Custom, Excise & Service Tax Tribunal
Neeraj Thakur vs Bhopal on 5 March, 2020
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CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH - COURT NO. II
Excise Appeal No. 50826 of 2019-SM
(Arising out of order-in-original No. 29/Pr. COMMR/CEX/BPL-III/2018 dated
31.12.2018 passed by the Principal Commissioner, Central Goods, Service Tax &
Customs, Central Excise, Bhopal).
Neeraj Thakur Appellant
House No. 8
Sector Shantiniketan
Govindpura, Bhopal.
VERSUS
Pr. Commissioner Respondent
Central Goods Service Tax & Customs Central Excise 35-C, GST Bhawan, Arera Hills Jail Road, Bhopal (M.P.).
WITH Excise Appeal No. 50875 of 2019-SM (Arising out of order-in-original No. 29/Pr. COMMR/CEX/BPL-III/2018 dated 31.12.2018 passed by the Principal Commissioner, Central Goods, Service Tax & Customs, Central Excise, Bhopal).
Lalit Thakuria Appellant
Sajjan House
7, New Agrawal Nagar
Opp. Lotus Navlakha, Indore, (M.P.)
VERSUS
Pr. Commissioner Respondent
Central Goods Service Tax & Customs
& Central Excise
48, Administrative Area, Arera Hills
Hoshangabad Road, Bhopal (M.P.).-462015.
WITH Excise Appeal No. 50876 of 2019-SM (Arising out of order-in-original No. 29/Pr. COMMR/CEX/BPL-III/2018 dated 31.12.2018 passed by the Principal Commissioner, Central Goods, Service Tax & Central Excise, Bhopal).
Ajay Goel Appellant Sajjan House, 7, New Agrawal Nagar Opp. Lotus Navlakha, Indore, (M.P.) VERSUS Pr. Commissioner Respondent Central Excise, Customs and Service Tax 2 48, Administrative Area, Arera Hills Hoshangabad Road, Bhopal (M.P.).-462015.
AND Excise Appeal No. 50877 of 2019-SM (Arising out of order-in-original No. 29/Pr. COMMR/CEX/BPL-III/2018 dated 31.12.2018 passed by the Principal Commissioner, Central Goods, Service Tax & Customs, Central Excise, Bhopal).
Anant Bomb Appellant 201, Trishul Apartments Sanghi Colony, Indore (M.P.) VERSUS Pr. Commissioner Respondent Central Goods, Service Tax & Central Excise and Customs 48, Administrative Area, Arera Hills Hoshangabad Road, Bhopal (M.P.).-462015. APPEARANCE:
Shri M. K. Sharma & Shri Manish Saharan, Advocates for the appellant Ms. Tamanna Alam & Shri Y. Singh, Authorised Representatives for the respondent CORAM:
HON'BLE MR. ASHOK JINDAL, MEMBER (JUDICIAL) FINAL ORDER NOs. 50498 - 50501/2020 DATE OF HEARING: 17.02.2020 DATE OF DECISION: 05.03.2020 ASHOK JINDAL:
All appeals are arising out of the same impugned order therefore, they are taken up together and are being disposed of by this common order.
2. Brief facts of the case are that on the basis of information, a search was conducted at the premises of M/s Ujala Electricals Limited (in short UEL), Mandideep, Distt-Raisen (M.P.), M/s VKM Electricals Limited (in short VKM) and in the premises of Shri V. K. Madan, the 3 Chief Advisor of all the above units. The appellant namely, shri Neeraj Thakur was one of the Directors of VKM having 6.42% of share capital and the remaining appellants are C&F agents who cleared the goods to UEL from different suppliers. During the course of investigation, it was found that UEL is availing cenvat credit on inputs without physically receiving the goods. Therefore, the C&F agents have not supplied the goods, consequently liable to penalised under Rule 26 of the Central Excise Rules, 2002 for imposition of penalty and the appellant Neeraj Thakur being Director of VKM is to be penalised under Rule 26 of Central Excise Rules, 2002 being Director. Therefore, show cause notice was issued on 06.05.2010 proposing disallowance of cenvat credit to UEL and to impose penalty on the appellants. The matter was adjudicated, demand on UEL and various penalties were imposed and penalties on all the appellants are imposed under Rule 26. The said order was challenged before this Tribunal and this Tribunal vide Final Order No. 52094-52097/2018-SM(BR)/2017-CU(DB) dated 01.06.2018 remanded the matter back to the adjudicating authority. In remand proceedings again, penalty of Rs. 20 lakhs has been imposed on Shri Neeraj Thakur, Director of VKM and penalty of Rs. 25 lakhs each have been imposed on all the co-appellants who are C&F agents. Against the said order, the appellants are before me.
3. Learned Counsel appearing for Neeraj Thakur submits that the appellant is dummy Director and not looking after of the company.
Moreover, Shri V. K. Madan in his statement has admitted that he is looking after all the business operation and the appellant is a dummy Director, therefore, there is no role of the appellant to penalise under 4 Rule 26 of the Central Excise Rules, 2002. In support of this contention, he relied on the decision of the Hon'ble High Court of Delhi in the case of Rakesh Kumar Garg CEAC 1/2011 vs. Commissioner of Central Excise vide order dated 10.12.2015 wherein the High Court held that the department would have to show the actual involvement of the person sought to be penalised in the action of possessing, transporting, removing, depositing, keeping, concealing, selling or purchasing, etc. of the excisable goods to levy penalty under rule 26 of Central Excise Rules, 2002. Therefore, no penalty can be imposed.
4. On behalf of the other appellants, learned Counsel submits that penalty has been imposed on the basis of third party evidence i.e. the statement of transporter and none of the transporter was called for examination in chief and no cross examination was granted to the appellant. It is his submission that the appellant has supplied the goods and received the payment through account payee cheque and the said goods have been used by the buyer in manufacturing of the final goods. It is his submission that none of the transporter has asked if they have not transported goods where the goods have been delivered. Therefore, penalties cannot be imposed on the basis of third party evidence without any corroborative evidence.
5. On the other hand, learned Authorised Representative appearing for the respondent supported the impugned order.
6. Heard the parties considered the submissions. 5
7. On 01.06.2018, while remaining the matter this Tribunal issued the following directions:-
"5. The only issue involved in the present case is regarding imposition of penalty of Rs. 25 lakhs each under the provisions of Rule 26 of Central Excise Rules, 2002 as a co-noticee, for the fraudulent availment of cenvat credit by M/s Ujala Electricals Ltd., the period involved in this case is from 2005-06 to 2008-2009. The penal provision under sub-rule 2 of Rule 26 was not there in existence for the period 2005-2006 and 2006-2007 and only available for the period after 1.3.2007. Also, the ledger submitted by the notices appears to have been not considered by the ld. Adjudicating authority which, as per the ld. Advocate, is a crucial piece of evidence to prove the innocence of the appellant. It also settled by the judicial decision of Hon'ble Haryana High court and this Tribunal as discussed above, the penalty cannot be imposed for the period prior to 1.3.2007, the date on which sub-rule (2) was inserted in Rule 26 of Central Excise Rules, 2002 vide Notification No. 8/2007-CE(NT) dated 1.3.2007 for issuing invoices without delivery of goods and also for abetting in issuing such invoices. I am, therefore, of the opinion that these aspects need to be relooked into by the ld. Adjudicating Authority in the facts and circumstances of the case."
8. In the impugned order, the Adjudicating Authority has not considered the legal issues raised by the appellant while imposing penalty on the appellants.
9. In the case of penalty imposed on Neeraj Thakur, I find that the penalty has been imposed being Director of M/s VKM Electricals Limited. It is a fact on record that the appellant was mere Director of that company but was not looking after the business affairs of that company. It has been revealed from the facts of the case as Shri V. K. Madan in his statement admitted that he was looking after affairs of the company. As Hon'ble High court held in the case of Rakesh Kumar Garg (surpa) that the actual involvement of the appellant is required to penalise under Rule 26 of the Central Excise Rules, 2002. Admittedly, no efforts has been made by the Revenue to find out the role of the appellant for availing fraudulent cenvat credit by M/s UEL. In that circumstances, I hold that penalty on Neeraj Thakur is not imposable. Therefore, the impugned order qua imposing penalty on Neeraj Thakur is set aside.
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10. With regard to penalties imposed on Lalit Thakuria, Ajay Goel and Anant Bomb, I find that the appellants are C&F agents to clear the goods to UEL of different suppliers. It has been alleged that goods have not delivered to UEL on the basis of the statement of the transporters recorded during the course of investigation. No physical verification was conducted at the premises of the appellants. Moreover, the statement of the transporters have been relied upon who have never called for examination in chief. Therefore, penalties have been imposed on the appellants on the basis of the statement of the transporter and records recovered from the premises of UEL are not sustainable as the statement of transporter was not examined in chief while adjudicating, therefore, the said statements are not admissible as is evidence as held by this Tribunal in the case of CCE-I vs. Kuber Tobacco India Limited -2016 (338) ELT 113. Further, no other corroborative evidence has been brought on record that the appellant have not supplied the goods to UEL.
11. In view of this the penalty is not imposable on the appellants. Therefore, the impugned order qua imposing penalties on Lalit Thakuria, Ajay Goel and Anant Bomb is also set aside.
12. In view of the above observations, the impugned order qua imposition of penalty on all the appellants is set aside and appeals are allowed with consequential relief, if any.
(Pronounced on 05.03.2020).
(Ashok Jindal) Member (Judicial) Pant