Customs, Excise and Gold Tribunal - Delhi
Tara Chand Shival vs Cce on 28 May, 2003
Equivalent citations: 2003(90)ECC131, 2003(158)ELT699(TRI-DEL)
ORDER P.G. Chacko, Member (J)
1. This appeal is against imposition of personal penalty of Rs. 10 lakhs on the appellant under Rules 198 and 209 A of the erstwhile Central Excise Rules, 1944 and under Sections 112 and 117 of the Customs Act by the Commissioner of Central Excise & Customs, Jaipur. The appellant was the authorized signatory of M/s. Reliable Poly Fib (India) Ltd. (for short, M/s. RPFL) during the period relevant to this case. M/s. RPFL were a 100% Export Oriented Unit (EOU). The appellant's brother Shri Richhpal Sharma was one of the Directors of another company, M/s. Pushpa Silk Mills Pvt. Ltd. (for short M/s. PSML), which was also a 100% EOU. Both the companies were engaged in the manufacture of grey fabrics. For the manufacture of grey fabrics, M/s. PSML used polyester/nylon filament yarn either imported or procured from other 100% EOUs at 'nil' rate of duty. 106.062 MTs of nylon filament yarn so procured were shown to have been sold by them to M/s. RPFL at 'nil' rate of duty against CT-3s. The relevant ledger account maintained by M/s. PSML showed payment for the material as having been received from M/s. RPFL by cheques or in cash. But investigation conducted by Anti-Evasion officers of Central Excise revealed that the above quantity of nylon filament yarn had not actually been despatched to M/s. RPFL by M/s. PSML and that only the papers (invoices, AR-3As etc.) were sent to them. Investigations further disclosed involvement of the appellant in connivance with his brother Richhpal Sharma in the transactions whereby, department found, M/s. PSML had evaded Customs duty on nylon filament yarn by selling the goods clandestinely in the domestic market without payment of duty. Accordingly, show-cause notices were issued to M/s. PSML, Shri Tara Chand Sharma (present appellant) and others. While a demand of duty was raised on M/s. PSML, penalty was proposed to be imposed on the appellant under Rules 198 and 209A and under Section 112. Para (13) of the show-cause notice contained the allegations against the appellant and the same is extracted below:-
"Shri Tara Chand Shival (Sharma) authorized signatory M/s. Reliable Poly Fib (India) Ltd., Plot No. 57/1, Village Pipodara, Taluka, Mangrol, Surat is also liable for penalty under Rule 209A and Rule 198 of Central Excise Rules, 1944 and Section 112 of the Customs Act, 1962 as he had connived with Shri Richhpal Sharma and made the entries regarding receipt of nylon filament yarn in the warehousing register of M/s. Reliable Poly Fib (India) Ltd., to regularize the irregular sale of M/s. PSMPL. Shri Tara Chand Shival (Sharma) had also made fictitious/bogus signature of incharge officer of Central Excise office Surat in the rewarehousing register and AR-3As to show receipt of nylon filament yarn by M/s. Reliable Poly Fib (India) Ltd., Pipodara. Shri Tara Chand in his statement dated 9.9.2000 and 29.3.2000 recorded under Section 14 of Central Excise Act, 1944 have admitted the above facts and the same was also confirmed by Shri Balkishan Jhawar, Director of M/s. Reliable Poly Fib (India) Ltd., in his statement dated 15.3.2000 recorded under Section 14 of Central Excise Act, 1944 and also by letter dated 29.3.2000."
The show cause-notices were contested by the noticees. The appellant, in his reply to the notice, submitted inter alia that he was looking after the general administration of the company and was working under the instructions of Shri Balkishan Jhawar, Director of the company; that he was only an employee of the company and was not aware of the intentions of Shri Jhawar (Director) who assigned functions to him; that it was at his instance that he had signed statements recorded by Central Excise officers; that he was not concerned in any way with keeping, removing, selling or concealing excisable goods known or believed to be liable to confiscation under the Central Excise Rules; that there was no evidence to show that he had played any active role in the alleged offence; and that no penalty was liable to be imposed on him under Rule 209A. The Commissioner who adjudicated on the dispute imposed the aforesaid penalty on the appellant, apart from confirming a demand of duty of over Rs. 2 crores against M/s. PSML, imposing equal amount of penalty on them as well as personal penalties on Richhpal Sharma and another. The appeals filed by M/s. PSML and Shri Richhpal stand dismissed as per this Tribunal's Final Order Nos. A/476-478/2000/NB(D), dated 18.4.2002.
2. Heard both sides. Ld. Advocate for the appellant submitted that imposition of any penalty under Rule 209A on the appellant was not sustainable as no excisable goods were confiscated from him. The appellant's statements recorded by the departmental officers on 9.3.2000 and 29.3.2000 had been retracted by him by way of an affidavit on 4.4.2000. That affidavit was in Hindi. An English translation, duly notarised, was submitted to the Commissioner on 22.5.2001. None of these documents was considered by the Commissioner, who held that there was no retraction of the confessional statements. The penalty imposed on the appellant was a composite penalty under Rules 198 and 209A as well as Sections 112 and 117. Sections 112 and 117 could not be invoked simultaneously. It was also pointed out by the counsel that the maximum penalty imposable under Rule 198 was only Rs. 1000. The counsel also relied on the following decisions:
(i) Z.U. AM v. CCE, Bhopal, 2000 (117) ELT 69
(ii) D.K. Ariwalla v. CCE, Mumbai, 2001 (138) ELT 684
(iii) C.K. Patel v. Appellate Collector of Customs, Madras, 2000 (126) ELT 73 (Mad.)
(iv) Akhtamli Hasannli Tobaccowala v. CCE, Mumbai, 2000 (121) ELT 358.
Ld. DR, who sought to defend the order of the Commissioner, submitted that there was no evidence on record to show that the affidavit dated 4.4.2000 of the appellant had been submitted to the Commissioner. In the voluntary statements given by the appellant under Section 14 of the Central Excise Act, he had admitted his involvement in the documentary transactions between M/s. PSML and M/s. RPFL and, in the absence of valid retraction of the statements, it was open to the Commissioner to reply upon the confessional statements and impose penalty on him. The DR also sought to distinguish the decisions cited by the advocate.
3. We have carefully examined the records and submissions. The allegations against the appellant in the show-cause notice have been reproduced earlier in this order. We find that, in his statements recorded under Section 14 of the Central Excise Act, the appellant has admitted the alleged facts. Shri Balkishan Jhawar, Director of M/s. RPFL has also confirmed the statements of the appellant who was the authorized signatory of that company. We are not inclined to accept the plea that the statements dated 9.3.2000 and 29.3.2000 were retracted by the appellant before the adjudicating authority. It is claimed that the affidavit was in Hindi and the same was later on translated into English. An English translation of an affidavit dated 4.4.2000 is seen on record. A copy of the appellant's letter dated 20.5.2001 addressed to the Commissioner is also noticed. This appear to be the covering letter for the English translation of the affidavit dated 4.4.2000 and bears the date seal of the Commissioner's office indicating that this letter was received in that office on 22.5.2001, These documents, however, do not show that the original affidavit in Hindi was submitted to tbe Commissioner, nor is there any evidence on record to indicate that any such affidavit in Hindi was received by the Commissioner. We have, therefore, to fall back upon the confessional statements of the appellant. The appellant has clearly admitted his role alleged in the show-cause notice, which was apparently one of abetment of evasion of Customs duty by M/s. PSML without physical clearance of nylon filament yarn by them to M/s. RPFL. The vital documentary transactions were done in a fraudulent manner by the appellant to make it appear that the material had been cleared at 'nil' rate of duty by M/s. PSML to M/s. RPFL. The materials covered by these documents have been held to have been clandestinely diverted by M/s. PSML to the Domestic Tariff Area and the appeals filed against this finding stand rejected. That the appellant forged the signature of the jurisdictional Supdt. of Central Excise has been confirmed by the Supdt. himself. At no stage of the proceedings has the appellant asked for cross-examination of the Supdt., nor has he taken any steps to disprove the department's allegation that the Supdt's signature on the rewarehousing certificates was forged and not genuine. The evidence on record is totally against the appellant. We, therefore, hold that the appellant should suffer penalty.
4. The case law cited by ld. Counsel does not help the appellant. In the case of Z.IL Aim (supra), it was held that the said appellant had only acted in his capacity as an employee of the manufacturer and hence did not fall within the purview of Rule 209A. Such is not the situation in the instant case. Admittedly, the appellant was not a mere employee of RPFL. He was the authorized signatory of the company and was, admittedly, incharge of general administration of the company. His brother was one of the Directors of the other company (M/s. PSML) which issued documents for the pretended removal of nylon filament yarn at 'nil' rate of duty to M/s. RPFL without physical clearance of the goods. The cited case, therefore, cannot be followed here. In the case of D.K. Ariwalla (supra), a penalty imposed on an officer of a company under Rule 209A was set aside on the basis that the penalty imposed on the company itself under Section 11AC of the Central Excise Act was set aside. Obviously, this decision is also not applicable to the present case. In C.K. Patel, the Madras High Court set aside a penalty on the ground of discrimination. The Hon'ble High Court could do so in its writ jurisdiction under Article 226 of the Constitution. This Tribunal functioning under fiscal statutes and not having Constitutional powers cannot do so. In Tobaccowala's case, this Tribunal held that, for penalising a person under Rule 209A, it must be shown that he knew or had reason to believe that the goods in question were liable to confiscation. It was also held that mens rea was esssential for such penalty. Here is a case with us, in which the acts wilfully indulged in by the appellant were ones of fraud and forgery which were enough for him to know/believe that the nylon filament yarn covered by the fraudulent documents was rendered liable to confiscation.
5. We note that the duty confirmed against M/s. PSML in respect of the nylon filament yarn in question is to the tune of over Rs. one crore. The penalty imposed on the appellant is Rs. 10 lacs. The appellant had not objected to penalty under Section 112 of the Customs Act in his reply to the SCN. His grievance was against penalty under Rule 209A. At the same time, we note that there was no proposal in the show-cause notice to impose any penalty on the appellant under Section 117 of the Customs Act. The proposal was only for a penalty under Rules 198 and 209A and under Section 112. We further note that the maximum penalty under Rule 198 is only Rs. 1000. Taking these aspects into account and having regard to the circumstances of the case, we are of the view that the quantum of penalty imposed on the appellant by the lower authority requires to be reduced to a reasonable limit. Accordingly, while rejecting the appeal, we reduce the penalty to Rs. 5 lakhs. The order of the Commissioner will stand modified to this extent.