun Magnetic Ltd. The 100% EOU was eligible to obtain raw materials duty free from the manufacturers of such raw materials. For this purpose, they were required to obtain CT-3 certificate from their jurisdictional Central Excise authorities; they were required to produce the CT-3 certificate to the supplying units; the supplying un....