TaxTMI 
TaxTMI 
2023 (11) TMI 415
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....ard to their transactions in MS Scrap. The investigations revealed that M/s Sujana had disposed of MS scrap imported by them to various Ingot manufacturers including M/s Jaibhavani. These materials were supplied without bills/invoices, to M/s Jaibhavani and various other units through brokers such as M/s Indoria Steel Corporation etc. where as in the statutory records of M/s Sujana it was shown to have been dispatched to their manufacturing units in Hyderabad. During search various documents were recovered. Statements were recorded. 1.2 It appeared that M/s Jaibhavani had purchased 2405.200 MTs of imported shredded scrap without proper documents from M/s Sujana and had not accounted them in their statutory records. Thus Show Cause Notice dated 28.06.1989 was issued alleging M/s Jaibhavani contravened the provisions of Central Excise Rules, 1944 in as much as they received unaccounted scrap and used it in the clandestine manufacture and clearance of MS Ingots. Thus M/s Jaibhavani suppressed facts with intent to evade payment of duty. Show Cause Notice was issued to M/s Jaibhavani proposing to demand duty of Rs. 34,01,775 along with interest and proposing to impose penalties. Show....
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....bhavani, proceedings were initiated for liquidation and a liquidator was also appointed. Subsequently, M/s Revathi Sridharan, who was appointed as liquidator passed away. The department had not put forward any claim before NCLT in regard to claim as per the order impugned in this appeal. The Ld. Counsel Shri G. Natarajan submitted that he is not representing the main appellant. So also it was submitted that Shri Ashok saraf (appellant in E/769/2007) passed away on 08.07.2019. Taking note of these submissions the Tribunal vide Final Order No. 40854-40855/2023 dated 22.09.2023 dismissed the appeal filed by main appellant M/s Jaibhavani for default, as there was no representation. On the same day vide same Final Order the appeal filed by Shri Ashok Saraf was dismissed as abated. 1.6 The Show Cause Notice was served on M/s Sujana Metals on 16.02.2004 as a co-notice. M/s Sujana Metals had filed appeal against this impugned order before the Tribunal as E/896/2007. The company filed petition under Section 9 of the insolvency And Bankruptcy code 2016 before the NCLT, Hyderabad bench. The NCLT vide order dated 20.06.2019 admitted the petition filed by M/s Sujana and ordered for commencem....
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....ana. In fact M/s MSTC had supplied scrap to others also. M/s MSTC failed to comply with the condition of furnishing the end use certificate for which proceedings were initiated against M/s MSTC by issuing Show Cause Notice dated 14.06.2000 by the Customs authorities proposing to deny the benefit of concessional rate of duty on the imported scrap, for demanding the differential duty and for imposing penalties. In the said proceedings Show Cause Notice was issued to Sujana group of companies (M/s Sujana Steels Ltd, and Sujana Industries Ltd. Hyderabad) and to various other ingot manufacturers. The appellant (M/s Jaibhavani) was not issued Show Cause Notice and was not a party to such proceedings initiated against M/s MSTC. 2.7 Out of the quantity imported, M/s MSTC has sold 19474 MTs of scrap to M/s Sujana. The appellant has purchased from M/s Sujana. The appellant had obtained end use certificate for a quantity of 3590.43 which would go to show that the quantity is more than the alleged unaccounted quantity (2405.820 MTs)on which demand is raised in the Show Cause Notice. 2.8 The end use certificate issued by the department would establish that the appellant has properly accou....
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.... form M/s MSTC, including the quantity sold by M/s Sujana to appellant. 2.12 The Ld. Counsel put forward the above contentions regarding import by M/s MSTC of shredded scrap, the supply to M/s Sujana and in turn the supply to appellant, in a tabular form which is as under:- S.No. Details Qty - MT Remarks 1 Total Quantity imported by MSTC 42309.606 2 Total Quantity sold by MSTC 41691.115 3 Out of (2) above, sold to Sujana 19474.000 4 Quantity no sold (1)-(2) 618.491 5 End Use Certificate produced by MSTC 27818.510 6 Out of (5) above, EUC produced by Sunajan 8067.745 7 SCNs issued demanding EDon MS ingots to Various parties-Appellant name not figuring in this 8397.673 8 Demand confirmed on MSTC on the ground of diversion (1)-(5)-(7) 6093.423 9 Sold to Sujana 19474.000 10 End use Certificate produced by Sujana 8067.745 11 Out of (10) above, EUC pertaining to appellant 3590.400 ....
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..../s Indoria. This file showed the factual details of business transactions of M/s Sujana with various Customers including the appellant. The documents recovered showed unaccounted purchases made by M/s Jaibhavani from M/s Sujana. In para 15.6, the adjudicating authority has observed that the evidence in the form of accounts showing payments made by M/s Jaibhavani to M/s Sujana to the tune of 90 lakhs corroborates the receipt of the MS Scrap from M/s Sujana, but such receipt are not accounted by the appellant in their statutory registers. The Ld. Authorized Representative argued that the confirmation of demand of duty with interest and penalties imposed on M/s Jaibhavani are legal and proper. The appellant is a Director /Chief Executive of the company and therefore the penalty of Rs. 5,50,000/- (Five lakhs fifty thousand) imposed on the appellant herein under Rule 209A of Central Excise Rule 1944 does not require any interference. The Ld. AR prayed that the appeal may be dismissed. 7. Heard both sides. 8. The appellant is aggrieved by the penalty of Rs. 5,50,000/- imposed under 209A of CER, 2002. 9. The allegation against they main appellant M/s Jaibhavani is that the procur....
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....ana. Later M/s Sujana could also produce end use certificate for the quantity of MS Scrap supplied to units other than M/s Jaibhavani. The infractions of non-compliance of the condition of furnishing the end use certificate was later regularized as M/s Sujana could produce the end use certificate in regard to the quantity procured by them from M/s MSTC. This is evident from the fact that the adjudicating authority in Customs proceeding had dropped all charges and allegations levelled against M/s Sujana, (Both M/s SSL & M/s SIL) and Shri P. Mallikarjun Reddy, Shri M.K. Chaturvedi, and Shri N.S Ayyanagar of M/s Sujana. The relevant operating part of the order No. 186/2001-CAU. Dated 17.10.2001 reads as under:- "(iv) I hold that the allegations and charges levelled against M/s SSL, M/s SIL and S/Shri P. Mallikarjun Reddy, Shri M.K. Chadurvedi and Shri N.S. Ayyanagar are not maintainable". 11. In para 26 of the impugned order the adjudicating authority observes that M/s Jaibhavani has produced end use certificate for 3590.430 MTs of Scrap. The end use certificate dated 05.02.1999 is for quantity of 2920.030 MTs and end use certificate dated 14.02.2000 is for quantity of 670....