Madhya Pradesh High Court
Shri Y.S. Bisht vs Commissioner Customs Central Excise on 17 August, 2015
C.E.A. No.36/2014, C.E.A.No.1/2015 &
C.E.A.No.2/2015
17.8.2015
Shri Ajay Bagadiya, learned counsel for the
appellant.
Shri Prasana Prasad, learned counsel for
respondent.
Heard.
2. Since the common question of law is involved
in these appeals therefore, they are heard together and
disposed of by this common order. For the sake of
convenience the facts are borrowed from
C.E.A.No.36/2014.
3. This appeal has been filed by the appellant
under Section 35-G of Central Excise Act, 1944 against
the final order dated 9/5/2014, passed by the Customs
Excise and Service Tax Appellate Tribunal New Delhi,
in Appeal No.E/541-543, 971-974/2006.
4. M/s. Bhanu Iron & Steel Co. Ltd are
manufacturers of M.S. Plates and M.S. Coils falling
under Chapter 72 of the Central Excise Tariff. They
were buying M.S. Slab from various parties and
converting into M.S. Plates and M.S. Coils. They were
also taking Cenvat credit of the duty paid on the slabs.
They were buying M.S. Slab through their associate
company at Hissar as well as other suppliers in Raipur,
Bhilal, Guwahati and Hissar. On the basis of
information that appellant fraudulently availed modvat
credit of duty paid on inputs and capital goods on the
strength of duty paying documents procured by them
without actual receipt of inputs/capital goods on
26/8/1995 to 29/8/1995, the Central Excise Authorities,
searched the premises of the appellant and noticed a
shortage of 2620.800 MT of slabs. On further
verification, stock of 76.62 of M.S. Plates (final product)
valued at Rs.11,89,650/- was found to be in excess of
the stock shown in the statutory record. The excess
M.S. Plates were seized.
5. Shri Yashwant Singh Bisht, DGM and Shri
B.R. Bishnoi, Excise Officers of the appellant - M/s.
Bhanu & Steel Co. Ltd., in their respective statements
accepted the shortage of 2620.800 MT Slabs and were
satisfied with the manner of stock taking and they
further deposed that this difference is due to actual non-
receipt of slabs in the factory. They have received only
duty paying documents. The adjudicating authority
passed an order dated 30th July, 1999, confirmed the
demand, interest and penalty against the appellant.
6. In an appeal the appellate tribunal vide order
dated 29/3/2000 (Annexure A/4), set aside the order
dated 30th July, 1999 and remanded the case to the
Commissioner concerned, for passing an appropriate
orders, in accordance with law, after giving the
appellant required document and giving an opportunity
of explaining their case in person or through their
counsel. The Commissioner of Central Excise &
Customs, considering the statements of various
persons, which were reproduced in the impugned order
and after granting fully opportunity to the petitioner and
to the appellant passed the following order :-
ORDER
69. In view of the above, I pass the following order;
(1) Show cause Notice No. V(72)15-48/95/Adj- I 12153 dated 26-02-1996
(i) The goods i.e., MS Plates weighing 76.628 MT valued at Rs.11,89,650/- and 88.120 MT of MS waste & scrap valued at Rs.7,04,960/- seized at the factory premises of the Noticee No.1-M/s. Bhanu Iron & Steel Co. Ltd., Plot No.801, Sector-III, Pithampur, are hereby confiscated. However, I gave an option to the Noticee No.1 to redeem the same on payment of redemption fine of Rs.8,00,000/- (Rupees Eight Lacs Only), which shall be exercised within 30 days of the receipt of this order.
(ii) A penalty of Rs.5,00,000 (Rupees Five Lacs only) is imposed on the Noticee No.1-M/s. Bhanu Iron & Steel Co. Ltd., Plot No.801, Sector-III, Pithampur under Rule 173Q of erstwhile Central Excise Rules, 1944.
(iii) The Central Excise duty at appropriate rate should also be paid at the time of clearance of impugned goods. (2) Show cause Notice No. V(72)15-14/97/Adj- I/41823 dated 21-8-1997.
i) The wrongly availed modvat credit amounting to Rs.3,67,52,507/- (Rupees Three Crore Sixty Seven Lacs Fifty Two Thousand Five Hundred Seven Only) is disallowed and confirmed for recovery from the Noticee No.1- M/s Bhanu Iron & Steel Co. Ltd. Plot No.801, Sector-III, Pithampur, in terms of Rule 57I(ii) and Rule 57U(2) of erstwhile Central Excise Rules, 1944.
ii) I also impose penalty of Rs.3,67,52,507.00/- (Rupees Three Crore Sixty Seven Lacs Fifty Two Thousand Five Hundred Seven Only) under rule 571(4) and 57U(6) of the erstwhile Central Excise Rules, 1944 on the Noticee No.1-M/s. Bhanu Iron & Steel Co. Ltd Plot No.801, Sector-III, Pithampur.
iii) They are also liable to pay interest at appropriate rate under rules 57I (5) and 57U (8) of the erstwhile Central Excise Rules, 1944 from the first day of the month succeeding to the month in which wrong credit was availed by noticee No.1 M/s- M/s Bhanu Iron & Steel Co. Ltd. Plot No.801, Sector-III, Pithampur.
iv) I also confiscate land, building plant and machinery of noticee No.1 but give an opinion to redeem the same on payment of redemption fine of Rs.25,00,000/- (Twenty Five Lacs only) within 3 months of receipt of this order under Rule 173Q(2) of erstwhile Central Excise Rules, 1944.
v) I also impose penalty of Rs.25,00,000/- (Rupees Twenty Five Lacs only) is imposed on the Noticee No.2 - Shri Anoop Bishnoi, Managing Director of Noticee No.1-M/s. Bhanu Iron & Steel Co. Ltd. Plot No.801, Sector-III, Pithampur, under Rule 209A of erstwhile Central Excise Rules, 1944.
vi) A penalty of Rs.1,00,000/- (Rupees One Lacs only) each is imposed on the Noticee No.3- Shri Y.R. Bisht, Dy. General Manager, of Noticee No.1- M/s. Bhanu Iron & Steel Co. Ltd., Plot No.801, Sector-III Pithampur, Noticee No.4-M/s Belveder Engineering Ltd., 9th K.M.Stone Behind Janak Steel Tubes Ltd., Delhi Road, Hissar, Noticee No.5- M/s Bharat Industrial Structural th Construction Ltd., 9 K.M.Stone, behind Janak Steel Delhi Road, Hissar., Noticee No.6-M/s Bhanu Iron & Steel Co. Ltd, 10th K.M. Stone, Behind Bharat Metals, Delhi Road, Hissar., Noticee No.8 - M/s Brahamputra Steel Pvt. Ltd., 1119 K.M. Stone, N.H.31 Amingaon, Guwahati (Assam) & Noticee No.9-M/s Brahamputra Tubes Pvt. Ltd., 1119 K.M. Stones, N.H.31, Amingaon, Guwahati (Assam), respectively under Rule 209A of the erstwhile Central Excise Rules, 1944.
vii)A penalty of Rs.50,000/- (Rupess Fifty Thousand only) imposed on the Noticee No.10 - Shri Sanjay Gupta, Owner of M/s Sanjay Roadways, Belatola, Guwahati (Assam), Noticee No.11-M/s Laxmi Ispat Industries, 17-A, Industrial Area, Bhanpuri, Raipur (MP), Noticee No.12-M/s. Balajee Loha Pvt. Ltd., 206-208, Urai Industrial Complex, Raipur (MP), Noticee No.13-M/s Bansal Commercial Co., G.E.Road, Khursipar, Bhilai (MP), Noticee No.14-M/.s Dinesh Traders (Iron & Steel Dealer), Nandini Road, Chhawani Chowk, Bhilai., Noticee No.15-M/s Easter India Trading Co.,17B,76 Light Industrial Area, Chhawni, Bhilai, Drug (MP), Noticee No.16- M/s Manmeet Steels, Nandini Road, Bhilai, Noticee No.17-M/s Mithilesh & Co., C-30, Samta Colony, Raipur (MP) & Noticee No.19-M/s Rajendra Steels, Nandini Road, Bhilai (MP), respectively, under Rule 209A of the erstwhile Central Excise Rules, 1944, Rules.
viii) I do not impose penalty on the Noticee No.18-M/s. Prakash Industries Ltd., Champa, Distt. Bilaspur (MP), Noticee No.20- M/s Ramesh Steel Industries, G.E. Road, Tatibandha, Raipur and Noticee No.21-M/s. Ramesh Rolling Mills Pvt Ltd., G.E. Road, Tatibandha, Raipur (MP), respectively. This order is being issued without prejudice to any other action that may be taken against the noticee under any other provision of law for the time being in force.
7. In an appeal, the learned tribunal by impugned order dated 9/5/2014 (Annexure A/1), dismissed the Excise appeals. Para 33 to 40 are relevant which reads as under :-
33. We have further examined the matter. From in depth and extensive investigation it has clearly emerged that :-
(a) Shri Annop Bishnoi, M.D.
Responsible for creating many
Companies with the sole motive to avail illegal cenvat credit on the strength of paper transactions
(b) On the basis of various verifications as referred in previous paragraphs, huge shortage 2620 MT of M.S. Slab was detected clearly indicating only paper transactions. Otherwise huge quantity of M/s. Slabs would not have been found short.
(c) Investigation relating to M/s UAL, M/s Belveder Engg. Ltd., that these unit did not have any infrastructure to produce the goods thus indicating only paper transactions with the sole motive to pass on illegal cenvat credit.
(d) Statement of Shri P.S. Bedi director of M/s. UAL that UAL was working on the directions of Shri Bishnoi even Shri Bishnoi was not officially on Board of the Company. He has no knowledge of sale of M.S. Slabs by M/s UAL to M/s BISCO, Pithampur and invoices issued about sale were only book entries. Mr. Bedi admitted that even sometime, he used to sign blank papers on the directions of Shri Bishnoi.
(e) Visit on 19.6.1996 to the unit namely M/s BISCO Hissar revealed that unit did not have infrastructure. Amazingly, there was no electricity connection. Even this unit did not have Bank Account.
(f) Shri Ranjan Stephen Director of M/s. Belvedere Engineering Ltd, Hissar deposed in his statement that unit did not have any facility to manufacture the goods in question.
(g) Goods purported to have been sent from M/s Belveder Engineering Ltd, Hissar on invoices, were found not issued or found take.
(h) Detailed investigations conducted in respect of transportation of goods/materials have clearly indicated that such transportation were fake. All truck owners denied having undertaken any transportation.
(i) Further investigations relating to transportation revealed a intriguing result as indicated in para 53 of the adjudication order that so called vehicles were LUNA, Trailer HGV, Bajaj Super, HGV TPV, TVS Champs, delivery Van (Bajaj), Bajaj Cub, TDV open, TDV Tanker were actually ficitious number as no such transportation actually took place.
(j) M/s Anoop Bishnoi of Bisco in his statement dated 2.7.1996 clearly admitted the modus operands adopted by the company to secure ineligible credit.
34. From the above investigations it clearly comes out that M/s BISCO has manipulated and created fictitious units so that invoices could be procured without movement of goods and subsequently credit is availed.
35. It is also observed that confessional statements by not one but by almost everyone including M.D., Directors, DGM clearly, proved non-production, issue of fake invoices and subsequent non-transportation confirming scam of paper transactions. This proves clear intent to defraud revenue.
36. Learned counsel's pleas are not based on any principles which can come to the rescue as clear fraud is committed. Appellant have acted with malafide and attempted to defraud the revenue. All actions have been committed with pre-mediated design. Overwhelming evidence with confessional statements and fraudulent creation of units with the sole purpose to commit thievery of Revenue demolish any argument of the counsel. Actually fabrication of documents clearly point towards their attempt to enrich themselves at cost of Revenue.
37. From the findings of Divisional Bench of Hon'ble Tribunal Mumbai in the case of Viraj Alloys Ltd vs. CCE Thane II reported in 2004 (177) ELT 892 (Tri. - Mumbai) in para 11 and Divisional Bench of Hon'ble Tribunal in the case of Ranjeev Alloys Limited vs. CCE Chandigarh 2009 (236) ELT 124 (Tri.- Delhi__) at para 9 to para 26 as extracted in previous paragraphs it has ome out that entire transactions get vitiated by fraud coupled with confessional statements, mis-statements, fabrication or records, paper transactions with intent to pass on illegal cenvat credit.
38. It is observed that Hon'ble High Court of Madras in the case of M/s Alagappa Cement (P) Ltd Vs. CCE Chennai - 2010 (260) ELT 511 (Madras) and Hon'ble High Court of Himachal Pradesh in the case of CCE Vs. International Cylinder Pvt. Ltd - 2010 (255) ELT 68 (H.P.) has come up with the findings that there could be no unjust enrichment at the cost of revenue.
39. From the above, a clear fraud with intention to fabricate documents with the sole motive to illegally avail and pass n the Cenvat credit get manifest and get proved with detailed investigations by the revenue.
40. In view of above we find no infirmity in the findings recorded by adjudicating authority. Accordingly we uphold the findings in respect of appellants. Appeals are dismissed."
8. Learned counsel for the appellant has drawn our attention to order dated 29/3/2000 (Annexure A/4), letters Annexure A/5 to A/13 and Annexure A/14 dated 13/10/2005 and submits that the representation of the appellant visited the Superintendent (Preventive) on 14/10/2005, for collection of documents. However, it was found that the floppies / files handed over to the representative were not at all belong to the appellant as the floppies were of Unix Operating System, which was never used by the appellant. The appellant thus, refused to take possession of said floppies and this fact was duly recorded in the Panchnama drawn on 14/10/2005 (Annexure P/15). He submits that 64 computer floppies seized. Computer and files bearing Nos.28, 29, 31, 32, 33, 36, 37 and 38 were not handed over to the appellant and therefore, he could not make out his case before the appellate authority as well as before the CESTAT. He submits that non-supply of documents by the department is a violation of principle of natural justice. In-spite of specific direction by the learned tribunal on 29/3/2000, the adjudicating authority failed to supply the aforesaid floppies and, therefore, he submits that impugned orders be set aside and matter be remitted to the adjudicating authority with a direction to supply the aforesaid 64 floppies and, thereafter decide the matter a fresh.
9. In reply, Shri Prasana Prasad, learned counsel the respondent/Department has denied the aforesaid contention and submitted that these facts were considered by the appellate authority while passing the impugned order and prayed for dismissal of the appeals. Para 24 to 29 of the order dated 28/11/2005 passed by the Adjudicating Authority is relevant which reads as under :-
"24. In order to examine the merits of the demand of the Noticee No.1 for the supply of certain documents it is necessary to pin point the history of the proceedings in the case which dates back to correspondence dated 30.9.1997, wherein the Noticee was requested to file reply to the Notice. The Noticee, vide their letters dated 19.9.97, requested for supply of relied upon documents.
25. All the Noticees were requested to inspect/take photocopies of documents again vide letter 25.12.97, and they were requested to file reply vide letter dated 5.5.98. Yet again, further opportunities to Noticees vide letters dated 4.6.96, 5.6.98, 17.6.98, 19.11.98, 8.12.98, 3.3.99, were provided to the Noticees for filing the reply. Inspite of these repeated requests and best efforts, reply to SCN was not filed by the Noticees, execpt by the Noticee Nos. 11, 14, 15, 18, 21 & 22.
26. Noticees were again given opportunity to defend their case during personal hearing fixed for 12.3.99. Shri Ashutosh Upadhyay, Advocate appeared and sought some more time for filing reply. Personal Hearing has again been fixed for 7.4.99, but nobody appeared on that date on behalf of Noticees.
27. The Noticee No.1 vide their letter dated 18.3.99 requested for release of non- relied upon documents. However, based on an acknowledgment by Shri B. K. Joshi, Authorized signatory, way back on 24.9.98 my predecessor took the stand that the Noticee is unnecessarily trying to prolong the case without sufficient reasons and, therefore, proceeded and adjudicated the case. However, the Noticee succeeded in projecting a picture before the Hon'ble Tribunal that their case was adjudicated without following the principles of natural justice and without supplying the documents demanded by them. In this context, I have examined in detail, the acknowledgment dated 24.09.98 given by the Authorized signatory of the Noticee on which my predecessor had relied upon heavily for proceeding in the case. The said acknowledgment categorically mentioned that they have not received (I) computer, (ii) Computer floppies-64 (iii) files at Nos. 28, 29, 31, 32, 33, 36, 37 & 58 of Annexure-B of panchnama dated 26.08.1995 withdrawn from their premises.
28. The natural inference that can be drawn from the above is that all other documents whether relied upon/non relied upon have been released to the party.
These documents were all along been demanded by them and they have put a condition in all their correspondence that unless these are provided to them, no defence reply can be filed.
In view of this rigid stand taken by the Noticeee, and in order to avoid a position of stalemate in the proceedings of the case, I have initiated a special drive to locate the concerned documents, though the case records pertain to ten years back. This has resulted in locating the file Nos. 28, 29, 31, 33 & 37 which were returned to the authorized signatory on 23.03.2005. The computer and the floppies were also traced out and offered to the party. However, they while accepting the computer denied accepting the floppies taking a plea that the concerned floppies are of Unix system which they did not use at the relevant point of time. Curiously enough, they have also came with an objection that the returned files are not containing documents as mentioned in panchnama though the file cover is tallying with the same. In view of this resistance to take back the floppies, the officers had to draw a panchnama evidencing the efforts of the Department to supply the required non-relied upon documents by the Noticee.
29. After releasing the documents as above, fresh opportunity of hearing was granted to the Noticee but they were adamant on the stand that without receiving all the documents as desired by them, they will not participate in the proceedings of the case. I have given a serious thought to this undiluted stand taken by the noticee on the issue of non-receipt of some documents. First of all, it is observed that the documents in question are just non- relied upon documents and the show cause notice is not at all relied upon them. All the relied upon documents on the basis of which the case was built upon, were provided to them way back in 1997. At that time, the Noticee was only asking for the relied upon documents and on receipt of the same, they wanted to adjourn the case proceedings on the pretext of non-receipt of non relied upon documents. After much efforts, these non- relied upon documents though not much relevant to the case were located from the old records and were offered to them. Instead of receiving, the same, the Noticee is not cooperating with the Department on flimsy grounds. This is evident from the fact that at the time of receipt of files on 23.3.2005, the Noticee never disputed regarding the contents whereas on 24.3.2005, they have submitted a letter disputing the contents of the files. This is clearly an after thought and had the contents were different, they should have verified at the time of receipt itself and refused taking possession thereof. This is not the case, and in the case of computer floppies as well as the objection of the Noticee is not tenable. These floppies were withdrawn by a suitable panchnama drawn at the time of seizure and at that time, the objection regarding technicalities of the floppies were never raised by the Noticee. The only conclusion that can be arrived from these facts is that the Noticee is trying mischievously to prolong the proceedings. This at any costs cannot be granted by a judicious adjudicating officer. In this view of the matter, I am proceeding with the case based on the available records, evidences and defence submissions of the other Noticees."
10. From the aforesaid, the contention of the appellant appears to be incorrect. In view of the concurrent finding of fact recorded by both the authorities, we do not find any substance in these appeals and appeals involve no substantial question of law. The appeals filed by the appellant have no merit and are accordingly, dismissed.
A copy of this order be retained in the record of other connected matters also.
(P.K. JAISWAL) (T.K. KAUSHAL)
JUDGE JUDGE
ss/-