TaxTMI 
TaxTMI 
2026 (8) TMI 807
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.... (2) I confirm the demand for Central Excise duty totally amounting to Rs.3,14,05,482/- against M/s. Sameer Industries, under the proviso to section 11A of Central Excise Act, 1944 read with proviso to section 3 (1) ibid along with interest at applicable rates in terms of section 11AB ibid. (3) I impose penalty of Rs.3,14,05,482/- on M/s. Sameer Industries, under section 11AC of the Central Excise Act, 1944. (4) I impose penalty of Rs.50 Lakh on Shri Ramesh Jain, Partner of M/s. Sameer Industries, under rule 26 of the Central Excise Rules, 2002. (5) I order confiscation of goods namely 270 MT of Brass Scrap totally valued at Rs. 1,80,51,379/- under section 111(0) of the Customs Act, 1962. Since the same are not physically available for confiscation, I refrain from imposing any fine in lieu of confiscation thereof. (6) I confirm the demand for Custom duty totally amounting to Rs.70,76,139/- against M/s. Sameer Industries, under the proviso to section 28 of Customs Act, 1962 along with interest at applicable rate in terms of section 28AB ibid. (7) I impose penalty of Rs.70,76,139/- on M/s. Sameer Industries, under section 114A of ....
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....Laxmi Enterprises maintained at the said banks and Demand Drafts/Pay Orders were issued in favour of the appellants. It was revealed that the accounts stand closed since then. 2.7 The payments from M/s MIEC were remitted from Jammu & Kashmir Bank Ltd. The Central Excise, Meerut-II collected the details of payments remitted from the above said branch and it was revealed that the remittances into their account in Jammu & Kashmir Bank Ltd. were in cash. However, Demand Drafts were issued in favour of the appellant. 2.8 On enquiry with DGFT, Mumbai, it was revealed that ➢ total four Advance Licenses were issued in favour of Lord Empire International, Delhi. These licenses were cancelled ab-initio by the Joint Director, DGFT, Mumbai vide Cancellation Order dt.24.7.2003. ➢ five Advance Licenses were issued in the name of M/s Laxmi Enterprises. The Joint Director, DGFT had also suspended the Advance Licenses issued to M/s Laxmi Enterprises vide order dated 03.03.2003. 2.9 Scrutiny of Advance Licenses issued to M/s Lord Empire and M/s Laxmi Enterprises revealed that they had submitted Chartered different Chartered Accountants' certificates issue....
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....pellant, is therefore, that they hatched a conspiracy with an intention to evade payment of duty. They suppressed material fact of non-existence of the buyers at the addresses mentioned in the licenses before the Customs authorities. They cleared goods under Advance Release Orders issued under various Advance Licenses by resorting to mis-representation with an intention to evade payment of Customs/Excise duty. 2.15 Show cause notice dated 19.04.2005 was issued to the appellant asking them to show cause as to why:- "(a) 1228.848 MT of Copper and Brass Scrap valued at Rs. 6,41,60,739/-, removed by M/s. Sameer Industries are liable to confiscation under rule 25 of the Central Excise Rules, 2002 and 270 MT of Brass scrap valued at Rs. 1,80,51,379/-are liable to confiscation under section 111(0) of the Customs Act, 1962. (b) Central excise duty of Rs.3,14,05,482/- is recoverable from them under the proviso to section 11A of the Central Excise Act, 1944 read with proviso to section 3 of the Central Excise Act, 1944. (c) Customs Duty of Rs. 70,76,139/- is recoverable from them under the proviso to section 28 of Customs Act, 1962; and (d) M/s. Sameer ....
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....Rupees Seventy Lakh Seventy Six Thousand One Hundred Thirty Nine only) against M/s. Sameer Industries, Plot No. 204-207, Sector4, KASEZ, Gandhidham under proviso to section 28 of Customs Act, 1962 along with interest at applicable rates in terms of section 28 AB ibid and order for its recovery from the said noticee. (vii) I impose penalty of Rs. 70, 76, 139/- (Rupees Seventy Lakh Seventy Six Thousand One Hundred Thirty Nine only) against M/s. Sameer Industries, Plot No. 204-207, Sector4, KASEZ, Gandhidham under section 114 A of Customs Act, 1962. (viii) I impose penalty under section 112 (a) of Customs Act, 1962 against the following noticees:- SI Noticee (S/Shri) Penalty Penalty 1. Ramesh Jain, Partner of Sameer Industries Rs.15,00,000/- Rupees Fifteen Lakh only. 2. Shri Riaz-ul-Hasan of M/s. Moradabad Import Export Corporation Rs.10,00,000/- Rupees Ten Lakh only. (ix) I drop the proceedings against Shri U. S. Kushwaha, Inspector of Central Excise, Indore (who served as Appraiser in KASEZ, Gandhidham at the material time). Show cause notice No. DRI/GRU/INV-08/2004 dated 19.4.2005 issued by DRI, Gandhidham is d....
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....provisions relating to SEZ. According to this new provision under the Customs Act, the goods removed from a Special Economic Zone (SEZ) for home consumption shall be chargeable to duties of Customs vide Section 76F. Thus, when there was no provision of levy of Central Excise duty in the Act, when the show cause notice was issued or when the impugned order was passed, the demand of duty and consequential interest, penalty, etc. cannot be legally raised or confirmed. This is more; so because there is no saving clause and moreover Section 38A also does not apply to amendment, etc., of an Act. ➢ The clearances were made after passing proper Bills of Entry In respect of all the consignments. As per the statement of the Customs Appraisers, they had themselves verified the Advance Licences and AROs and had also obtained verification reports about those documents being genuine from the DGFT. Thereafter only, they had passed the assessment orders on the respective Bills of Entry, allowing clearance of the goods from the SEZ. Consequently, in the absence of any appeal against such assessed Bills of Entry, the present demand of duty being contrary to such assessment orders bec....
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....e Customs duty demand of Rs.70,76,139/- it is contended by the Department that the Advance Licence should have been registered at the Port of Import and that the Advance Licence was not registered at any port. This argument is not significant or of any material importance because it was transitional period; Chapter XA was incorporated on 11.05.2004 and the Bills of Entry Nos. 758 to 768 (for supplies to M/s. Moradabad Import-Export Corporation) were all dated 08.06.2004. Even the Customs Officers at Kandla Customs House were unaware of the provisions of the new incorporated Chapter XA on 11.05.2004. This is also borne out from the statement of the Customs Appraiser. ➢ The show cause notice dated 19.04.2005 is without jurisdiction since it has been issue by the DRI who does not have such power and authority, in terms of the Board's Circular No. 16/04-Cus dated 16.02.2004 and the following judgments. ○ CCE V/s Paras Fab International 2009 (237) ELT711 (T) ○ Fero Alloys Corpon. Ltd Vs. CCE 1995 (8) RLT 352 (CEGAT) 2.18 The Tribunal, vide Final Order No. A/14131416/WZB/AHD/2010 dated 26.08.2010 set aside the impugned order and remand....
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....ations:- "Adjournment request has been received from Shri Hasit Dave, Advocate on the ground that he is busy before Hon'ble High Court. However, we find that he has not filed his Vakalatnama. Therefore, learned Counsel is directed to file his Vakalatnama within a week. Matter is adjourned. List on February 25, 2026." 3.5 On 25.02.2026, matter is adjourned for today with following observations by the Bench:- "None appeared from the appellant side even though as per learned AR, the matter was remanded by Hon'ble Gujarat High Court for decision by the Tribunal within eight months. Learned AR mentioned that while disposing Misc. Application filed by the appellant in 2018, Hon'ble Court directed that the Tribunal decide the matter within period of eight months. We find that the appellant has not been appearing on various dates fixed by the Tribunal. In the interest of justice, as a chance, the matter is adjourned to 10th March, 2026 failing which the matter will be considered on merit. The notice may be issued to the appellant to be served through the department." 3.6 As we find from the above that despite specific direction from the Hon'ble High Court that t....
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....AROs and had also obtained verification reports about those documents from DGFT. Thereafter, the Bills of entry were issued from the SEZ. No appeal has been filed by the revenue against the such assessed Bills of Entry, hence the demand made contrary to the assessed Bills of Entry, as without an appeal the assessment order becoming final is not sustainable. Reliance is placed on the following decisions:- ○ M/s Priya Blue Inds. Vs CC 2004 (172) ELT 145 (SC); ○ CC (Imp.) Vs Eurotex Indus. & Exports Ltd. 2007 (81) RLT 962 (CESTAT-LB); ○ ITC Ltd. Vs CCE 2019 (368) ELT 216 (SC); ➢ Demand of Rs.50,06,365/- and Rs.32,21,890/- for Copper Scrap supplied to M/s Lord Empire International and M/s Laxmi Enterprises. These two demands are also not sustainable as the subject Advance Licenses were valid at the time of clearance of the goods from the appellant's SEZ unit and they were not reported to be cancelled or suspended only after the relevant period of customs clearances and the goods has been cleared at the time when such licenses were valid and not declared void at the time of clearance of the goods cannot be denied. Reliance is ....
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....r Section 112A of the Customs Act on the appellant cannot be sustained because when the penalties imposed on the partnership firm, separate penalty cannot be imposed on the partner as has been held in the following cases:- ○ CCE Vs Jai Prakash Motwani 2010 (258) ELT 204 (Guj.); ○ CCE Vs Mahendra Kumar 2010 (260) ELT 51 (Guj.); ○ Mohammed Farookh Mohammed Ghani 2010 (259) ELT 179 (Guj.); 3.9 Learned Authorized Representative reiterates the findings recorded in the impugned order of the lower authority. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 The issue of jurisdiction of DRI officers and the issuance of show cause notice has been finally adjudicated by the Hon'ble Supreme Court in Review Petition filed in the case of M/s Canon India holding that the DRI Officers had sufficient jurisdiction to issue the show cause notice. Hence, we are not going into this issue any further following the above decision while deciding these appeals. 4.3 Impugned order records the findings as follows:- "9.1 I have examined the contentions of M/s. Sameer Ind....
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....acture' for purposes of levy of central excise duty, is irrelevant. Consequently, the case laws relied upon by M/s. Sameer Industries are also not relevant. 11. The second ground is that the Commissioner of Customs, Kandla lacked jurisdiction for demanding central excise duty from M/s. Sameer Industries. It is argued that it is only the Commissioner of Central Excise or a Central Excise Officer, who is appointed under rule 3 of the Central Excise Rules, 2002 who can pass an order confirming demand of Central Excise duty. Not only that, but as per rule 3(2), a Commissioner of Central Excise can exercise his powers only within the jurisdiction as may be specified by the Board by a Notification under rule 3(2). 11.1 By virtue of Notification No. 15/2002-Cus (NT) dated 07.03.2002, the Commissioner of Customs, Kandla has jurisdiction over Kandla SEZ. Notification No. 38/2001-CE (NT) dated 26.06.2001 also appointed the officers of customs in EPZ, FTZ and SEZ as officers of Central Excise Therefore, by virtue of these two notifications, the Commissioner of Customs, Kandla is also Commissioner of Central Excise for the purpose of Kandla SEZ 11.2 The question ....
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...., reported as 2007 (216) E.L.T. 24 (Tri. LB), a Larger Bench of the CESTAT considered the following question referred to it: "Whether Section 3A of the Central Excise Act, which was omitted with effect from 11.05.2001, could be considered to have been 'repealed within the meaning of this expression used under Section 6 of the General Clauses Act, 1897." In paragraph 8.1 of the Order, the CESTAT observed that "... Therefore, there is no substance in the contention that Section 3A was 'omitted' and not 'repealed' making Section 6 of the General Clauses Act inapplicable, thereby abrogating the liabilities arising under the rules though protected by Section 38A. Section 38A, in our opinion, clearly governs the field and saves the obligations and liabilities that had already arisen while these rules were in operation so that they could be enforced and implemented as contemplated by Section 38A. It is therefore unnecessary to enter into the controversy surrounding the provisions of Section 6 of the General Clauses Act as to the meaning of the word 'repeal' on which diverse views have been expressed by the Courts. Section 11A of the C....
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....ment, re-assessment and any assessment in which the duty assessed is nil. The mere fact that before assessing the bills of entry the assessing officers had obtained verification reports about the advance licences/advance release orders being genuine, from DGFT, would not preclude the authority superior to him from demanding duty on the basis of facts contrary to those existed at the time of assessment emerged after investigation. I further find that the citations on which M/s. Sameer Industries has placed reliance in this regard were rendered in the context of application for refunds under section 27 filed without first reviewing the assessment under section 28 or challenging the same in appeal. The provisions of section 28 of the Customs Act, 1962 do not envisage that for demanding duty not levied, short levied etc., the assessment already made shall be reviewed or challenged in appeal. This ground also is without merit. 15. The next ground of challenge is that the SCN is time barred in view of the fact that the customs officers had obtained verification reports of advance licences/release orders, before passing assessment orders allowing clearances. Further, there was no....
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....ies had taken benefit of these two notifications, it was their responsibility to explain to the department during investigations that the goods imported duty-free by them in the SEZ unit were exported by them (after specified processes as mentioned in Notification No. 137/2000Customs) or given by them to bonafide persons who then exported goods manufactured out of them. The onus of proving clearances to bonafide persons was clearly on M/s. Sameer Industries. During investigations, it was revealed that the persons to whom these goods were cleared were non-existent. One, therefore, cannot help, but conclude that M/s. Sameer Industries mis-used provisions of law to divert goods imported by them duty-free to the Domestic Tariff Area without payment of appropriate duties. 15.3 The Hon'ble Supreme Court in its judgment in the case of Mihir Textiles vs. Collector of Customs, Bombay reported at 1997 (92) ELT 9 (SC) held that exemption/benefit dependent upon satisfaction of certain conditions cannot be granted unless such conditions are complied with, even if such conditions are only directory. It is a settled position in law that the burden to prove fulfillment of conditions o....
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....59 which was to be registered at Cochin Port but the said licence was not registered and that they had not received any material against the same. Thus, simply arguing that there is no positive evidence to indicate that the goods were never delivered at the factories of their buyers, does not absolve them of their liability to discharge the burden of disproving the department's case. Records of the case indicate that goods totally valued at Rs.8.22 Crore were removed by M/s. Sameer Industries between the period October, 2002 and July, 2004 to three units, viz., M/s. Laxmi Enterprises, New Delhi, M/s. Lord Empire International, New Delhi and M/s. Moradabad Import-Export Corporation, Moradabad, all of which were found to be non-existent. 15.5 Exemption from customs/central excise duties under the advance licence scheme is available only if the exempt materials are used in the manufacture of resultant products and export thereof. The fact that the advance licences issued to the three buyers in the instant case were cancelled/suspended by the licensing authorities eminently vindicates the stand that they were non-existent entities and that they had not utilized the exempt ....
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....d invalid only on 03.03.2003 (whereas the clearances were made in October, 2002) in case of M/s. Laxmi Enterprises and on 24.07.2003 (whereas the clearances were made in February, 2003) in case of M/s. Lord Empire International. Therefore, the clearances made at the time when the concerned Advance Licences and AROs were valid cannot be denied the exemption. They also placed strong reliance on various case laws. 16.1 As already stated above, the department's case is that the three buyers to whom M/s. Sameer Industries sold the goods against advance licences/advance release orders were found non-existent and consequently the goods could not have been used by them in the manufacture of any resultant products for export. I have also found that the burden to establish that the advance release orders issued to the said firms were genuine and that they existed at the declared addresses and that the exempt material were to be used in their factory in the manufacture of resultant products for export, has not been discharged by M/s. Sameer Industries. When the advance licences were obtained by the aforesaid three entities way of fraud, it is irrelevant whether the same were vali....
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.... before the Superintendent of Customs (Prev), M&P Wing, Mumbai on 07.04.2003 [o] A copy of letter dated 29.11.2004 from M/s. Moradabad Import-Export Corporation addressed to SIO, DRI, Gandhidham, signifying the proof of existence of the said Unit. [p] Documents showing imports of Copper Scrap by M/s. Lord Empire International in an independent transaction, as obtained by M/s. Sameer Industries from their CHA, M/s. Nikhil Shopping Agency, viz., CHA's Bill No.418, LR No.222 dtd.27.3.2003, Bill of Entry No.7635 dtd.4.3.03, etc. [q] Affidavit dated 09.03.2005 of Shri Gulbir Singh Anand of M/s. Apollo Roadways. [r] Affidavit dated 23.4.2009 of Shri Riazul Hasan of M/s. Moradabad Import-Export Corporation. 17.1 In this case the overwhelming evidence gathered during investigations, coupled with the fact that the licensing authorities had cancelled/suspended the advance licenses, substantiates that the three buyers were non-existent at the given address. On the face of such evidences, copies of the aforesaid documents, brought on record, do not help M/s. Sameer Industries in establishing existence of these units. The letters, contracts, etc.....
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....nce gathered during investigation that the firms did not exist at the given addresses. 17.2 It is a well settled position in law that in case of clandestine removals, the department is not required to prove its case by mathematical precision. It is also well settled that strict rules of evidence are not applicable in quasi judicial proceedings and the case can be established by preponderance of probability supported by circumstantial evidence. Viewed in the light of this settled position law, the department's case is well established and stray evidences in the form of letters, etc., produced by M/s. Sameer Industries cannot negate the overwhelming evidence gathered during the course of investigation and appear to be afterthoughts. 18. The last ground of challenge is that the duty liability is on the buyers of the goods and not on M/s. Sameer Industries. It was submitted that the demand, if at all sustainable, should have been confirmed against the buyers of the goods who had purchased the same and not M/s. Sameer Industries, inasmuch as under section 3 of the CEA 1944 or Chapter XA of Customs Act, 1962, the levy and liability for duty arises on arrival of the ....
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....only, the assessment orders on the respective Bills of Entry, allowing clearance of the goods from the SEZ. Consequently, in the absence of any appeal against such assessed Bills of Entry, the present demand of duty being contrary to such assessment orders becoming final is not sustainable. Reliance is placed on the following judgments. ➢ Priya Blue Industries [2004 (172) ELT 145 (SC)] ➢ Eurotex Inds & Export Ltd [2007(81) RLT 962 (CESTAT-LB)] Both the decisions relied upon by the appellant are in case of Refund Claims made under the provisions of the statute (Custom Act, 1962 and Central Excise Act, 1944). The principle laid down in the said decisions which is in respect of refund if applied to provisions relating to demand under Section 28 will render the entire section redundant. Hon'ble Supreme Court has in case Canon India Pvt. Ltd. [2021 (376) E.L.T. 3 (S.C.)] observed as follows: "8. It is significant to note that while the decision to clear the goods for import because they were exempted from customs duties under Notification No. 15/2012, was taken by Deputy Commissioner, Appraisal Group, Delhi Air Cargo, the show cause notice was....
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....had assessed the goods at the time of clearance. It must be clarified that the proper officer need not be the very officer who cleared the goods but may be his successor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group. Assessment is a term which includes determination of the dutiability of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2(2)(c) of the Customs Act, 1962[3]. 12. The nature of the power to recover the duty, not paid or short paid after the goods have been assessed and cleared for import, is broadly a power to review the earlier decision of assessment. Such a power is not inherent in any authority. Indeed, it has been conferred by Section 28 and other related provisions. The power has been so conferred specifically on "the proper officer" which must necessarily mean the proper officer who, in the first instance, assessed and cleared the goods i.e. the Deputy Commissioner Appraisal Group. Indeed, this must be so because no fiscal statute has been shown to us where the power to re-open asse....
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.... Further explaining the scheme of Section 17 and Section 28 of Customs Act, 1962, Hon'ble Supreme Court has in case of Canon India Pvt. Ltd. [2024 () ELT (SC)] again observed as follows: "95. Section 17 read with Sections 46 and 47 of the Act, 1962 deals with the assessment and re-assessment at the first instance that is, upon entry of the consignments and clearance of bill(s) of entry. The amendment to Section 17 introduces the process of self-assessment and subsequent re-assessment upon verification by the proper officer, if so required, for undertaking a check at the first instance. 96. The proceedings under Section 28 are subsequent to the completion of the process set out in Section 17 of the Act, 1962. The procedure envisaged under Section 28 is in the nature of a quasi-judicial proceeding with the issuance of the show cause notice by the proper officer followed by adjudication of such notices by the field customs officers. It is also worth noting that in the case of DRI, the proceedings under Section 28 start only after an investigation has been undertaken by DRI. This is reaffirmed by Circular No. 4/99-Cus., dated 15-2-1999 and Circular No. 44/2011-Cus., d....
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....s consequently set aside." 4.7 The facts have been recorded in sufficient details in the previous paras. Appellant had cleared the goods in name of three firms namely, (i) M/s Lord Empire International, Delhi (ii) M/s Laxmi Enterprises, Delhi and (iii) M/s Moradabad Import Export Corporation, Moradabad (MIEC). The paragraphs of the show cause notice summarizing the clearances and facts of verification under taken are reproduced below: "2. Scrutiny of records withdrawn and records received from DGCEI revealed that M/s Sameer Industries, KASEZ had claimed to supply 140 MT of Copper Scrap to M/s Lord Empire International, New Delhi, 100 MT of Copper Scrap to M/s Laxmi Enterprises, New Delhi, 1258.84 MT of Brass Scrap to M/s Moradabad Import Export Corporation, Moradabad (MIEC). The details (placed at Sl. No 5 and Sl. No 18 of the documents relied upon) of dispatches are given below: (i) Dispatches claimed to M/s. Lord Empire International, Delhi (under Advance Release Order No. 03/84/072/AM-03/ALSV dated 27.09.2002 issue against Advance License No. 0310156347 dated 03.09.2002). Sr. Invoice No & date Qty MT Value (Rs.) T....
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....3/06.10.03 20 958640 HR-38G-3934 2661/31.12.03 13 384/06.10.03 20 958640 HR-38H-2581 2664/06.01.04 14 385/06.10.03 25 1198300 HR-46B-7634 2553/06.10.03 15 386/06.10.03 25 1198300 HR-38F-7148 2555/07.10.03 16 387/06.10.03 25 1198300 HR-38F-7148 2558/18.10.03 17 388/06.10.03 25 1198300 HR-46B-7634 2566/8.11.03 18 389/06.10.03 25 1198300 HR-46B-7634 2578/18.11.03 19 390/06.10.03 25 1198300 HR-46A-6745 2567/10.11.03 20 391/06.10.03 25 1198300 HR-47-2000 2592/08.12.03 21 392/06.10.03 25 1198300 HR-38B-6603 2596/15.12.03 22 580/19.12.03 25 1198300 HR-47-3504 2597/19.12.03 23 581/19.12.03 25 1198300 HR-46B-4725 2598/20.12.03 24 582/19.12.03 25 1198300 HR-38B-6603 2600/22.12.03 25 583/19.12.03 25 1198300 RJ-1G-3006 2652/23.12.03 26 584/19.12.03 20 958640 HR-38M-6147 2702/22.01.04 27 585/19.12.03 20 958640 HR-38E-5587 2701/22.01.02 28 586/19.12.03 20 958640 HR-38D-8672 2705/29.01.04 29 589/....
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....3 47 03.09.200 2 3/84/72/A M-03/ALS- V 6.02.2003 140 98,55,055 50,06,365 30/97 dated 01.04.97 M/s Laxmi Enterprises, New Delhi 03101432 43 21.06.200 2 3/83/21/A M-03/ALS-V 27.09.200 3 100 63,42,300 32,21,890 M/s MEIC Moradabad 29100040 59 13.01.200 3 29/0001 04.07.200 3 988.84 8 4,79,63,3 84 2,31,77,2 27 28/2001- CE 16.05.20 01 dated 29100040 59 13.01.200 3 29/AM 03 04.06.200 4 270 1,80,51,3 79 70,76,139 53/2003 CUS -NT dated 22.07.20 03 62/2004 CUS -NT dated 11.05.20 04 Total 1498.8 48 8,22,12,1 18 3,84,81,6 21 4. The addresses of M/S. Lord Empire International was declared as: Head Office: Bristro Building Complexes, No.12, 2nd Floor, Hauzkhas Village, New Delhi-16 and Branch Office: Room No.5, Ground floor, Bhagwan Bhawan, 196-198, Samuel Street, Mumbai-09. On verification by the DRI Delhi & Mumbai at the respective places, it was revealed that no such firm in the name & style of M/S. Lord Empire International was in existence at the declared addresses. Reports received are placed at Sl. No 3 of the documents relied upon. 5. The addresses of M/S. La....
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....elsewhere in DTA by adopting this modus operandi. 4.9 During the course of investigation statements of concerned person were recorded and also the factum of payment received by the appellant against the supply of the goods against ARO was verified from the concerned banks. The relevant paragraphs from the show cause notice which establish that the appellant was diverting these goods cleared against ARO else where are reproduced below: "8. Statements (Placed at Sl. No. 7 of the relied upon documents) of Shri Narendra Singh Rathore, Manager of M/S. Sameer Industries, KASEZ was recorded under Section 108 of the Customs Act, 1962 on 11.08.2004, 24.01.2005 & 03.02.2005. In his statement dated 11.08.2004 he stated, interalia, that: * he was working with M/S. Sameer Industries, KASEZ since last Syears; Shri Ramesh Jain was the owner of M/S. Sameer Industries, KASEZ and was staying in Mumbai; besides him, he knew Shri Naresh Jain, son of Shri Ramesh Jain and Shri Sanjay Dave who were other partners; Shri Ramesh Jain operated the factory from Mumbai and as per requirement he visited Gandhidham 2 to 3 times in a month; sometimes his son visited Gandhidham; he di....
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....ot aware of any other records maintained as the same was looked after by Shri Ghanshyam Rathod; * Shri Ramesh Jain was calling him daily and he was reporting to Shri Jain day to day position of goods; goods were also being exported from their unit and as per the direction of Shri Ramesh Jain he was attending loading of the container; Shri Sunil Milak was attending customs documentation; * on being asked as to how the payments of goods dispatched in India or exported were received he stated that the payments were received in their head office at Mumbai and Shri Ramesh Jain was looking after that; * on being asked whether he had loaded any goods in the name of M/S. Lord Empire International he stated that he did not rein-ember any such party to whom they had loaded goods. In his statement dated 24-1-2005 (placed at S. No 7 of the relied upon documents) he stated, interalia, that: * he confirmed his statement dated 11-8-2004; he did not know the names of parties in Delhi; Shri Ramesh Jain used to instruct him to load trucks for Delhi; at times Ramesh bhai used to instruct him, to load trucks for one Gopalbhai in Delhi; since Shri Ramesh Jai....
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....: * he started his business of customs-KASEZ liaison since 1998 in the name & style of M/S. Sonal Enterprises; Shri Ramesh Gadhavi was his partner; he looked after the general day to day work through his staff; Shri Ramesh Gadhavi looked after liaison with KASEZ authorities; they did not have any CHA Licence; however they were attending to the day to day work of their clients with KASEZ authorities; they were attending to the work of following companies: 1. M/S. Sameer Industries, KASEZ (2) M/S. U.S. Clothing (1) Pvt. Ltd., KASEZ (3) M/S. Blaze International, KASEZ & (4) M/S. Tulip EXIM, KASEZ; * they were attending to work of M/S. Sameer Industries, KASEZ since 1998; they did not enter into any written contract with them; Shri Ramesh Kumar Jain, Shri Sohanlal Bohra, Shri Naresh Jain, Smt. Pooja Jain (wife of Shri Naresh Jain) and Shri Sanjay Dave were the partners in M/s. Sameer Industries, KASEZ; Shri Ramesh Jain was handling the day-to-day work of the firm and other partners were not active; Shri Ramesh Jain was stationed at Mumbai and was visiting the factory as and when required; * they were looking after day to day work pertaining to Import, DTA cle....
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....o weighment and clearing of the same from KASEZ check post; * they also attended to the work pertaining to maintenance of records like Part-I, III & B-17 registers and miscellaneous correspondence with KASEZ Customs/Administration; they were not maintaining any records of M/S. Sameer Industries, KASEZ at their premises; they handed over the documents as soon as the job was over; they were receiving charges per container basis @ Rs. 1180/- per 20 feet container and Rs. 2000/- per 40 feet container as per bills raised by them; * on 19.01.2004 officers of DGCEI, Ahmedabad had searched the premises of M/S. Sameer Industries, KASEZ and had taken over the documents and records; he had witnessed the proceedings as a Panch witness; * they had not been given authorization to sign documents on behalf of M/S. Sameer Industries, KASEZ; they were attending all the work at the instructions of Shri Ramesh Jain directly or through Shri Narendra Singh and had taken signature on the documents from them or from Shri Sanjay Dave. Shri Sunil Milak in his statement dated 03.02.2005 (placed at Sl. No. 8 of the relied upon documents) had stated, interalia, that: ....
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....ry; as the address of M/S. MIEC was mentioned in the ARO/ Advance licence as "Hasan House, Mughal Pura, 1st Khari Kuan, Moradabad-244 001" they were mentioning the same on the CE Invoices/ Bill of entry; * they were attending the work pertaining to documentation only and the transportation was arranged by Shri Ramesh Jain or employees of M/S. Sameer Industries, KASEZ and as such they were not aware of where the goods had actually gone. 10. Statement (placed at Sl. No. 9 of the relied upon documents) of Shri Jitendra Kothari, Manager, M/S. Sameer Industries, KASEZ was recorded under Section 108 of the Customs Act, 1962 on 22.09.2004. He stated, interalia, that * he joined M/s. Sameer Industries, KASEZ May/June'1999 as a manager; he was drawing salary Rs. 7000/- per month; he was attending day to day work of M/S. Sameer Industries, KASEZ in the capacity of manager during May/June '99 to April'2004 then he was working as manager at their Mumbai office; Shri Ramesh Jain and Shri Sanjay Dave were the partners of M/S. Sameer Industries, KASEZ; Shri Ramesh Jain was his uncle; * as manager at M/S. Sameer Industries, KASEZ he was attending day....
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....hat: * he joined his father's company M/s. Ramesh Kumar Hamerlal Jain, Mumbai a metal merchant & commission agent company in 1971; he was proprietor of M/S. Dhakad Metal Corporation, Nani Daman since last 10 to 12 years; he was working as Managing Director of M/S. Dhakad Metals Pvt. Ltd., Nani Daman and Managing Director of M/S. Raja Zinc Pvt Ltd., Nani Daman; he was partner of M/S. Sameer Industries, KASEZ since 1998 wherein besides him Shri Sanjay Dave, Shri Sohanlal Bohra, Shri Naresh @ Nilesh Jain and Smt. Pooja Jain were the other partners; however only he was the active partner of the firm and all others were sleeping partners; * he was attending day to day work pertaining to M/S. Sameer Industries, KASEZ; he was visiting the factory as and when required and otherwise attending work through his employees; earlier Shri Jitendra Kothari was looking after the day to day work under his instructions since April'2004 he had been working at their Mumbai office; Shri Narendra Singh was working as production manager and Shri Ghanshyam Rathod was working as accountant of M/S. Sameer Industries, KASEZ; Shri Narendra Singh was working as per his direction and at....
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....y the goods to them; accordingly they had entered into contract to supply the goods to them; Shri S.K. Gupta, had informed him that he would supply them Advance Release Order (ARO) against which the goods were to be supplied; accordingly he had sent ARO; they had supplied total 140 MT of Copper Scrap to them; * as the records were with the DGCEI, Ahmedabad he was not able to answer what were the Bills of entry numbers vide which the goods were supplied to M/S. Lord Empire International; the documents pertaining to dispatches were prepared by either by Shri Ghanshyam Rathod, Accountant or Shri Jitendra Kothari, Manager of M/S. Sameer Industries, KASEZ; * on being asked how the payments were received he stated that the payments came through Demand drafts/ Banker Cheques however he did not remember the name of the bank; * on being asked who had arranged the transportation for the goods supplied to M/S. Lord Empire International, New Delhi, he stated that Shri S.K. Gupta of M/S. Lord Empire International, New Delhi had asked him whether he knew any reliable transporter for transporting their goods from KASEZ to Delhi; he had suggested the name of M/S. Sonal F....
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....i S.K. Gupta and make him pay the duty failing which he undertook to pay the duty within one month. Shri Ramesh Jain in his statement dated 21.09.2004 stated, interalia, that: * he confirmed the facts stated by him in his statement dated 13.08.2004; M/S. Apollo Roadways, Mumbai were attending transportation work of their Daman and Mumbai based companies since last 15 years; their full name and address was: M/S. Apollo Roadways, 313-319, Samuel Street, Harish Chambers, 1st floor, Mumbai -03. Telephone 022-32518021; Shri G.S. Anand was Proprietor of M/S. Apollo Roadways, who had introduced him to Shri S.K. Gupta of M/S. Lord Empire International, New Delhi. * on being reminded that in his statement dated 13.08.2004, he had assured that he would locate Shri S.K. Gupta, proprietor of M/S. Lord Empire International, New Delhi and make him pay the duties and also that he had undertaken to pay the duties within one month in case he failed to do so, he stated that as assured by him he had tried to locate Shri S.K. Gupta, Proprietor of M/S. Lord Empire International, Delhi; he had met Shri S.K. Gupta and his son in Delhi in the first week of September 2004 along w....
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.... S.K.Gupta, had informed him that he would supply them Advance Release Order (ARO) against which the goods were to be supplied; accordingly he had sent ARO mentioned above, for supply of 100 MTs of copper scrap which they had supplied from M/S. Sameer Industries, KASEZ during October 2002. * on being asked whether he was still in contact with Shri S.K.Gupta of M/S. Laxmi Enterprises, Delhi he stated that his old addresses were fictitious however he had tried to locate him in Delhi and had met him in the first week of September 2004; he had given his new residential address and telephone numbers; * on being asked whether they had supplied copies of the said Advance Licence and Advance Release Order to the KASEZ Customs authorities for verification he stated that they had submitted the copy of Advance licence and Advance Release order to the Customs authorities of KASEZ for verification; and only after receiving the report from the ARO/ Advance Licence issuing authorities, they were allowed clearance by the Customs * KASEZ authorities; on being asked as to who had arranged the transportation for the goods supplied to M/S. Laxmi Enterprises, Delhi he stated ....
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....Samuels Street, Masjid Bunder, Mumbai, M/S. Lord Empire International was found not existing. He was also shown a letter dated 14.09.2004 from Assistant Director, DRI, Mumbai, regarding the non-existence of M/S. Laxmi Enterprises, at 34, Bhagwan Bhawan, 3rd Floor, 196, Samuels Street, Mumbai. He agreed that the abovementioned addresses of M/S. Lord Empire International, Mumbai and M/S. Laxmi Enterprises, Mumbai did not exist as on today also in the past; he had not verified correctness of the above stated addresses. * he had given address of Shri S. K. Gupta as C/o Pramod Gupta, 1055-A, Ward No. 8, Mehrauli, Delhi, which he had procured from Telephone Exchange for the phone No. 01126644315; he had not verified the correctness of the address and therefore he could not confirm the address; he was shown a letter from Assistant Director, DRI, New Delhi dated 10.11.2004, indicating that Shri S. K. Gupta was not found at this address. * on being told that from the above the address given by him of Shri S. K. Gupta had turned to be fake; he stated that he agreed that he had not confirmed the address of Shri S. K. Gupta; * on being reminded that in his earlier st....
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....stated, interalia, that: * he had been shown his earlier statements dt.13.08.04, 21.09.04 and 13.12.04; having seen and in confirmation he put his dated signature on the same * he was shown the statements dt.24.01.2005 & 03.02.2005 of Shri Narendra Singh Rathod, Production Manager, M/S. Sameer Industries, KASEZ wherein Shri Rathod stated that Shri Jain had not informed Shri Rathod about dispatches to be made in the name of M/S. Lord Empire International & Laxmi Enterprise, Delhi; Shri Jain had only informed Shri Rathod to load trucks for Delhi; he knew some other companies for which he was loading trucks; he could not confirm whether the goods reached the destination or not; on being asked as to what he had to say Shri Ramesh Jain stated that Mr. Narendra Singh Rathod was mainly looking after the work of production related activity; the work relating to preparation of invoices/challans etc was looked after by another person i.e. Ghanshyamm Rathod; Mr. Narendra Singh Rathod was normally instructed to load so many trucks only; since he was related to production related work, he did not know the destination of trucks or the names of the buyers; all these details were....
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....ide which 988.848 MT of brass scrap had been cleared duty free against ARO No.29/001 dated 04.07.2003 and the Bills of Entry vide which 270 MT of brass scrap had been cleared duty free against ARO No.29/AM03 dated 04.06.2004 issued against Advance Licence No.2910004059/4/03/00 dated 13.01.2003 issued to M/S. MIEC the address was shown as M/S. Moradabad Import Export Corporation, Hasan House, Mughal Pura, 1st Khari Kuan, Moradabad PIN 244 001; the same were dispatched vide Builties issued by M/S. Sonal freight Carriers, Gandhidham, Transporter showing the same address; verification conducted by the officers of Central Excise, Meerut-II Commissionerate revealed that the premise was a residential one and that no firm in the name & style of M/S. MIEC existed at the declared address; Shri Riazul Hasan, CEO of M/S. MIEC, Moradabad in his statement dated 09.07.2004 recorded under Section 108 of the Customs Act, 1962 before the officer of Central Excise, Meerut II had stated that Advance Licence No.2910004059 was to be registered at Cochin Port but the said licence was not registered; they had not received any material against the said licence and on being asked that therefore their claim ....
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....Delhi could not have reached the address shown on the licence as it turned out to be a residential premises and no firm in the names of above existed Shri Jain stated that they had loaded the trucks arrived from M/S. Sonal Freight Carriers, Gandhidham, who were authorised by M/S. Lord Empire International & M/S. Laxmi Enterprise to transport the material from KASEZ to Delhi; neither the transporter nor the buyer complained about non-receipt of the goods. * on being told that all the advance licences i.e.. under which they had claimed to have supplied 1498.848 MT of Brass/copper scrap were for manufacturer exporters; there was no mention of supporting manufacturer in the licence; it was seen from the verification reports the firms/factories did not exist at the addresses mentioned therein and therefore their claim of supply to these firms was wrong Shri Jain stated that he had no idea about the supporting manufacturer; they dispatched the material to the address shown in the Advance Release Order; they dispatched the material shown in the ARO and received payments; the buyers never complained about non-receipt; that their claim of supplying the material to ARO holders was c....
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....ctorate when he last met him at Delhi; in spite of his best efforts and repeated requests, Shri S.K.Gupta did not appear before this directorate; even though it was not his duty to bring him, he tried his best to prove his bonafides; he understood that the Advance Licence holder was responsible for duty payment in case of any misuse; however, if the burden was on the supplier lawfully, he was ready to pay the duty; 12. Statements (placed at Sl. No. 11 of the documents relied upon) of Shri Ratan Gadhavi, Proprietor of M/S. Sonal Freight Carrier, Gandhidham Transporter for M/S. Sameer Industries, KASEZ was recorded under Section 108 of the Customs Act, 1962 on 12.08.2004, 14.10.2004,16.12.2004 & 03.02.2005. In his statement dated 12.08.2004, he stated, interalia, that: * he was proprietor of a transporter company in the name & style of M/s. Sonal Freight Carriers, Gandhidham since 5 years; in his transport company he was arranging trucks on commission basis for the parties and taking his commission; he was getting Rs. 700 to Rs. 800 per truck as commission; whenever any party contacted him for truck he was arranging the truck on commission basis after talki....
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....through the party from where the goods were loaded or through angadia; * on being asked how they received the payments for the goods loaded for M/S. Lord Empire International he stated that he was not able to state how they had received the payments from M/S. Lord Empire International as he did not have the copy of the Bill which was taken over by the officers of DGCEI, Ahmedabad; he produced one file containing bills raised by them to different parties and showing endorsement of "received payment" on the face of the bills; * they were receiving copy of Customs invoice from the party from where the goods were loaded wherein address of consignee i.e. receiving party was mentioned; they were sending their bill on that address of the consignee and were writing the same on the Builty; * as he or his employee was not accompanying the trucks they could not say where the goods were actually gone which was loaded from M/s. Sameer Industries, KASEZ for Delhi or Moradabad; the details of the same could only be given by the drivers and he would make efforts to produce the concerned drivers before DRI; Shri Ratan Gadhavi in his statement dated 14.10.2004 sta....
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....to state whether he had received in cash or through DD; he had arranged the said 5 trucks from M/S. DKR, M/s. Sonipat Transport and M/s. Alwar Kotputli transport, Gandhidham; he had paid the freight to the concerned transporters in advance and the drivers were paid by the owner of the transporters; * as he was attending work of M/S. Sameer Industries, KASEZ having confidence in M/S. Sameer Industries, KASEZ he had paid the freight in advance; Shri Ratan Gadhavi in his statement dated 16.12.2004 stated, interalia, that: * he confirmed the facts stated by him vide his statements dated 12.08.2004 & 14.10.2004; he produced details of trucks arranged from M/S. Sameer Industries, KASEZ for M/S. Moradabad Import Export Corporation, Moradabad, M/S. Lord Empire International, Delhi and M/S. Laxmi Enterprise, Delhi, * he was receiving instructions over phone from Shri Narendra Singh who was manager of M/S. Sameer Industries, KASEZ for sending trucks for loading for Moradabad and Lord Empire International, Delhi and M/S. Laxmi Enterprise, Delhi; accordingly he was arranging the trucks and sending the same to M/S. Sameer Industries, KASEZ; * after l....
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....rming the same from the receiving party he stated that they were receiving receipt from driver or transporter as they were giving the Builty's received copy, he had never confirmed the receipt from the party; * he was shown the verification reports of M/S. Lord Empire International, Delhi and M/S. Laxmi Enterprise, Delhi stating that the firms did not exist at the declared addresses and was asked as to how he had transported 140 MT and 100 MT of scrap respectively at the said addresses he stated that they had received written instructions from the M/S. Sameer Industries, KASEZ and the receiving party according to which they had to deliver the goods from M/S. Sameer Industries, KASEZ to Delhi, as and when they had received instructions from M/S. Sameer Industries, KASEZ they had arranged the trucks on talking to the transporters, they were preparing and handing over the Builty to the transporter on the basis of Invoice issued by M/S. Sameer Industries, KASEZ; on the basis of that documents they presumed that the trucks had reached the destination; they could not confirm where the goods were actually unloaded at Delhi; they were receiving the payments, as negotiated, thr....
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....s loaded by them at destination and as to how they were getting confirmation of the same he stated that the business of transport depended on trust and as he talked to Shri Ramesh Jain, it was his responsibility; however as he was taking the truck on commission basis from the other transporter the responsibility of delivering the goods to the destination was of original transporter; there was no written contract but it was an understanding; when they sent goods from KASEZ they were keeping a part of payment with them which was paid to the driver/transporter after acknowledgement was received; the receipt was however destroyed so that the same should not be used again; * on being asked as to how they had received the freight for the goods transported to M/S. Moradabad Import Export Corporation and if any payment was pending he stated that generally they got their payments through demand drafts and they did not have any outstanding payments from M/S. MIEC; * on being asked what documents they were delivering to the drivers after loading of goods from M/s. Sameer Industries, KASEZ and whether they were giving any phone or Mobile number for contacting the receiving pa....
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....ated that he could say that the goods would not have reached the addresses shown in the Builties prepared by him; * on being asked to tell as to where the goods had gone, as the responsibility to deliver the goods was on him, he stated that he was giving phone number he got from the contract letter to the driver along with the builty; the driver had to contact on that number after reaching in that city; receiving party or Shri Ramesh Jain of M/S. Sameer Industries, KASEZ could only say where the goods had been unloaded and gone. 13. Statement (placed at Sl. No.12 of the documents relied upon) of Shri Umesh Dagar, Proprietor of M/S. Baba Haridas Transport Company, Gandhidham Transporter (who had arranged trucks for M/S. Sonal Freight Carrier, Gandhidham for transporting goods from M/S. Sameer Industries, KASEZ) was recorded under Section 108 of the Customs Act, 1962 on 23.12.2004 wherein he stated, interalia, that: * he was the owner of M/S. Baba Haridas Transport Company (BHTC) Gandhidham and he was running that company since last 5 years; * he was arranging trucks on commission basis; he was arranging trucks directly or through some transporters....
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.... any builty which was being issued by the main transporter; they were keeping records of the work attended by them in register/copy and destroying the same after one year; * on being asked how they knew M/S. Sameer Industries, KASEZ he stated that: he did not know M/S. Sameer Industries, KASEZ; * on being asked on whose instructions he had sent truck no. HR-46B-0371 on 25.09.2003 and HR-46-7813 ON 26.10.2002 to M/S. Sameer Industries, KASEZ he stated that he had sent the said trucks to M/S. Sameer Industries, KASEZ at the instructions of Shri Ratan bhai & Shri Karan bhai of M/S. Sonal Freight Carriers and had taken commission of Rs. 300/- and had sent the same to the said company the builty were also issued by M/S. Sonal Freight Carriers; * on being asked whether he knew what was loaded in the trucks and where the trucks were sent he stated that as per information given by Shri Ratan bhai the truck was loaded with copper scrap and truck No. HR-46B-0371 was arranged for Moradabad and HR-46-7813 was arranged for Bhajanpura (Delhi); * on being asked whether he was confident that the trucks went to Moradabad & Delhi he stated that he could not state ....
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....he stated, interalia, that: * he was running transport company in the name & style of M/S. Alwar Kotputli Transport, Gandhidham since last 4 years; he was arranging trucks on commission basis to different transporters; he was not issuing builty for the truck arranged by him the same was issued by that transporter; he only took commission of Rs. 300/-; * on being asked how they knew M/S. Sameer Industries, KASEZ he stated that he did not know M/S. Sameer Industries, KASEZ; * on being asked how he had sent trucks to M/S. Sameer Industries, KASEZ he stated that on being asked by Shri Ratan Gadhavi owner of M/S. Sonal Freight Carrier he had sent the trucks to M/S. Sameer Industries, KASEZ and had taken Rs. 300/- towards his commission from the truck owner; * on being asked what goods were loaded and in which city the trucks had gone which were arranged by him he stated that as he had stated earlier, he worked on commission basis and he had given the trucks to Shri Ratan Gadhavi who had also issued builty for the trucks; he was not aware as to what goods were loaded from M/S. Sameer Industries, KASEZ and where the trucks had gone. 17. Stateme....
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....ection 108 of the Customs Act, 1962 on 24.12.2004 wherein he stated, interalia, that: * he was working as manager in transport company named and style as Haryana Public Roadways since last 3 years and the owner of company residing in Haryana; he was arranging trucks on commission basis to different transporters for which they had not issued builty as the builty was issued by the respective transporter; some times they supplied the truck directly to the party at that time they issued builty; he produced one * register in which they were maintaining kachchha record; on being asked how they knew M/S. Sameer Industries, KASEZ he stated that he did not know M/S. Sameer Industries, KA SEZ; * on being asked how he had sent trucks to M/S. Sameer Industries, KASEZ he stated that on being asked by Shri Ratan Gadhavi of Sonal Freight Carrier they had sent the trucks to M/S. Sameer Industries, KASEZ and had received Rs. 200/- towards commission from the owner of the truck the Builties for these trucks were issued by Sonal Freight; * on being asked what goods were loaded and where the trucks had gone which they had arranged for M/S. Sameer Industries, KASEZ, ....
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.... Release Order No. 3/83/021/AM03/ALS-V dated 27.09.2002 issued against Advance Licence No. 0310143243 dated 21.06.2002 issued in the name of M/S. Laxmi Enterprises, New Delhi the addresses of M/S. Laxmi Enterprises were declared as: Head Office: A-44, Friends Colony East, New Delhi 110 065, Branch Office: 34, Bhagwan Bhawan, 3rd Floor, 196, Samuel Street, Mumbai-09 and supporting manufacturer's address was declared as: Bhagawant Nagar Industrial Area, Unaao, UP. On verification by the DRI Delhi, Mumbai & Lucknow it was revealed that no such firm in the name & style of M/S. Laxmi Enterprises was in existence at the declared addresses. Summons No. CA-26/1267 dated 17.11.2004 was issued to Shri Dinesh Kumar Jain at the address given in the profile of exporter/importer submitted to the advance license issuing authority by M/S. Laxmi Enterprises, Mumbai at: Shri Dinesh Kumar Jain, S/O Shri Jai Prakash Jain, RZ-132, Gali No.4, Sadhnagar, Palam Colony, New Delhi-110 045 to appear before DRI, Gandhidham on 03.12.2004, had returned back. 24. Shri. Riazul Hasan, CEO, of M/S. MIEC, Moradabad in his statement dated 09.07.2004 recorded under Section 108 of the Customs Act, 1962 bef....
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....d banks, and Demand Drafts/Pay Orders were issued in favour of M/S. Sameer Industries, KASEZ. It was revealed that the accounts stands closed since then. Payments received from M/S. MIEC were remitted from Jammu & Kashmir Bank Ltd., Moradabad. The Central Excise, Meerut-II, collected details of payments remitted from the above said branch. It was revealed that remittances in to their account, in Jammu & Kashmir Bank Ltd., Moradabad were in cash. However, Demand drafts were issued in favour of M/S. Sameer Industries. 26. Details of the Advance Licences issued in the name of M/S. Lord Empire International, Mumbai and M/S. Laxmi Enterprises, Mumbai were called for from the Director General of Foreign Trade, Mumbai. It was revealed that total 05 Advance licences were issued in the name of M/S. Laxmi Enterprises, (IEC No. 0598020217) and 04 Licences were issued in the name of M/S. Lord Empire International, (IEC No.0595022006) as detailed below: Details of Advance Licence issued to M/S. Lord Empire International. Sr. No. Advance Licence No. Date Qty & Description Value 01 0310156347 03.09.2002 729 MT Copper Scrap 4,97,35,000 02 03101....
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....agmohan Singh & Co. He also submitted an affidavit vide his letter dated 16.11.2004. From the said letters of Shri Jagmohan Singh Rawat and returning of summons issued to the other Chartered Accountants it is evident that the Certificates of Chartered Accountant submitted to the Advance Licence issuing authority were also bogus, forged and were not genuine." 4.10 From the above it is quite evident that appellant had manipulated, conspired and cleared the goods in the DTA from their unit in KASEZ without payment of duty, in garb of making clearances against the ARO issued against the Advanced Licenses which were issued in the name of the three buyers as detailed earlier. From para 27 of the show cause notice it is quite evident that during the course of investigations the Chartered Accountants who have issued certificates in respect of the Advance Licenses issued to the M/s Lord Empire International and M/s Laxmi Enterprises, were called for giving the evidence and summons were issued to them. However summons issued to the two of such chartered accountant were returned back with the remark left. In response to the summon issued to third chartered accountant namely Shri Rawat Jagm....
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....he investigating officer on number of occasions to establish that these firms were not fictitious and were existing. However they never appeared. From the facts as recorded in para 4.2 above it is also evident that they never appeared before the adjudicating authority also. It is also evident that by the order dated 29.01.2008/ 08.02.2008 penalty of Rs 25,00,000/- was imposed on each Shri S K Gupta @ S K Agarwal (Proprietor of Lord Empire International) and Shri Dinesh Kumar Jain (Proprietor of Laxmi Enterprises), but they did not file any appeal against the said order. Thus the findings recorded in that order to the effect that the these buyer firms were bogus or non-existent has acquired finality and cannot be disputed. The claim of the appellant that they have supplied the goods against the ARO's issued to the said firms against advance licenses held by those firms is without any merits and cannot be substantiated. 4.13 We also note that though the statement of Shri Riaz Ul Hasan of M/s Moradabad Import Export Corporation was recorded, and he had also file reply to the show cause notice through his counsel Shri Amit Awasthi, they didn't participated in the adjudication procee....
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.... upon certain decisions to buttress their arguments. However we do not find any merits in the arguments as we observe that entire scheme of clearance of the goods by the Appellant, to the non-existent units against the advance licenses obtained by the production of fake/ forged certificates/ documents is nothing but fraud played by the appellant to evade the payment of due custom and central excise duties. In case of Munjal Showa Ltd. [2022 (382) E.L.T. 145 (S.C.)] Hon'ble Supreme Court has observed as follows: "8. From the judgment and order passed by the Tribunal and even from the findings recorded by the Department, it has been found that the DEPB licenses/Scrips, on which the exemption benefit was availed of by the appellant(s) (as buyers of the forged/ fake DEPB licenses/Scrips) were found to be forged one and it was found that the DEPB licenses/Scrips were not issued at all. A fraud was played and the exemption benefit was availed on such forged/fake DEPB licenses/Scripps. 9. In that view of the matter and on the principle that fraud vitiates everything and such forged/fake DEPB licenses/Scrips are void ab initio, it cannot be said that the Department acted ....
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....ed under the indemnity bond; (iv) No evidence has been produced by the Department in the show cause notice regarding the collusion of the appellants with the exporter, operator, brokers; (v) Duty cannot be demanded from the appellants, who imported the goods under valid licence. Reliance has been on the following decisions : (a) East India Commercial Co. Ltd. v. CC 1983 (13) E.L.T. 1342 (S.C.); (b) Union of India v. Sampat Raj Dugar 1992 (58) E.L.T. 163 (S.C.); (c) Collector of Customs, Bombay v. Sneha Sales Corporation 2000 (121) E.L.T. 577 (S.C.); (d) Taparia Overseas (P) Ltd. 2003 (161) E.L.T. 47 maintained by Hon'ble Supreme Court in Union of India v. Blue Blends & Textur. Mfg. Co. Ltd. 2017 (349) E.L.T. A93 (S.C.); (e) Commissioner of Customs v. Leader Valves Ltd. 2007 (218) E.L.T. 349 (P & H) maintained by the Hon'ble Supreme Court in 2008 (227) E.L.T. A29 (S.C.); (f) Sanjay Sanwarmal Agarwal v. Union of India 2004 (169) E.L.T. 261 (Bom.); (g) Hico Enterprises v. Commissioner of Customs, Mumbai 2005 (189) E.L.T. 135 (Tri. - LB) affirmed by Hon'ble Supreme Court in Commissioner of Cust....
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....eproduced as under : "35. Nor is there any legal basis for the contention that licence obtained by misrepresentation makes the licence non est, with the result that the goods should be deemed to have been imported without licence in contravention of the order issued under section 3 of the Act so as to bring the case within clause (8) of Section 167 of the Sea Customs Act. Assuming that the principles of law of contract apply to the issue of a licence under the Act, a licence obtained by fraud is only voidable : it is good till avoided in the manner prescribed by law. On May 1, 1948, the Central Government issued an order in exercise of the power conferred on it by Section 3 of the Act to provide for licences obtained by misrepresentation, among others, and it reads : "The authorities mentioned in the Schedule hereto annexed may under one or other of the following circumstances cancel licences issued by any officer authorised to do so under clauses (viii) to (xiv) of the notification of the Government of India in the late Department of Commerce, No. 23-ITC/43, dated July 1, 1943, or take such action as is considered necessary to ensure that the same is made ineffec....
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....peal and setting aside the order of the Collector, has not dealt with the part of the order of the Collector. This submission finds support from the order of the Tribunal because the Tribunal while setting aside the order passed by the Collector has not dealt with the question whether the goods were liable to be confiscated under section 111(p) on account of contravention of the requirement of Section 11C of the Act. In these circumstances, we are of the view that the matter is required to be remitted to the Tribunal for consideration of the question whether the goods are liable to be confiscated under sections 111(m) on the ground of misdeclaration of the value of bobbins and under section 111(p) on the ground of contravention of the provisions of Section 11C of the Act. The appeal is accordingly allowed, the impugned judgment of the Tribunal is set aside and the matter is remitted to the Tribunal for consideration of the question whether the goods are liable to be confiscated under sections 111(m) and (p) of the Act." 31. This is also a case where the purchaser had not indulged in any activity of manipulation of port of export/import and there was no case of issue of for....
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....o unam rem possidere. It should be observed, also that the thing assigned takes with it all the liabilities attached to it in the hands of the assignor at the time of the assignment, except in cases for the encouragement of commerce, such as sales in market overt, negotiation of promissory notes, bills of exchange, etc., and, in the case of equities, where the assignee is a bona fide purchaser for value without notice." [Emphasis Supplied] It is thus no doubt true that as a general rule, if a transaction has been originally founded on fraud, the original vice will continue to taint it, and not only is the person who has committed fraud is precluded from deriving any benefit under it, but an innocent person is so likewise, unless there has been some consideration moving from himself. In the cases at hand, it is not in dispute that all the petitioners had obtained licences for valuable consideration without any notice of the fraud alleged to have been committed by the original licence holders while obtaining licences. If that be so, the concept that fraud vitiates everything would not be applicable to the cases where the transaction of transfer of licence is for val....
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....ion and/or cancellation, in catena of cases, it is laid down that the date of import of goods would be the date on which the Bill of Entry was presented under section 46. This legal position is clear from the decision of the Apex Court as laid down in Union of India v. Apar Ltd. 1999 (112) E.L.T. 3 (S.C.) and Garden Silk Mills v. Union of India 1999 (113) E.L.T. 358 (S.C.). The same is the view taken by the Apex Court in Sampat Raj Dugar case (cited supra). Imports against replenishment Licences were permitted duty free if the importers produced an import Replenishment Licence the goods or the materials were imported into India. In the instant cases when the goods were imported into India, and even when the Bills of Entry were filed, neither were the licences suspended nor the same cancelled. In all these cases, Bills of Entry were filed by the petitioners well before the suspension and/or cancellation of the licences in question, thus the imports were made under valid licences, the goods could not be subjected to levy of customs duty in the peculiar facts and circumstances of the cases in hand. In the circumstances, we hold that in all cases at hand, the goods were import....
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....hased the license on bona fide belief that they were genuine. The issue of forged TRA was not examined by the Court. These cases would not help the appellants. 36. In Sumit Wool Processors & Others, the Tribunal held that as the appellants had bona fide purchased the concept of this fraud vitiates everything would not be applicable. The authority themselves had not checked the fraud committed at the time of export in cases where licenses/scrips were transferred to the importer who had no knowledge of the misrepresentation by the exporters in obtaining Bill of Entries which were filed. Accordingly, it was held that the goods cannot be subjected to Customs duty in terms of Paragraph 9 of the order which is as under : "9. In view of the above, the confiscation of goods imported by the appellants who are transferees of the licenses/scrips does not arise. The demands of duty against them and penalties are set aside," 37. Regarding the transfer of utilisation of FPS licenses by a few importers at the port other than port of export i.e. Ghojadanga, it was submitted that office of DGFT has made these licenses transferable and, therefore, they have rightly utilise....
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....arn and that too along with cotton, therefore, the import of goods other than the material exported cannot be held to be proper and action for demanding Customs duty against the appellants is justified even if no action is taken by DGFT for cancellation of impugned DFIA Licenses. 9. Appellants who imported the goods against transferable DFIA Licenses have also taken an argument that they have purchased the DFIA Licenses under a bona fide belief that the same were genuine. It is thus their case that they cannot be held as party to the fraud and extended period cannot be made applicable for demanding duty. Transferee appellants have relied upon an order dated 31-8-2015 passed by the co-ordination bench, Mumbai in the case of Incos ABS (India) Ltd. & Others v. C.C., Kandla. In this order it has been held by CESTAT, Mumbai that transferees cannot be held responsible for duty and that extended period is not applicable while demanding duty. With due respect we differ with the view expressed in orders passed by CESTAT, Mumbai as several case laws, including some recently decided by the Apex Court, were not brought to the notice of CESTAT, Mumbai. On this issue Delhi CESTAT in the....
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.... CEGAT. The only question that has been put forward, on the basis of the finding of the facts without challenging the same, is about the effect of absence of collusion on the part of the appellant, as pointed out earlier, in relation to the availability of the credit under the forged DEPB scrips. But in the decision in United India Insurance (supra), the forgery related to the driving licence of the driver engaged by the insured, but the Insurance Policy was not found to be forged. The question would be different if the document itself, on the strength whereof credit is claimed is forged. In that event, the same cannot be equated with merely an irregularity in the licence of the driver driving the vehicle in relation to the liability of the insurer in relation to a valid insurance policy under the Motor Vehicles Act providing for compulsory insurance to secure third party interest. In this case, the document itself having been found to be forged whether there was collusion or fraud on the part of the appellant in the issue of the DEPB licences/scrips becomes absolutely immaterial and irrelevant since no credit can be derived from a forged DEPB. The credit is made available on the s....
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....person has been obtained by him by means of - (a) collusion; or (b) wilful misstatement; or (c) suppression of facts, For the purposes of this Act or the Foreign Trade (Development and Regulation) Act, 1992 (22 of 1992), by such person or his agent or employee and such instrument is utilized under the provisions of this Act or the rules made or notifications issued thereunder, by a person other than the person to whom the instrument was issued, the duty relatable to such utilization of instrument shall be deemed never to have been exempted or debited and such duty shall be recovered from the person to whom the said instrument was issued : Provided that the action relating to recovery of duty under this section against the person to whom the instrument was issued shall be without prejudice to an action against the importer under section 28. " 10.1 It is the argument of Learned Advocate that duty if any can only be demanded from the person in whose name DFIA Licenses were obtained fraudulently. It is observed that Section 28AAA of the Customs Act, 1962 has been made effective from 28-5-2012 and cannot be made applicable to the pre....
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.... 28 of the Act had expired and the extended limitation under the proviso could not be invoked in absence of misstatement or suppression being attributed to the appellant was also rejected. The Tribunal followed the judgment of this Court in the case of the assessee itself in respect of different DEPB Scrips in Friends Trading Co. and Another v. Union of India 2010 (254) E.L.T. 652, which in turn refers to earlier judgment of this Court dated 1-9-2007 in CUSAP No. 27 of 2008 M/s. Munjal Showa Limited v. Commissioner of Customs and Central Excise, (Delhi (IV), Faridabad [2009 (246) E.L.T. 18 (P & H)]. 4. With reference to proposed questions of law A to E, it was submitted that benefit taken on the basis of fabricated document, which is cancelled subsequently, could not be withdrawn since benefit was taken prior to the date of such cancellation. For this proposition, reliance has been placed on following judgments of the Hon'ble Supreme Court :- (i) East India Commercial Company Limited v. Collector, 1983 (13) E.L.T. 1342 (S.C.) = AIR 1962 SC 1893; (ii) Collector of Customs, Bombay v. Sneha Sales Corporation, 2000 (121) E.L.T. 577 (S.C.); and (i....
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....nder silver or gold liable for confiscation. 28. As noted above, SILs were not genuine documents and were forged. Since fraud was involved, in the eye of law such documents had no existence. Since the documents have been established to be forged or fake, obviously fraud was involved and that was sufficient to extend the period of limitation." 42. The Supreme Court also held that in case forged license is purchased from the market, the burden of proof remains with the purchaser of the license following the principle of buyers be aware as observed in Friends Trading. 43. It is seen that an identical issue where not only DEPB scrips were forged but also the Telegraphic Release Advice for use of this DEPB scrips on port other than port of export was considered extensively in K.I. International. It was held that importer transferee would be liable to compensate the customs duty and also would be liable to penal provision and interest. The relevant portion of the order as contained in paragraphs 10.1, 10.2. 10.3, 10.4, 14.5 is reproduced as under : "10.1 Evidence gathered by Revenue unambiguously and succinctly proved that the TRAs used by the importer....
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....r Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.), their Lordships of the Supreme Court have observed that it is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. Being the ultimate beneficiaries of the fake TRAs, the importer Appellants were not innocent. Claim at the threshold was based on fake TRAs. Therefore, Revenue has rightly invoked extended period under section 28 of the Customs Act, 1962 to adjudicate the matter. 10.5 It has been held in ICI India Limited v. CC (Port), Calcutta 2005 (184) E.L.T. 339 (Cal.) that the DEPB licence/scrip is admittedly a negotiable one and is available in the market. Anyone can purchase it from the market and avail of the credit out of it. But, ultimately if it is found that the said DEPB scrips were not acquired lawfully nor transferred by original owners thereof credit cannot be derived from forged TRA. The decision of Hon'ble Calcutta High Court was affirmed by Apex Court in appeal by ICI India Ltd. as reported in 2005 (187) E.L.T. A31 (S.C.). Thus invoking of extended period for ....
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....atements (under Section 108 ibid) of customs officers who disowned the signatures appearing purportedly as theirs on the SBs, (v) statement (under Section 108 ibid) of the Export Manager of M/s. APL India Pvt. Ltd. who stated that they had not handled the cargo mentioned in the SBs, and (vi) orders of the Deputy DGFT, Mumbai cancelling the DEPB licences ab initio. It is significant to note that the appellant has not assailed the above evidence. The appellant has virtually acquiesced in the factual position that the DEPB licences used for duty-free clearance of the goods imported by them had been obtained by the original licensees by producing forged and fake SBs and BCERs without export of any goods and that the licences were cancelled ab initio by the licensing authority later. Their only contention is that, as bona fide purchasers of the DEPBs with no notice of the tainted character of the licences, they cannot be adversely affected by the post-import cancellation of the licences. Their argument is that the DEPBs were valid when used for duty-free clearance of the goods imported by them and that the subsequent cancellation of the DEPBs by the DGFT canno....
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....f Duty Entitlement Pass Book (DEPB) shall have the option to pay additional customs duty, if any, in cash as well." [Underlining Supplied] Para 7.29 provided that "DEPB may be issued on (a) post-export basis and (b) pre-export basis". Para 7.30 explained that "DEPB on post-export basis shall be granted against exports already made". Para 7.32 provided as follows :- "The DEPB on post-export basis and/or the items imported against it are freely transferable. The transfer of DEPB shall, however, be for import at the port specified in the DEPB which shall be the port from where exports have been made". In the present case, "DEPBs on post-export basis" were obtained from the licensing authority under the FT (D&R) Act by racketeers (mostly in the name of non-existent and fictitious firms) by producing forged and fake Shipping Bills (SBs) without exporting any goods. "Transferability" was got endorsed on the DEPBs by the licensing authority, on the basis of forged and fake Bank Certificates of Export & Realisation (BCERs). These facts are not in dispute. In the absence of exports and realization of export proceeds, no credit of duty accrued "as a specif....
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....ates everything would not be applicable to the cases where the transaction of transfer of licence is for value without notice arising out of mercantile transactions governed by common law and not by provisions of any statute". [Underlining Added] The transfer of REP licences in the case of Taparia Overseas was governed by common law as observed by the Hon'ble High Court and by ordinary law as per para 226 of the Import & Export Policy ibid. Indisputably, there is total harmony between the Policy provision and the court's ruling. A closer look at para 226 of the Policy would reveal as to why the transfer of REP licence was said to be "governed by the ordinary law" - the licence was freely transferable as in an ordinary mercantile transaction without any endorsement or permission from the licensing authority. As per the Hon'ble High Court's ruling as we comprehend it, the concept of fraud vitiating everything is not applicable to such a transaction. But the concept is applicable where a transaction of transfer of licence is governed by provisions of any statute. This view, which is clearly discernible from the Hon'ble High Court's ruling, is ....
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.... International, has the power under section 9(4) of the FT (D&R) Act to cancel DEPB "credit" already "utilized". In our view, the distinction drawn by the Learned Counsel between a forged DEPB and a DEPB issued on the basis of forged documents is of no significance where the DEPB of the latter category is cancelled with retrospective effect by the authority which issued it. Both are incapable of vesting any credit of duty in the DEPB-holder so as to be used for purposes of Notification No. 34/97-Cus. 9.31 The cases of Hico Enterprises and Ajay Kumar & Co. decided by the Supreme Court are also distinguishable. The relevant paragraphs of the two judgments are quoted below : Hico Enterprises :- "It is seen that in view of the fact that in the show cause notice issued on 4-3-1999, there was no reference to the alleged infraction of M/s. Amar Taran Exports, the transferor of the licence in question, the judgment of the CESTAT does not suffer from any infirmity to warrant interference. The appeal is dismissed." [Underlining Supplied] Ajay Kumar & Co :- "It is seen that in view of the fact in the show cause notices, there was no reference to th....
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....ered the goods imported by him liable to confiscation under section 111 of the Act. This is the reason why we refrain from imposing alternative penalty under section 112 of the Customs Act on DeNocil. 14.3 Where any penalty under section 112 of the Customs Act is not imposed on De-Nocil regarded as the main offender by the department in this case, there can be no penalty under the same provision of law on P.K. Srinivas on the ground of abetment. In the result, the penalty on P.K. Srinivas is vacated and his appeal is allowed." 45. In Munjal Showa Ltd. v. Commissioner of Customs & Central Excise (Delhi-IV), Faridabad 2009 (246) E.L.T. 18 (P & H) also decided an issue regarding the liabilities of transferee towards Customs duty. Paragraphs 18, 19 and 21 are reproduced as under : "18. Coming to the admitted facts of the present case, the appellant availed exemption from duty in May-June, 2003. Within three months, the appellant was informed about the forgery and the fact that the appellant was not entitled to the benefit of exemption. Even as per scheme of exemption, exemption was subject to export proceedings being realised within six months, which in the p....
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....This fact highlighted by para 25 of the show cause notice is not disputed. Thus when the entire transaction of the receipt of money by the appellant itself has been found to be sham, something to launder money, we find that the appellant was indeed conspiring with the others to fraudulently defraud the department of the due revenue. As we find that the appellant has acted by perpetuating this fraud, we find the argument advanced by the appellant on limitation have to fail. Extended period of limitation as provided by Section 28 of The Customs Act, 1962 and Section 11A of the Central Excise Act, 1994 are invokable for making these demand. 4.17 Appellant has relying on certain decisions argued that process of segregation of scrap undertaken by them do not amount to manufacture hence the demand could not have been made upon them under the Central Excise Act, 1944. We find that none of the decisions relied upon by the appellant has dealt with the specific issue in hand i.e. whether the segregation of scrap would amount to manufacture or not. This issue has been considered by jurisdictional high court, in the case of Mitesh Impex [[2014] 46 taxmann.com 30 (Gujarat)]. Hon'ble Gujarat ....
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....of the Act, since admittedly the assessee complied with other conditions for grant of the claim. However for the rest of the profit the assessing officer rejected the assessee's claim by his order of assessment dated 31.3.2006 for the assessment year 2003-04. He also held that the assessee's sales to DTA areas are not export sale. Deduction under section 80IB of the Act would not be available on such sales. 5. The assessee carried the matter in further appeal before the Tribunal. The Tribunal by the impugned judgment noted at length the assessee's process and referred to the decision of Supreme Court in case of Vijay Ship Breaking Corporation and others vs. Commissioner of Income-tax reported in [2009] 314 ITR 309(SC) to hold that the same amounted to manufacturing activity. 6. With respect to the assessee's claim for deduction on its DTA sales, the Tribunal placed the matter back before the assessing officer in following terms:- "13. Regarding claim u/s. 10B on deemed exports we have already set aside this issue to the file of assessing officer in case of M/s. Siyaram Metals P. Ltd in ITA No.377/RJT/2006 for the assessment year 2002-03. 11. This....
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....terial when received in factory is sorted and segregated in different diameters and of various lengths. This process is done manually or most of the times mechanically to remove jackets, upper layer and paper and for making them suitable for feeding in different cable cutting machines and stripping machines. After a process various strips in the cables are removed, the sorted cable scraps put in to cable cutting machine for cutting and stripping. Out of this process, several types of copper wire are generated. This process also generates several types of impurities such as plastic, dust and other metals. Clean copper material emerges out of this process, which is different and distinct from the cable wire scrap. The pure copper obtained from this process is then bailed in bailing machine. This makes this metal in different sizes and weights as required. Then this material is packed and exported. a) Mix Metal Scrap Mix metal scrap is imported from various countries. This scrap is consisting of several substances such as stones, rubber, steel, metal-ferrous as well as non-ferrous etc. It is generally the scrap generated from dismantling of buildings or other structu....
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....anufacture" includes any process- (i) incidental or ancillary to the completion of a manufactured product; (ii) which is specified in relation to any goods in the section or Chapter notes of The First Schedule to the Central Excise Tariff Act, 1985 (5 of 1986) as amounting to manufacture; or (iii) which in relation to the goods specified in the Third Schedule, involves packing or repacking of such goods in a unit container or labelling or re-labelling of containers including the declaration or alteration of retail sale price on it or adoption of any other treatment on the goods to render the product marketable to the consumer; and the word " manufacture" shall be construed accordingly and shall include not only a person who employs hired labour in the production or manufacture of excisable goods, but also any person who engages in their production or manufacture on his own account; 14. The Special Economic Zones Act,2005 also defines the term 'manufacture' but in a slightly different manner. Such definition contained in section 2(r) reads as under:- "2(r) "manufacture" means to make, produce, fabricate, assemble, process or bring into ex....
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....Likewise, mix metal scrap would consist of several substances such as stones, rubber, steel, ferrous as well as non-ferrous metals. This would be derived mostly from dismantling of buildings and other structures and plants. Scrap as such would have no other use or marketability before subjecting to manufacturing process. Assessees would segregate and remove attachments, sorting out various metals in categories from the mix metals. This process would derive ferrous metal, other non-metallic parts etc. 19. In the case of old/used transformers the assessees would import used old gadgets and machines once their useful life is over. From such used machines and gadgets the assessees would remove metal and other parts and ultimately segregate non-ferrous and ferrous metals, non-metallic material or ingots by using such metals extracted from the gadgets. 20. It can thus be seen that in all three cases the assessees would put the imported material to series of manual and mechanical processes and through such exercise so undertaken, bring into existence entirely new, distinct and different commodities which are marketable. Thus, the Tribunal, in our opinion, correctly came ....
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.... undergoing the process indicated above certainly results in emergence of a new and distinct commodity. The original block does not remain the marble block, it becomes a slab or tile. In the circumstances, not only is there manufacture but also an activity which is something beyond manufacture and which brings a new product into existence and, therefore, on the facts of these cases, we are of the view that the High Court was right in coming to the conclusion that the activity undertaken by the respondents assessees did constitute manufacture or production in terms of Section 80IA of the Income Tax Act, 1961." 22. Additionally we also notice that the assessee, as an EOU is required to carry out manufacturing activity and on its DTA sales is also required to pay excise duty which admittedly, the assessee paid and excise department collected. It would be a dichotomy if on the same activity the assessees were to pay excise duty on the ground that the same amounted to manufacturing activity but would be declined deduction under the Income Tax Act on the ground that the same did not. In this context, in the case of Income-tax officer vs. Arihant Tiles and Marbles P.Ltd.(supra) t....
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.... 18. One cannot fail to notice that both the proviso to subsection 1 of Section 11A and Section 11AC use the same expressions : "....by reasons of fraud, collusion or any wilful mis-statement or suppression of facts, or contravention of any of the provisions of this Act or of the rules made thereunder with intent to evade payment of duty,...". In other words the conditions that would extend the normal period of one year to five years would also attract the imposition of penalty. It, therefore, follows that if the notice under Section 11A(1) states that the escaped duty was the result of any conscious and deliberate wrong doing and in the order passed under Section 11A(2) there is a legally tenable finding to that effect then the provision of Section 11AC would also get attracted. The converse of this, equally true, is that in the absence of such an allegation in the notice the period for which the escaped duty may be reclaimed would be confined to one year and in the absence of such a finding in the order passed under Section 11A(2) there would be no application of the penalty provision in Section 11AC of the Act. On behalf of the assessees it was also subm....
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.... in defeating what is intended by the legislature. The firm and the partners thus can in a given case be subjected to a simultaneous penalties for the contravention of Section 111 of the Act resulting into confiscation of the goods, however the same would be subject to the either of the parties proving that the contravention has taken place without their knowledge or despite exercise of all due diligence to prevent such contravention, which is a safeguard inherently provided by the Act. Thus as regards use of the word "abets" in Section 112(a) of the Act, it may be observed that same would not attract the rule of mens rea. Further it is well settled that a penalty is imposed under the Act for such acts which are in the nature of breach of a civil obligation and by an adjudicatory proceeding, different from criminal proceedings before a Criminal Court and thus would not attract the Rule of mens rea. 90. In regard to the main issue relating to the levy of simultaneous penalties a useful reference can also be made to a decision of the Division Bench of Kerala High Court in "India Sea Foods v. Collector of Customs and Central Excise, Cochin" reported in "1984 (16) E.L.T. 243 (....
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....ection 112(a) is an independent provision. Section 135(i) (a) is a provision dealing with a criminal offence and thus, cannot have a relevance in penalty proceedings adopted under Section 112(a) of the Act, as the essential ingredient in respect of a criminal offence is mens rea. This is how Section 135(i)(a) specifically refers to a prior knowledge. Reading Section 135(i)(a) even remotely in the implementation of Section 112(a) would result into a legal absurdity and a violence to the provisions of Section 112(a) and defeat the clear intention of the legislature, as it would amount to incorporating a foreign ingredient or something which the legislature never intended. In the entire scheme of Chapter XIV of the Act which deals with "Confiscation of Goods and Conveyances and Imposition of Penalties", in the matter of imposing of penalties, the legislature has clearly left it to the wisdom of the executing agencies of course subject to the appropriate safeguards, and evaluation. In my opinion, a judicial interpretation which would further the intention of the legislature is to be adopted, if so, then an interpretation to read Section 135(i)(a) in Section 112(a) can never be contempl....
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....onsidered opinion of the Court, in the light of the above cited judgments, penalty on the partner as well as the partnership Firm can be simultaneously imposed and of course, imposition of penalty both on the Firm and its partners, depends upon the facts of each case." 4.21 In view of the decisions as above, it is clear that there is no bar on simultaneous imposition of penalty on the partnership firm and partner. The only thing that needs to be established for imposition of penalty upon the partner is that he was actively in knowledge and involved in acts of omission and commission leading to contravention of the provisions of the statute and leading to evasion of duty and goods becoming liable for confiscation. Show cause notice in para 37 while recording the role of Shri Ramesh Jain, Partner (Appellant 2 & 4) has recorded as follows: "37. Shri Ramesh Jain of M/S. Sameer Industries, KASEZ has conspired with Shri S. K. Agarwal @ S.K. Gupta of M/S. Lord Empire International, Shri Dinesh Kumar Jain of M/S. Laxmi Enterprises and Shri Riaz ul Hasan of M/S. MIEC to clear dutiable goods from a unit in KASEZ under the guise of clearance to advance licence holders and to diver....
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....on can be verified from the records of M/S. Sonal Freight Carriers. Shri Ratan M. Gadhavi, proprietor of Shri Sonal Freight carriers, the transporter for the above transaction in his statement dated 03.02.2005 had stated that he had prepared the Builties as per the information given by M/S. Sameer Industries; he could not say that the goods have been received by the company for which they were claimed to have been consigned. This falsifies the claim of Shri Ramesh Jain and M/S. Sameer Industries. In his various statements he undertook to contact Shri S.K.Gupta@ S.K.Agarwal of M/S. Lord Empire International and make him pay the duty revaded. Even tough he claims to have met Shri S.K.Gupta@ S.K.Agarwal but hedid not to produce him and did not volunteer to pay up the duty evaded. It is be concluded under these circumstances that Shri Ramesh Jain was making claims only to avoid payment of duty evaded and consequent punitive action. It has to be concluded that Shri Ramesh Kumar Jain of M/S. Sameer Industries KASEZ had hatched the conspiracy. The amounts stated to have been received in the form of DD/Cheque by M/S. Sameer Industries from different parties are to be seen as part of well-o....