Customs, Excise and Gold Tribunal - Mumbai
Chawla Highway Carriers, Shri B.B. ... vs Commissioner Of Central Excise on 3 February, 2003
Equivalent citations: 2003(87)ECC350, 2003(161)ELT165(TRI-MUMBAI)
JUDGMENT J.H. Joglekar, Member (T)
1. This set of time Appeals arise out of the same Order passed by the Commissioner of Central Excise, Bombay-III. All these appeals are decided in this common order.
2. Show Cause Notice dated 4.6.1990 was issued to M/s. Twincity Organics Pvt. Ltd. (TOPL), M/s. Dyes Distributors (India) Ltd. (DDIL), their Directors and employees, to their consignment agents and to a number of transport operators, their partners, proprietors and employees. TOPL and DDIL manufactured Camphor and other excisable goods. Certain private accounts were seized from their premises showing unrecorded production and clearance of camphor and other chemicals. The authenticity of the figures on the private records was admitted by the Directors and officers of the two companies as also their employees. The figures of clearances shown in such private records were cross checked with the goods transported by various transporters as further corroboration of such clearance. On comparison of the figures of production with such figures shown in the official registers, it was found that the units had indulged in clearance without payment of duty. The modus operandi was narrated by Mr. J.D. Vora, Excise In-charge of both the manufacturing units. The clearance documents under which the goods were sent to various parties were brought back by various transporters and were destroyed by him. The manipulation of production statistics covered extra clearances. Shri Satish Sanghvi, C.M.D. of DDIL and Director of TOPL confessed to maintaining duplicate sets of invoices. They were clearing duty paid goods through M/s. Deluxe Cargo Movers and those cleared through M/s. Deluxe Cargo Movers were non-duty paid goods. The transporters accepted to changing documents and, acting to suit the convenience of the manufacturing units. Satish Sanghvi also claimed that the goods cleared without payment of duty under the different clearances were in fact cleared to M/s. Apex Silicate & Chemicals Indus. (ASCI), Delhi. The consignments were sent to ASCI through Chawla Highway Carriers.
3. The Commissioner after hearing the noticees passed the impugned Order confirming the duty evaded by TOPL & DDIL. He ordered confiscation of the goods seized which were cleared without payment of duty. He imposed penalties on the two manufacturing units as also on the Directors and Officers of the 2 units, The other persons and penalties imposed upon them were as below:
Chawla Highway Carriers = Rs. 2.5 lacs. Bashir M. Mevekari = Rs. 2.5 lacs. Kushalchand D. Shalh = Rs. 5 lacs. Tarun D. Shah = Rs. 5 lacs.
Saurashtra Rodways = Rs. 2.5 lacs. A. Aziz A. Gani Menon = Rs. 1 lac. Apex Silicate & Chemicals = Rs. 5 lacs. Wadhuram Wadhwa = Rs. 5 lacs.
Suresh Shah = Rs. 5 lacs.
Although no penalty was imposed upon N.D. Wadhuram, the goods seized from their premises have been confiscated. Their grievance arises from this order of confiscation.
The Penalties are imposed under Rule 209A of the Central Excise Rules which reads as under:
"Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or those rules, shall be liable to a penalty not exceeding three times the value of such goods or five thousands rupees, whichever is greater."
4. The Appellants in this batch of appeals are the transport operators and their staff; and M/s. ASG, the consignment agents. The appeal filed by Suresh Shah is not taken up for disposal, since his writ application is partly before the Hon'ble High Court of Madras.
5. The following persons appeared for the following Appellants:
(1) Shri S.L. Ahuja Chawla Highway Carriers Saurashtra Roadways A. A. Menon (2) Shri S.N. Sejpal B.M. Mevekari (3) Shri J.C. Patel K.D. Shah T.D. Shah Apex Silicate & Chemicals W. Wadhwa N.D. Wadhuram.
6. The charge against these appellants essentially is aiding and abetting TOPL & DDIL in the clandestine clearance of goods without payment of duty.
7. S/Shri Satish Sanghvi', Prakash Sanghvi and H.S. Dhillon were principal persons concerned with the unrecorded production and unauthorized clearances of dutiable goods in these proceedings. In their statements inter alia they admitted that although a number of consignees were shown, the goods ultimately reached their consignment agents. The consignments sent through DCM were those on which duty was not paid. It was admitted that the payments for such consignments were in cash only. Certain consignments were sent through Chawla Highway Carriers also. As per Shri Vora's statement the names of the consignees were fictitious.
8. The two manufacturing units and their officers are not appellants before us in these proceedings. We were informed that their appeals were dismissed by the Tribunal for failure to comply with the interim orders made by the Tribunal in terms of Section 35F of the Central Excise Act.
9. The issue before us in these appeals is whether the various acts performed by the transport operators and consignments agents amounted to aiding and abetting the manufacturing units in the clandestine removal of excisable goods.
10. The fact of transportation of the goods by the transport operators and their being deposited and kept by the consignor agents is established and accepted. The issue for decision is whether these persons had knowledge or reason to believe that the goods were liable to confiscation or not.
11. The first transport operator was Bashir M. Mevekari, Proprietor of Basanti Tempo Service. His job was limited to carrying the goods to Bhiwandi for depositing in the godowns of the larger transport operators. The Commissioner imposed penalty on the observation that since at times the goods were not accompanied by gate pass the transport operator should have reason to believe that the goods had not suffered duty. The plea raised by the Appellant is that he was a small transport operator and did not keep any formal accounts. In fact he referred to manufacturer only as "KAPUR" "camphor company". It is claimed that at all times a representative of the manufacturer was in the transport vehicle and clearance documents were at all times in his possession. It was claimed that since the transporter never handled the documents he couldn't be accused of connivance. He had raised the bills at fortnightly basis and was paid by crossed cheques.
12. His statement indicates that he was not aware of the real identity of the consignors. He was entirely unaware even of their names but simply referred to "camphor company". His statement brings out his lack of education and knowledge of law. Given the state of evidence it is not possible to conclude that Mevekari had knowledge or reason to believe that the goods carried by his tempo were cleared in contravention of the Central Excise law. The orders imposing penalty upon him do not sustain.
13. Chawla Highway carriers have also been penalised for such transportation. The statement of Shri G.P. Sharma, Manager, shows that the invoices, etc. which are the documents required by the transporter were given to him. The gate pass was sometime given or sometime not given. This particular part of the statement is emphasized in the show cause notice. It has come in his statement that the consignor's names were different in different invoices of TOPL and DDIL although the document were received from their staff. In certain cases the name of the consignor was left blank and that was filled in later on the instructions given by these two manufacturing units to him. The branch incharge of the transporters one Shri Raman confirms this statements. The statement given by the staff of the transporter do indicate that there was an element of deceit in the documentation given by the consignors to them. But to attract penalty under the C.Ex. Act it has to be established that the transporter and their staff had knowledge that these defects in the documentation or misrepresentation apparent were specifically created for evasion of Excise duty.
14. India is the country where traders are predominant. Traders have to deal with sales tax, octroi, etc. but are known cheat these authorities. Vague incomplete documentation, and benami documentation are almost standard practice in the transport of goods. Therefore the transporter even when he cooperates with the consignors or the consignees is generally unaware as to which law is being violated by such acts of omission done by him or consignor. In this situation the evidence has to show that such transporter in such circumstances was aware that he was aiding and abetting the evasion of Central Excise Duty. If that is not done the penalty imposed upon them cannot sustain. The evidence of the employees of the Chawla Highway Carriers do show their awareness of bad documentation/defective documentation. But it does not establish their involvement in the evasion of Central Excise Duty. Therefore the impugned order imposing penalty upon them do not survive.
15. A.A. Gani was the partner of Saurashtra Roadways. His statement also brings out his awareness of incomplete/wrong/benami documentation. Thodkar and Shailesh the clerical officers in the said transport co. also did not shed any extra light on the complicity or knowledge of wrong doing part of the transporters. The statement of Mohammed Yunus another clerk as well as Muchala, Manager of the transporters generally bring out the absence of knowledge of contravention of Central Excise law on the part of the transporter. On this ground the order of penalty upon either on Saurashtra Roadways or A.A. Gani do not sustain,
16. K.D. Shah and T.D. Shah, the persons in-charge of Deluxe Cargo Movers which was the principal roadlines carrying the contraband camphor alongwith its sister transporter company. The Manager, H.R. Shah admitted to carrying, transporting of goods and handing over the goods to ASC without signature. These facts were confirmed by one Sarang Pande. K.D. Shah the partner of the transport company denied the assertion of Shri Shah, Zonal Manager that deliveries of the goods by improper manner were made on his directions. Before the Commissioner these two persons claimed their innocence by stating that they had no means to know that the goods had suffered the burden of duty or not. The Commissioner in imposing penalty upon these two persons has noted only 2 factors. Firstly that such wrong practices were done at the instance of Satish Sanghvi and secondly by removing these goods and loading in Bhiwandi, We find that this state of evidence miserably fails to bring out conscious knowledge on the part of these persons. Thus the orders of penalty imposed upon them do not sustain.
17. The next Appellants are M/s. Apex Silicate & Chemicals (ASC). Shri Wadhuram Wadhwa is the Director of ASC. They had a godown in Delhi. There was a largo unaccounted stock of camphor and other material stored. In his statement Wadhwa had claimed that such goods were received by them from TOPL & DDIL through Chawla Highway Carriers. The delivery of such goods in the name of other consignees to the godown of ASC was brought out in the statement of the Manager of Chawla Highway Carriers. A part of the goods in the godown was claimed by Narain Das Wadhuram, sister concern of ASC who are also Appellants in this batch. Shri Vasudev Wadhwa of Narain Das Wadhuram in his statement had claimed that other consignors had supplied the camphor. Some other suppliers denied having supplied these goods but had claimed to be given accommodating invoices to Narain Das Wadhuram. However, Amo Chemicals had claimed to have worked on their behalf converting camphor powder into balls.
18. The evidence given by these 2 persons does not implicate them. It was Satish Sanghvi on whose instructions the goods were sent to this unit. Satish Sanghvi is the person who is termed as an 'architect' and 'prime mover' behind the fraud. He has admitted to manipulation of production records and clearance thereof without payment of duty. His statements name the Sulur Agencies and Bhagwan Dasani as the recipients of such goods at Madhura and Coimbattur. They are not the Appellants before us in this batch of appeals. The statement of Narendra Upadyay also speaks of Bhagwan Daswani. His clerk Sabnani also admitted to receipt of such goods by Daswani. Sulur Agencies were sole selling agents of TOPL.
19. The Commissioner in para 68(vi) of the impugned Order has chosen to impose penalty on ASC, and on Wadhuram Wadhwa, only on the basis of the fact that the goods found in their custody could not be accounted with reference to records of production and clearance by these 2 manufacturing units. The statements merely show that the persons in-charge were aware that the documentation of the goods received by them were incorrect, improper and inadequate. The impugned Order however suffers from the same defects as we have pointed out earlier in the case. The only charge against these units and the persons in-charge is that the goods in their possession had been cleared without payment of duty.
20. For penalty to be attracted in these circumstances, the department has to prove not only the non-duty paid nature of the goods but also that the persons dealing with these goods had conscious knowledge that the goods were non-duty paid. This knowledge is not apparent from the evidence on record. The second part of the provision requires at least the reason to believe to be proved. As we have observed above in our country wrong/incorrect/benami documentation is a byword in transportation. Everybody indulges in it and nobody questions this practice. It is therefore for the department to establish that the person charged with was aiding and abetting and at least that there was a reason in their minds to believe that the goods are dutiable and that the goods had not been suffered the duty burden. Even that reason has not been established by the department.
21. The liability to confiscation of the goods seized from ASC (and from other respondents) is on different a footing. There is a clear admission by the persons in-charge of the manufacturing units that substantial goods were cleared by them without payment of duty and that they had prepared documents to obscure this factum. Some evidence to show lawful acquisition was tendered by M/s. ASC. In paragraph 132 of the show cause notice the Department has shown the lack of substantiation. Part of the goods were claimed to belong to M/s. Narain Das Wadhuram which claim is discussed below. Therefore, since the goods which have been seized were cleared by these manufacturing units and that since it is shown that the goods had not suffered duty, the orders of confiscation would sustain,
22. M/s. Narain Das Wadhuram have filed an appeal. It is their claim that part of the goods seized form the premises of M/s. ASCI being 13758 kilos of camphor and Isoborneol valued at Rs. 12,38,220 belonged to them. Since these goods are confiscated they have become aggrieved persons. It is their claim that show cause notice was required to be issued to them. Since this was not done, the orders of confiscation of the goods did not sustain.
23. We have considered this plea. In paragraph 131 of the show cause notice this claim has been discussed fully and the claim of ownership of M/s. Naraindas Wadhuram has prima facie been found not tenable. This is the reason the show cause notice was not issued to them. In their appeal memorandum nothing has been said to belie the various grounds given in the show cause notice rejecting their title. Therefore we find that they have no locus-standi to file this appeal and accordingly dismiss the same.
24 We therefore make the following order.
(1) The orders of the confiscation of the seized goods are upheld.
(2) The appeal filed by M/s. Narain Das Wadhuram is dismissed.
(3) The penalties imposed upon all the Appellants are set aside.