Custom, Excise & Service Tax Tribunal
M/S. Mathura Polymers Pvt. Ltd vs Cce, Chennai-Ii on 29 February, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH AT CHENNAI E/549/2005, E/448/2005, E/614/2005, E/613/2005 & E/615/2005 (Arising out of Order-in-Original No. 05/2005 dated 31.03.2005 passed by the Commissioner of Central Excise, Chennai) 1. M/s. Mathura Polymers Pvt. Ltd. 2. Shri V. Natarajan 3. M/s. Vijay Aqua Pipes Pvt. Ltd. 4. Shri S. Nainar 5. Shri R. Thiagarajan Appellant Vs. CCE, Chennai-II Respondent
Appearance for the Appellants Shri Venkatachalam, Advocate in (E/549/2005) Shri Rajendran, Advocate in (E/448/2005) Smt. Hema Muralikrishnan, Advocate Shri L. Muralikrishnan, Advocate For Appellants 3 to 5 Shri K.P. Muralidharan, AC (AR) for the Respondent CORAM Honble Shri D.N. PANDA, Judicial Member Honble Shri R. PERIASAMI, Technical Member Heard on: 13.01.2016/22.01.2016 Pronounced on: 29.02.2016 Final Order Nos. 40345-40349 / 2016 Per: D.N. Panda 1.1 Shri Rajendran, Advocate appearing on behalf of the appellant Shri Natarajan in appeal No. E/448/2005 submits that personal penalty of Rs.50,000/- has been imposed on this appellant under Rule 209A of Central Excise Rules, 1944, in terms of adjudication order dated 31.03.2005, making a baseless allegation in para 61.1 of the adjudication order.
1.2 He explained that Shri Natarajan was Managing Director of M/s. Mathuura Polymers Pvt. Ltd., (hereinafter referred to as the Mathura Polymers) which is in appeal No. E/549/2005. That was a job worker of M/s. Vijay Aqua Pipes Pvt. Ltd., (hereinafter referred to as Vijya Aqua) which is in appeal No. E/614/2005. Central Excise Authorities made a search to the premises of M/s.Vijay Aqua on 24/02/99 and found a truck bearing No. TN 72 5238 in their premises with certain goods loaded therein. Search party found connection between M/s. Vijay Aqua and M/s. Mathura Polymers for which, they made a search to the premises of M/s. Mathura Polymer also on the same date.
1.3 During search into the premises of Mathura Polymer, search party found certain materials relating to M/s. Vijay Aqua. They drew a mahazar recording statement u/s 14 of Central Excise Act, 1994 form Shri Rama Rao, of M/s. Mathura Polymers who was authorized person of that concern looking after the day to day activities. In mahazar, Shri Rama Rao, categorically admitted that he was in-charge of receipt of raw materials from M/s Vijay Aqua for Job work to be done thereon as well as clear the job worked goods. He also brought out the modus operandi of M/s. Mathura Polymer and M/s. Vijay Aqua in page-3 of mahazar and his statement revealed that Shri Natarajan, MD was no way involved in the allegations made against him by the Revenue.
1.4 Learned counsel pleaded that the appellant Shri Natarajan was not at all involved in any clandestine removal alleged by Revenue. But the authorities made a false allegation against him and penalised him. He also submitted that the appellant had difference of opinion with the other two Directors of the Company, for which he was not at all attending the day to day activities of the Company nor involved in day to day activities of M/s. Mathura Polymers. Even such strain relation between the Directors was corroborated by the police complaint.
1.5 According to the ld. Counsel when the record itself carries the finding that the appellant Shri Natarajan, was no way concerned with any despatch of the materials by M/s. Mathuura Polymers to M/s. Vijay Aqua and vice versa, there should not be any allegation against him. Penalty levied on him being without any basis, he should be exonerated from penalty and his appeal may be allowed.
2.1 Shri Venkatachalam, ld. Advocate appearing on behalf of M/s. Mathura Polymers, says that this appellant was the manufacturer and job worker of M/s. Vijay Aqua. For the purpose of job working, the goods were sent by M/s. Vijay Aqua sometimes through challans and sometimes through chits. The goods which were forwarded using challans, were recorded in the statutory records and the goods forwarded through chits were not recorded in such records. He brought out the methodology of working of both the concerns In para-6 of the SCN. On 24.02.99 Statement of Shri Nainar, Director of M/s. Vijay Aqua was recorded on 26.02.99. In his statement, he confessed that the goods were job worked for M/s. Vijay Aqua by M/s. Mathuura Polymers and categorically agreed with the statement of Shri K. Govindarajan, lorry driver of the vehicle TN 72 5238 who had deposed that two truckloads of PVC pipes containing 1000 nos. each were sent to M/s. Vijay Aqua on 24.02.99 by M/s. Mathuura Polymers without any duty paying documents for that. While the third consignment was in the process of dispatch that was intercepted by the authorities and the lorry was detained along with the goods. All such facts were recorded in mahazar dated 24.02.99 signed by Shri Govindarajan.
2.2 Ld. Counsel further submitted that Shri S. Nainar (E/613/2005) stated in his statement that the goods were cleared without any duty paying documents by M/s. Mathura Polymers and the contents of the statement of Shri Natarajan recorded on 22.02.99 was agreeable to him. When a specific query about challans and chits was made to Shri Nainar, he clarified that the PVC pipes as described and quantified in the chits bearing identification No. Sl.No. 1 to 10 and Sl. No. 1 to 18 were the goods manufactured by M/s. Mathura Polymers. Such goods were cleared through the vehicle of M/s. Vijay Aqua. The goods so manufactured were by M/s. Mathura Polymers out of the raw materials supplied by M/s. Vijay Aqua. He also categorically stated that the goods sent were not accounted for in the statutory record. They also availed modvat credit without following the central excise procedures and reversal thereof was not made in respect of the goods sent to M/s. Mathura Polymers through chits. When the authority worked loss of revenue of Rs.5,16,161 in that regard Shri S.Nainar agreed to pay that.
2.3 On the aforesaid background, it was submission of the ld. Counsel that M/s. Mathura polymer is not liable to the duty liability of Rs. 5,95,721/- assessed by adjudicating authority. So also penalty of equal amount of duty imposed under Section 11 AC of CEA, 1944 followed by further penalty of Rs. 50,000/- under Rule 173 Q of CER, 1944 imposed may be waived.
2.4 It was further submitted by the appellant, that M/s. Vijay Aqua was actually involved in the loss of revenue without any involvement of the appellant job worker M/S Mathura polymer. They received only job charges. When the evidences of Shri Rama Rao and Shri Govindarajan was against the appellant, the appellant company M/s. Mathura Polymers sought cross examination of their evidence. But that was not allowed by the adjudicating authority.
2.5 Ld. Counsel pleaded that decision of adjudicating authority denying SSI exemption benefit is not tenable in law following the decision of the Tribunal in the cases of:
1. Aggarwal Rolling Mills Vs. CCE, New Delhi - 1997 (93) ELT 615 (Tri.)
2. CCE, Hyderabad Vs. Coat Tech Industries - 2004 (176) ELT 648 (Tri- Bom.)
3. Pawan Biscuits Co. Pvt. Ltd. Vs. CCE, Patna- 2000 (120) ELT 24 (S.C.) 2.6 According to the appellant, a solitary transaction of duty loss does not disentitle the appellant to SSI exemption in respect of the rest of the goods manufactured by it as a job worker. The department has valued the job worked goods arbitrarily without adopting the value adopted by the principal manufacturer M/s. Vijay Aqua. To rebut the allegations, in the SCN, he relied on the decision of the Honble Supreme Court in the case of Pawan Biscuits (supra).
2.7 So far as the imposition of penalty is concerned, ld. Counsel submits that there was neither proposal for levy of penalty in the SCN for imposition thereof under section 11 AC of CEA, 1944 nor under Rule 173Q of CER, 1944. Law is well settled that penalty cannot be imposed under two similar provisions simultaneously. Even if the Tribunal reaches to the conclusion that the appellant was a manufacturer and duty is payable, there shall be no penalty on the appellant for its no conscious involvement in duty evasion since the principal owner of the goods was M/s. Vijay Aqua.
2.8 Appellant lastly submitted that the benefit of Notification No. 214/86 dated 25.3.86 and Notification No. 8/98 dated 2/6/98 cannot be denied to the appellant for the reason that under Notification No. 214/86, procedures are to be followed by the principal manufacturer but not by the job worker. So far as the Notification No. 8/98 is concerned that relates to the claim of SSI exemption by the appellant.
3.1 Ld. AR on behalf of Revenue submits that there was specific intelligence with revenue that duty evasion has occurred due to no accounting of goods sent by M/s. Vijay Aqua to M/s. Mathura Polymers for Job working and Job worked goods sent by the later to the former without being accounted by both of them. Search was conducted to the premises of both on 24.2.99 to ascertain the quantum of revenue loss. Ld. adjudicating authority has recorded the history of the case in para-2 at page-2 of the adjudication order demonstrating questionable conduct of both Parties. Revenue found that raw materials were sent by M/s. M/s. Vijay Aqua to M/s. Mathura Polymers for Job working thereon. That was not accounted for by either parties in their statutory record for which there was loss of revenue which was worked out by the Revenue in very clear terms applying the law relating to Valuation and recording violation of procedures in para 59.4 of the adjudication order.
3.2 Revenue further submitted that the Adjudicating authority in para 59.1 at page 51 of Order-in-Original recorded the plea of M/s. Mathura Polymers as to its no liability on the plea of mere receipt of job charges from M/s. Vijay Aqua. But that was discarded due to carrying out of manufacture of goods by M/s. Mathura Polymers in terms of section 2 (f) of CEA, 1944 and evaded duty payment thereon. The goods manufactured by it were delivered to M/s. Vijay Aqua without any duty payment thereon. Neither the goods manufactured were accounted for by either party, nor the raw materials sent by Vijay Aqua to Mathura Polymers were recorded in their statutory record. Considering that M/s. Mathura Polymers was the manufacturer of unaccounted goods, it was rightly denied the exemption claimed under notification No. 214/86 holding that the appellant M/s. Mathura Polymers was the manufacturer of gods. They were also denied the SSI exemption on the ground that when the goods were unaccounted, there was no question of exemption benefit allowable.
3.3 Ld. AR relied on para 59.2 of Order-In-Original to say that anyone to claim the SSI exemption benefit has to exercise the option in writing. But that was not done. All that is visible form the evidence is that M/S Mathura Polymer had close connection with M/s. Vijay Aqua and both of them colluded to cause loss of revenue. That is determined against each in the adjudication order rightly. M/S Mathura Polymer was therefore rightly denied the benefit of exemption Notification No. 8/96.
3.4. Ld. AR reiterating the stand as above supported the adjudication order and submitted that when the appellant M/s. Vijay Aqua contravened Rule 9 (1), 58(A), 53, 173 G of CER, 1944 proving that there was suppression of goods manufactured, causing loss to revenue, they were rightly levied duty with penalty. There was a clear proposition in the SCN to bring the appellant to the fold of penalty. So far as the appellant Shri Natarajan is concerned, ld. DR supporting adjudication and relying on the finding of the adjudicating authority at para 61, submitted that the authority has rightly found the statement of Shri Natarajan imputing him to penal consequence of Rs. 50,000/-.
4.1 Above two appellants and Revenue were heard on 13.1.2016. but, the appellants Shri S.Nainar, M/s. Vijay Aqua, R.Thiagarajan, at Sl. No. 3 to 5 of the cause list could not be heard on that date on mention that they shall argue on 20.01.2016 engaging a senior counsel. But record revealed that there were frequent adjournments taken on such plea and other pleas in the past in these cases and the appeals are made 10 years old. In the interest of justice, the appellants were given an opportunity to place their case on 20.01.2016 without default. They were further informed that if they fail on that date, appropriate order shall be passed on merit without issuing further notice.
5.1 On 20.01.2016, the appellants M/s. Vijay Aqua, Sri Nainar and Sri Thiyagarajan remained absent. Therefore they were granted last opportunity of hearing for 22.01.2016. Ld. Counsel Smt. Hema Muralikrishnan, along with Sri L. Muralikrishnan, Advocates, appearing on behalf of M/s. Vijay Aqua, in appeal No.E/614/2005, and Directors Shri S. Nainar in appeal No.E/613/2005 and Shri Thiyagarajan, in Appeal No.E/615/05 of the said company submitted that there is no dispute that the invoices appearing in annexure C1, C2, C3 of SCN were the bone of contention which were raised by appellant during the year 1998-99 as is apparent from para-18 of the OIO. Annexure C1 deals with the duty paid invoices. That had not given rise to any dispute in the adjudication. The invoices that appearing in annexure C2 gave rise duty demand of Rs. 67,03,159/- which is disputed. Similarly the invoice appearing in annexure C3 did not result in clearance of goods. However, duty of Rs.30,61,782/-paid thereon, was claimed for adjustment against the duty demand arising under annexure C2. If such relief is granted, appellant may not have further grievance. It was further submitted that penalty is not leviable for escaped accounting of goods.
5.2 Appellant relied on para-11of the impugned order which narrates the facts of clandestine removal of the goods. That remained undisputed by the appellant. What the appellant prayed for consideration is set off of the duty paid under Annexure-C3 against duty liability arose under Annexure- C2.
5.3 Innocence of Sri Nainar and Sri Thiyagarajan was pleaded to exonerate them from penalty.
6.1 On the contrary, Revenues submission was that para-15 of the OIO makes clear that adjudication was done fairly and reasonably by Adjudicating authority. There was a clear admission of the fact of evasion caused through different invoices by the appellant which is apparent form the records marked as file A & B seized in the cause of search. Relying on para-18 of the adjudication order, Ld. DR says that the observations made during investigation are as under which goes against the appellant:
18. As it appeared that VAP * Have availed modvat credit on all the inputs/raw materials purchased by them * Have cleared certain inputs to job workers under Rule 57F (4) of the Central Excise Act, 1944 * Have further cleared certain inputs under their own private challans without following the procedures as set out under Rule 57 F (4) of the CER 1944 for conversion into PVC pipes to MPPL * Have received back the finished PVC pipes after conversion from MPPL on chits prepared by MPPL and have not accounted the said receipts of the finished in any statutory records of VAP * Have raised central excise invoices with fictitious debit entries regarding payment of excise duty on such clearances (incorrect serial number of RG23 part ii) as there was no such debit entry for payment of excise duty on such clearances.
* Have cleared the goods without sufficient balance either in their RG23 part II PLA with an intention to evade payment of duty, * Have manufactured and cleared clandestinely finished excisable goods., viz., Rigid PVC pipes to TWAD board divisions located at various places as per the worksheet prepared in annexure-B without payment of appropriate duty due on the said goods and without following any central excise procedures. 6.2 Revenue says that all the annexures C1, C2 and C3 were the outcome of investigation and that was examined independently without any set off of the claim of the appellant that duty paid under Annexure C3 be adjusted against liability arose under Annexure C2. Relying on para 47 of the adjudication order, submission of learned DR was that C3 not being correlated to the demand under C2 there is no question of set off. Relying on para -47 and 51.1, ld. DR says that the appellants having failed before the Settlement Commission were given appropriate hearing by the adjudicating authority. But they avoided appearance for which on the basis of the material on record, the adjudicating authority proceeded to complete adjudication.
6.3. Relying on para 53 of the adjudication order, Ld. DR says that the issue before the adjudicating authority was as follows:-
The issue involved is that:-
A) VAP have availed modvat credit on all the inputs/raw materials purchased by them and have cleared certain inputs to job workers under Rule 57 F (4) of the Central Excise Act, 1944. They have further cleared certain inputs under their own private challans without following the procedures as set out under Rule 57 F (4) of the CER, 1944 for conversion into PVC pipes to MPPL. VAP have received back the finished PVC pipes after conversion from MPPL on chits prepared by MPPL and have not accounted the said receipts of the finished goods in any statutory records of VAP; that VAP have raised central excise invoices with fictitious debit entries regarding payment of excise duty on such clearances (incorrect serial number of RG 23 part II) as there was no such debit entry for payment of excise duty on such clearances. VAP have cleared the goods without sufficient balance either in their RG 23 part II or PLA with an intention to evade payment of duty; that VAP have manufactured and cleared clandestinely finished excisable goods, viz., Rigid PVC pipes to TWAD board divisions located at various places as per the worksheet prepared in annexure-B without payment of appropriate duty due on the said goods and without following any central excise procedures. In view of the above VAP are liable to pay Rs. 66,89,021/- minus Rs. 5,95,721/- being the duty involved on the clandestine removal of excisable goods under proviso to Section 11 A (1) of the Central Excise Act, 1944 read with Rule 9 (2) of CER, 1944 thereby rendering themselves liable for a penalty equal to the duty amount so not paid under Section 1 AC of the Central Excise Act, 1944 and liable to pay interest under Section 11 AB of the Central Excise Act, 1944, and liable for a penalty under Rule 173Q of CER, 1944;
B) MPPL received raw material under the private challans of VAP for conversion without following any procedures as set out in Rule 57 F (4) of the CER 1944 and have manufactured and cleared PVC pipes without accounting for the same in any of the statutory records and cleared the same clandestinely on certain chits without following any of the central excise procedures and without payment of central excise duty, thereby suppressed the above facts from the knowledge of the department with an intention to evade payment of duty and have contravened the provisions of Rule 9 (1), 52 (A), 53, 173G of Central Excise Rules 1944. MPPL are also liable to pay Rs. 5,95,721/- being the duty involved on the clandestine removal of excisable goods under proviso to sub-section (1) of Section 11 A of the Central Excise Act, 1944 read with Rule 9 (2) of the Central Excise Rules 1944. Thereby rendering themselves liable for a penalty equal to the duty amount so not paid under Section 11 AC of the Central Excise Act, 1944, and liable to pay interest under Section 11 AB of the Central Excise Act, 1944, and liable for a penalty under Rule 173 Q of CER 1944; that MPPL are also liable to pay Rs. 26,520/- being the duty involved in the seized goods under Section 11 A (1) of the Central Excise Act, 1944 read with Rule 9 (2) of the Central Excise Rules, 1944. And penalty under Section 11 AC of the Central Excise Act 1944 on the seized goods.
C) The show cause notice also proposed confiscation of the vehicle, plant and machinery at VAP and MPPL and to impose penalty on Shri R. Thiagarajan, Managing Director of VAP and on Shri S. Nainar, Director of VAP, Shri V. Natarajan, MD of MPPL, Shri H. D. Pandey owner of the vehicle bearing registration No. TN 72 5238.
6.4 Relying on paras 54, 54.5 and 61 of OIO, ld. AR says that what was the assessees case before the settlement Commission is depicted by learned adjudicating authority in his order. He has examined the issue independently and has drawn conclusion fairly on the basis of the materials on record testing the evidence. Duty evasion had occurred by the collusion of all the appellants and demand was quantifiable. The confessional statement recorded not being controverted, that was bound to be utilised against the respective appellants for completion of adjudication as well as raising of duty demand and penalty.
6.5 Learned AR relies on para 8 & 9 of the adjudication order and reiterated his stand stating that only due to investigation and recovery of incriminating materials, Revenue was able to detect evasion and determined the quantum thereof. Further, the duty was demanded correctly and penalties imposed. That should be confirmed.
7. In rejoinder ld. Counsel for the appellant M/s. Vijay Aqua submitted that while entertaining the prayer of the said appellant to exonerate them from the charge, Tribunal may be gracious to refer the matter to the Settlement Commission for settling the dispute between the parties. But learned AR says that there is no provision in law to make reference to the Settlement Commission when the matter is before Tribunal.
8. Heard both sides and perused the records.
9.1 M/s. Vijay Aqua was issuing resin to M/s. Mathura Polymers for manufacture of PVC pipes on job work basis by the later. On 24.2.1999, the Central Excise officers intercepted a truck bearing registration No. TN725238 carrying PVC pipes. Driver of the said truck Shri K. Govindaraj stated that 1000 numbers of pipes were loaded in the truck by M/s. Mathura Polymers without any duty paying document accompanying such goods for delivery to M/s. Vijay Aqua.
9.2 Sequel to the interception of the truck stated above, further probe into the matter revealed that one supervisor Shri Ch. Ramarao of M/s. Mathura Polymers Pvt. Ltd. was looking after the manufacture of the PVC pipes of that concern and the goods found in the truck by the investigation team during interception were manufactured by M/s. Mathura Polymers and that was consigned to M/s. Vijay Aqua. Many incriminating documents recovered from the premises of M/s. Mathura Polymers during search conducted included few chits demonstrating duty evasion by both parties colluding with each other. Physical inventory of goods taken in the premises of Mathura Polymers revealed that there was shortage of 2000 PVC pipes thereat. Shri Ramarao revealed that the shortage was due to dispatch thereof to M/s. Vijay Aqua by the said truck on the same day which was intercepted by investigation on 24.2.1999.
9.3 When Shri V. Natarajan, Managing Director of M/s. Mathura Polymers Pvt. Ltd. was examined on 25.02.1999. He revealed that what that was the statement given by Shri Ramarao was proper. However nothing came out from his statement to impute him to charge although he corroborated that the goods were cleared by M/s. Mathura polymers without payment of duty.
9.4 When aforesaid facts Came to the knowledge of investigation Shri Nainar, Director of M/s. Vijay Aqua was examined to discover truth. He fully agreed with the outcome of the investigation as recorded from the driver Shri K. Govindarajan, Shri Natarajan as well as Shri Ramarao. He also agreed that they will deposit the duty evaded amount of Rs.5,16,161/-.
10.1 The outcome of investigation above, paved the way for further enquiry into the affairs of M/s. Vijay Aqua Pipes. Inventory of the said concern was taken on 4.3.1999. The goods found from the intercepted truck was seized noticing that to be unaccounted and no duty paid thereon. When Shri R. Thiagarajan, Managing Director of M/s. Vijay Aqua was examined on 12.3.1999, he corroborated the outcome of investigation.
10.2 Two files were recovered from the factory of M/s. Vijay Aqua in the course of search. Examination thereof revealed that there were clandestine removal of PVC pipes made by Vijay Aqua without payment of duty in terms of documents borne by that file marked by investigation as file A. The extent of duty evasion arose out of documents in the file marked as A was Rs.67,03,159/-. There was another file recovered containing certain invoices. That file was marked by investigation as file B. Documents therein revealed that spurious/fabricated invoices were prepared to give an impression that the clearances exhibited by such invoices were prepared to adjust the clandestinely removed goods made through invoices in file A although there were no actual removal of goods made through such invoices contained in file B. The spurious/fabricated invoices in the file marked as B gave rise to the duty evasion of Rs.30,61,782/- in respect of false clearances depicted therein.
10.3 It was pleaded by Vijay Aqua that the invoices in file B were prepared to regularize the clandestine removals made covering duty evasion of Rs.67,03,159/- (outcome of contents in the file seized and marked as file A). Shri Thiagarajan confirmed that every material in the file was testimony of the clandestinely removed goods. He did not refute the contents of the statement recorded from Shri Nainar, Director of M/s. Vijay Aqua. Investigation came to know that the clandestine clearances made to different parties were actually cleared to Tamil Nadu Water and Drainage Board.
11. The appellant M/s. Vijay Aqua did not dispute the duty liability of Rs.67,03,159/- worked out from the contents of the file marked as file A before any fora till Tribunal and even that remained undisputed before Tribunal. Law is well settled that facts admitted need not be proved.
12.1 The appellant M/s. Vijay Aqua went before Settlement Commission to settle its dispute arose out of search proceeding. But its application was rejected. Adjudication was accordingly made on the basis of outcome of search proceeding. Appellants came in appeal before the Tribunal against the adjudication order.
12.2 Although there were several opportunities granted, by Tribunal, M/s. Vijay Aqua did not lay any cogent and credible evidence to prove that the materials contained in File A (which were according to the appellant the Annexure C2 documents) giving rise to the demand of Rs.67,03,159/- is unsustainable. That became admitted fact without controverting. The allegations of investigation and adjudication findings could not be defended. Therefore the demand on that count is to be sustained. It is ordered accordingly.
13.1 It was the prayer of the appellant M/s. Vijay Aqua Pvt. Ltd that the spurious invoices found from the file marked as file B showing duty deposit of Rs.30,61,782/- having been deposited to regularize the duty evasion of Rs.67,03,159/-, arose under the file marked as A, that may be adjusted. It may be stated that when duty evasion has occurred, the evader has no right to claim any relief of adjustment of duty paid preparing any fabricated/spurious document showing false clearances and law is well settled that one cannot take advantage of his own wrong. Therefore, appellant does not get any relief of adjustment of Rs.30,61,782/- against duty evasion of Rs.67,03,159/-.
13.2 It is settled principle of law that a construction which permits one to take advantage of ones own wrong or to impair ones own objections under a statute should be disregarded. Interpretation should as far as possible be beneficial in the sense that it should suppress the mischief and advance remedy without doing violence to the law [Ref: Commissioner of Customs (Prev.), Mumbai Vs. M. Ambalal & Co. 2010 (260) ELT 487 (SC)].
13.3 The appellant in one hand admitted the fraud committed against Revenue involving duty evasion of Rs.67,03,159/- but on the other hand pleaded adjustment of credit of Rs.30,61,782/- against such liability committing further fraud of fabrication of spurious invoices. That was done against illicit transactions. The incriminating evidence in File A and the spurious documents in File B were termed by the appellant as Annexure C2 and C3 giving rise to the demand of Rs.67,03,159/- and Rs.30,61,782/- respectively. That speak the premeditated design of the appellant to defraud Revenue. Therefore, extending any set off of duty under Annexure-C3 will be bonus to evasion.
14. There was no argument at all made by the appellant for M/s. Vijay Aqua on other consequence of adjudication. Therefore that part of adjudication remain untouched by this order. Accordingly those consequences stand confirmed and its appeal is dismissed. It was prayer of the Appellant M/s. Vijay Aqua that the Tribunal may send back the matter to Settlement Commission for their reconsideration. Without any provision in law in this regard, such prayer is dismissed.
15. So far as penalty of Rs.2 lakhs on Shri Thiagarajan, Managing Director and Rs.3 lakhs on Shri S. Nainar, Director of M/s. Vijay Aqua is concerned, there was no evidence led by them to prove their innocence. Investigation result revealed their active and conscious involvement in dealing with unaccounted raw materials and finished goods causing evasion of duty. Both of them colluded to defraud Revenue. Investigation substantiated its result with full proof leading incriminating evidence against all the appellants which remained uncontroverted. Therefore, penalty imposed on both the appellant is confirmed and their appeals dismissed.
16. So far as duty demand of Rs.5,95,721/- on M/s.Mathura Polymers is concerned, it is an established fact from the evidence on record that this concern was involved in removal of unaccounted job worked goods to Vijay Aqua and was an abettor to commit fraud against Revenue. Accordingly entire demand of duty of Rs.5,95,721/- levied on this concern is confirmed having been engaged in manufacture of duty evaded goods. So also the other consequences of law as adjudicated by the adjudication order remain untouched by this order except to the extent hereinafter dealt separately. Interest if any, payable, shall be recovered.
17. So far as imposition of penalty of Rs.50,000/- (Rupees fifty thousand only) on M/s. Mathura Polymers, under Rule 173Q of Central Excise Rules, 1944 is concerned, that is not desirable to be levied in view of penalty of Rs.5,95,721/- confirmed against that appellant imposed under section 11AC of Central Excise Act, 1944.
18. The penalty of Rs.50,000/- (Rupees fifty thousand only) levied on Shri V. Natarajan does not appear to be reasonable for no incriminating evidence recovered in the course of search against him. He rather brought out the fraud committed against Revenue brining out involvement of Shri Rama Rao who was in-charge of manufacture in Mathura Polymers and further corroborated by the statement of truck driver of Shri Govindarajan. Therefore his appeal is allowed waiving penalty levied on him.
19. It is made clear that apart from the specific order passed as above, the other consequences of law flowing from the adjudication order passed against M/s. Vijay Aqua and M/s. Mathura Polymers are confirmed.
20. In the course of hearing, learned counsel for M/s. Mathura Polymers argued that it shall be entitled to the small scale benefit. Law is well settled that fraud nullifies every solemn act and outcome of the fraud does not entitle the perpetrator of the fraud to claim any benefit under law. Accordingly no small scale benefit is admissible to it under any Notification.
21. It is surprising that the Authority below has not made any adjudication against the truck driver Shri K. Govindarajan and Shri Ch. Rama Rao. They are not brought to the fold of adjudication although their involvement in the chain of evasion was noticeable. That is concern of Revenue administration to examine that aspect.
22. In the result,
(a) Appeal of M/s. Vijay Aqua Pipes Pvt. Ltd. is dismissed and entire demand raised in adjudication with other consequences of law is confirmed.
(b) Appeal of M/s. Mathura Polymers Pvt. Ltd. is dismissed and entire demand raised by adjudication with other consequences of law is confirmed except waiver of penalty of Rs.50,000/- imposed under Rule173Q of Central Excise Rules 1944.
(c) Appeal of Shri V. Natarajan is allowed.
(d) Appeal of Shri S. Nainar is dismissed.
(e) Appeal of Shri S. Thiagarajan is dismissed.
(Pronounced in open court on 29.02.2016)
(R. PERIASAMI) (D.N. PANDA)
TECHNICAL MEMBER JUDICIAL MEMBER
BB/ RKP/Rex
1