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[Cites 24, Cited by 0]

Custom, Excise & Service Tax Tribunal

8. Ispat Industries Ltd vs Nasik on 11 March, 2015

        

 
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI


APPEALS NOS: 
1. E/722/2008-MUM
2. E/652/2008-MUM
3. E/733/2008-MUM
4. E/736/2008-MUM
5. E/737/2008-MUM
6. E/738/2008-MUM
7. E/656/2008-MUM
8. E/657/2008-MUM
9. E/658/2008-MUM
10. E/659/2008-MUM
11. E/653/2008-MUM
12. E/654/2008-MUM
13. E/655/2008-MUM
14. E/660/2008-MUM
15. E/632/2008-MUM
16. E/739/2008-MUM
17. E/634/2008-MUM
18. E/706/2008-MUM


[Arising out of Order-in-Original No: 07/CEX/2008 dated 25/02/2008 passed by the Commissioner of Central Excise, Nasik.]


For approval and signature:


     Honble Shri P.K. Jain, Member (Technical)
     Honble Shri Ramesh Nair, Member (Judicial)

	

1.
Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
:
No
2.
Whether it should be released under Rule 27 of CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
:
Yes
3.
Whether Their Lordships wish to see the fair copy of the Order?
:
Seen
4.
Whether Order is to be circulated to the Departmental authorities?
:
Yes



1. Bhagwati Steel Cast Ltd.


2. Mahendra Kumar Agarwal


3. K. D. Singh


4. Pawankumar Agarwal


5. Surahbhan Rajkumar Pvt. Ltd.


6. Shree Durga Iron & Steel Pvt. Ltd.


7. Manish Steel Corporation


8. Manish Agarwal


9. Geeta Metal Pvt. Ltd.


10. Vinay Kumar Kalani


11. Harkishan B. Soneji


12. Harshadbhai R. Desai


13. Mohammad A. Master


14. Mohsin H. Memon


15. Mori Chelabhai Devabhai


16. Daimand Roadways


17. Chandrakanth Nathwani


18. Ispat Industries Ltd.

Appellants
Vs


Commissioner of Central Excise 


Nasik

Respondent

Appearance:

Shri Gajendra Jain, Advocate for the appellant Nos. 1 to 3 Shri Vinod Awtani, Chartered Accountant for the appellant No. 4 to 6 Shri Vinay Sejpal, Advocate for the appellant Nos. 7 to 14 None for appellant Nos. 15 & 16 Shri Nikhil Kumar Rungta, Advocate for the appellant No. 17 Shri Roshil Nichani, Advocate for the appellant No. 18 Shri V.K. Agarwal, Addl. Commissioner (AR) for the respondent CORAM:
Honble Shri P.K. Jain, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 11/03/2015 Date of decision: 26/06/2015 ORDER NO: ____________________________ Per: P.K. Jain:
Brief facts of the case are that M/s. Ispat Industries Ltd., (appellant No. 18) is a manufacturer of H.R. coils having manufacturing units in Kamleshwar, near Nagpur and Dolvi/Taloja near Mumbai. During the manufacture of such coils trimmings are obtained which are in the form of coil only but of width of 1 to 3. Such H.R. trimmings are used in the manufacture of MS wires. Such wires, in turn, are used for the manufacture of nails, barbing, fencing, etc. The manufacture of MS wires, nails, barbed fencing wires etc. is carried out by large number of small scale units, who are availing SSI exemption. A large number of such units are located in and around Viramgam in the State of Gujarat. Such units are located mainly in Amreli, Keshod, Lakhator, Limbadi, Malpur, Mawa, Mehsana, Vijapur, Watwa, Viramgam, etc. In fact, Viramgam appears to be the main centre.

2. The HR trimmings are sold by appellant No. 18 by online auction process. Such H.R. trimmings are purchased by certain traders based in Viramgam (appellant Nos. 11, 12, 13, 14, 15 and 16) and also Indore based traders (appellant Nos. 9 and 10). Such HR trimmings are cleared by appellant No. 18 on payment of appropriate Central Excise duty and by issuing corresponding invoices indicating details of duty payments. Since the material is used by small scale industry which are not required to pay excise duty, CENVAT credit of duty paid on such H.R. trimmings are not available to SSI units. Duty paying invoices are therefore not usable by such SSI units. What was therefore, being done was that appellant Nos. 9 to 16 after purchasing the H.R. trimmings from appellant No.18 were in turn selling the same to hundreds of small scale units in and around Viramgam on cash basis and corresponding duty paying invoices were being sold separately to manufacturing units of MS Ingots located in Maharashtra. MS Ingots manufacturing units require iron and steel scrap, which in turn is available in the form of bazaar or scavenger scrap which is non-duty paid. Credit of duty paid on particular goods is available only if the goods covered by the invoice is used by the availer of credit. The invoices issued by appellant No. 18 were therefore, being manipulated to indicate the name of certain manufacturers of MS ingots or the first stage excise registered dealer (in the present case, by the main appellant or appellant No. 5 and 6). Thus, the main appellant, in the present case was purchasing the invoices without getting the HR trimmings and such HR trimmings were sold by appellant No. 9 to 16 to 100s of small scale units in and around Viramgam. Further, for selling the invoices, appellant No. 9 to 15 were using the services of appellant No. 4 to 8. Appellant Nos. 5 and 6 were controlled by appellant No. 4. Similarly, appellant No. 8 was managing the firm appellant No. 7. Further, appellant No. 5 and 6 were registered dealer with Excise department and hence whenever the transaction were dealt through them, then the corresponding invoices of appellant No. 18 would indicate the name of the buyer as appellant No. 5 or 6 and the consignee as appellant No.1. As far as appellant No. 7 and 8 are concerned, they were not registered with the excise department and hence their name was not appearing in any of the document. However appellant No. 4 to 8 were locating the customers for such invoices, who were purported buyer/consignee in CENVATable invoices without actually receiving the corresponding goods viz. H.R. Trimmings. They were also getting the money from appellant No. 10 to 15 in cash, through angadia service or otherwise and getting the same converted into Bank Draft etc. from appellant No. 1 or themselves in the name of appellant No. 18. Appellant No. 17 is a transport commission agent based in Nagpur. He was coordinating and ensuring that the goods cleared from appellant No. 18 unit at Kalmeshwar, Nagpur were transported to Viramgam and to the trader/SSI unit or as per the instruction of the broker/traders (appellants Nos. 9 to 16) or brokers/dealers (appellant Nos. 4 to 8). Appellant No. 17 was also ensuring that documents received from Appellant No. 18 are sent to main appellant or broker/dealers (appellant No. 4 to 8). Further, appellant No. 17 was handing over fictitious documents to the driver from Kamleshwar/Nagpur to Viramgam for any checking during transportation. Similarly, appellant No.16 is a transport-commission agent who was transporting the HR trimmings from appellant No. 18s unit located in Dolvi/Taloja near Mumbai to Viramgam and the corresponding documents to either appellant No.4 (or his companies) or appellant No. 8 or the main appellant. Further fictitious documents for safe passage from Dolvi/Taloja to Viramgam were also handled by him. Benefit of fraudulently availed credit was distributed between various appellants. Incidentally, more than 90% of the demands pertains to invoices pertaining to Kamleshwar, Nagpur unit and remaining 10% to Dolvi/Taloja unit.

3. Thus, the case of the Revenue is that the main appellant in the present case has availed CENVAT credit on the basis of duty-paying invoices issued by appellant No. 18 without receiving any HR trimmings covered by such invoices. The main appellant was, therefore, not eligible to take the CENVAT credit covered by such invoices, and the act is fraudulent in nature and is therefore liable to pay the credit so availed, interest and penalty. Case against appellant No. 2 to 18 is for penalty.

4. The case was initiated based upon intelligence and was investigated by the Central Excise intelligence. A number of places were searched and statement of various appellants as also other persons were recorded. During searches, certain incriminating documents were recovered, particularly from appellant No. 17s premises in Nagpur. The investigation also revealed that the name of a fictitious transporter i.e. Sidhivinayaka Road Carriers, Raipur was also being used by the two transporters to show as if some of the consignments were being handled by the said transporter. Investigation revealed that no transporter with the said name at the said place existed. Investigation also revealed that registration numbers used in some of the invoices are of three wheelers, autorikshaws, oil tankers or Government vehicles which would not be suitable for transporting scrap. Statements of few vehicle owners were also recorded which indicated that they did not transport any HR trimmings from Kalmeshwar / Dolvi to the main appellants factory in Nasik. Investigation also revealed that vehicles of M/s. Nar Narayan Transport of Ahmedabad were used for transporting H.R. trimmings from Kalmeshwar to Viramgam. Most of the H.R. Trimmings were transported using the vehicles having Gujarat registration number. Such vehicles are not allowed to transporting freight within Maharashtra i.e. in this case, from Nagpur to Nasik or Dolvi to Nasik. Such vehicles can only carry freight from Maharashtra to Gujarat. Statements of various persons confirmed that HR trimmings were sent to Viramgam and nearby areas and only invoices are made in the name of main appellant.

5. Based upon detailed investigation, a demand notice dated 03/05/2006 was issued to the main appellant for demand, interest, penalty as also to other appellants for penalty. After receiving the replies, allowing cross-examination, the Commissioner vide the impugned order adjudicated the case wherein he confirmed the demand, interest and imposed penalty on the main appellant. Further penalty was also imposed on all other appellants i.e. appellant No. 2 to 18 for their role in the fraudulent transactions.

6. The main submission of the learned counsel for the main appellant, appellant No. 2, who is the Managing Director of the main appellant and appellant No.3, who is the General Manager of the main appellant is that the statements of certain witnesses, whose statements have been relied upon, did not turn up for cross-examination. The learned counsels grievance was mainly with reference to Mr. Pawan Agarwal (appellant No. 4) and Mr. Manish Agarwal, (appellant No. 8) as also Shri A.P. Dutta, Investigating Officer of DGCEI, who investigated the present case. The learned counsel further submitted that the statements of witnesses who had not turn up for cross-examination have no evidentiary value and in support of the same he submitted the following case laws:

(i) Arsh Casting vs. Commissioner of Central Excise 1996 (81) ELT 276;
(ii) Nu-Trend Business Machines vs. Commissioner of Central Excise 2002 (141) ELT 119;
(iii) Meenakshi Re-Rollers vs. Commissioner of Central Excise  Final Order No. A/843-844/13/EB/C-II dated 17/09/2013 passed by CESTAT, Mumbai bench
(iv) Takshila Spinners vs. Commissioner of Central Excise 2001 (131) ELT 568;
(v) Milton Polyplast vs. Commissioner of Central Excise 2006 (201) ELT 372
(vi) Sunder Ispat vs. Commissioner of Central Excise 2002 (141) ELT 24 (AP)
(vii) Saraswati Rubber Works vs. Commissioner of Central Excise 2006 (205) ELT 993
(viii) Sharma Chemicals vs. Commissioner of Central Excise 201 (130) ELT 271
(ix) Hingora Industries vs. Commissioner of Central Excise 2014-TIOL-2461-CESTAT-AHM
(x) Senthil Kumar Soap Works vs. Commissioner of Central Excise 1997 (89) ELT 77

7. The next submission of the learned counsel for the first three appellants is that the impugned order has been passed on the basis of assumption and presumption without proper corroboration. The learned counsels submission is that no investigation was undertaken on aspects like different types, qualities and quantities of HR trimmings/scrap. Further, no investigation was undertaken at the beneficiary i.e. 400 Viramgam based SSI units who were the actual buyer and recipient of HR trimmings. Further, no investigation was taken up on the bazaar scrap supplied in place of HR trimmings/scrap. It was also submitted that investigation has not attempted to identify number of cases involving change in billing address of auctioned scrap. It was also submitted that the investigation does not reveal actual amount of cash transaction between Viramgam brokers and Mr. Manish Agarwal, who is alleged to have converted cash into Demand Draft for lifting the HR trimmings from M/s. Ispat Industries Ltd. Further, no investigation was conducted at the octroi post between Gujarat and Maharashtra border. It was also submitted that the vehicles mentioned in Annexure B to the show cause notice are not appearing on the Ispat Industries invoices, based on which credit was availed by the appellant. It was further submitted that none of the invoices based on credit was availed by the appellant and involved in the present case mentions M/s. Sidhivinayaka Road Carriers as transporter. Vehicles mentioned in the statements of Shri Sajjan Singh Ishwar Singh Saini and Shri K.B. Bhatia are not appearing in appellants books. It was also submitted that statements of Shri Pawan Agarwal, Director of appellants No. 5 and 6 are not relevant. It was also submitted that the statements of Viramgam based trader do not have evidentiary value. The learned counsel further submitted that the absence of lorry receipts does not prove that the scrap from Ispat Industries is not received by the appellants. It was submitted that the main appellant availed credit on the basis of valid invoices and nowhere the law prescribes that lorry receipts is a necessary documents. It was submitted that for movement of the goods within the State no lorry receipts is necessary and it is only optional and discretion of the parties. It was submitted that there are many consignments where they did not have lorry receipts and still have availed CENVAT credit and Revenue has not objected the same. It was also submitted that HR trimmings/scrap purchased by the appellants from Ispat Industries are lower in price than the HR trimmings and scrap required by wire drawing units in Viramgam. It was also submitted that reliance placed on the third party evidences, in the absence of corroborative evidence is inadmissible. It was further submitted that statement of Shri Manish Agarwal has no evidentiary value, that payments made by them during investigation was made under protest. It was submitted that certain scrap was received from Ispat Industries which was admitted by the Commissioner in the impugned order. It was also submitted that payment to M/s. Ispat Industries for lifting of scrap is through Demand Draft, that the other proceedings against the main appellant, which was quoted by the learned AR are irrelevant to the present case and submitted that the judgments quoted by the learned AR are not applicable to the facts of the present case. Further extended period cannot be invoked in the facts of the present case as all the facts were in the knowledge of the department and they were regularly filing the returns and their unit was being monitored by the Central Excise officials. The learned counsel also submitted the following case laws:

(a) Commissioner of Central Excise vs. Juhi Alloys 2013 (296) ELT 533;
(b) Commissioner of Central Excise vs. Tata Motors 2013 (294) ELT 394 (Jhar.)

8. It was also submitted that the denial of recovery of CENVAT credit should be restricted to invoices mentioned in Annexure B3 to the show cause notice as there is no corresponding evidence for the remaining demand and in support of this contention the learned counsel quoted the following case law:

(a) Alfa Ceramics Industries vs. Commissioner of Central Excise 2002 (145) ELT 454;
(b) Commissioner of Central Excise vs., Ratna Fireworks 2005 (182) ELT 382;
(c) Thumbay Holdings vs. Commissioner of Central Excise 2011 (272) ELT 225

9. It was further submitted that there were no dealing with Shri Manish Agarwal and Mr. Pawan Agarwal in financial year 2001-02. It was further submitted that imposition of penalty on appellant No. 2 and 3 are incorrect and is liable to be set aside, that CENVAT Credit Rules, 2002 was not in existence at the time of issuance of show cause notice and therefore the impugned order confirming penalty under the said Rules were illegal. Further penalties under Rule 26 is not imposable as there is no whisper or proposal about the confiscability of any excisable goods in the show cause notice nor any finding in the impugned order. Following case laws were submitted in support of this contention:

(i) Castrol India Ltd. vs. Commissioner of Central Excise 2008 (222) ELT 408;
(ii) Air Carrying Corporation vs. Commissioner of Central Excise 2008 (229) ELT 80 affirmed by High Court 2009 (248) ELT 175 (Bom.)

10. It was submitted that the appellant No.2 was not looking after the day-to-day affairs of the appellant-company and therefore imposition of penalty on him is incorrect and arbitrary. Further, appellant No.3 has not admitted anything and therefore no penalty should be imposed on him.

11. The learned counsel appearing for appellants Nos., 4, 5 and 6 submitted that there is no findings about the role of the appellants. Further, the department has not investigated the role of Viramgam based broker. It was further submitted that no penalty is imposable under Rule 26 as there is no proposal to confiscate the goods in the show cause notice and in support of the same, the learned counsel submitted the following case laws:

(i) Elengo Ravi 2006 (198) ELT 47 (Tri.-Bang.)
(ii) Santogen Silk Mills 2006 (199) ELT 69 (Tri.-Mumbai)
(iii) Cosmo Films Ltd. 2006 (202) ELT 131 (Tri.-Mumbai)
(iv) Vishal Shah 2007 (201) ELT 135 (Tri.-Mumbai)

12. It was further submitted that the impugned order levies penalties on the company as well as on the Director of the company and penalty cannot be levied on the two persons for the same offence. It was further submitted that a penalty of ` 10 lakhs has been imposed on the appellant No. 4 and the total CENVAT credit denied pertaining to the appellant is ` 1,89,940/- and therefore, penalty of ` 10 lakhs each on appellants Nos. 4, 5 and 6 is on a very high side and as against this a penalty of ` 10 lakhs is imposed on appellant No. 2 and 3 and in view of this position, the penalty should be substantially reduced.

13. The learned counsel for the appellant No. 5, in addition to the above, submitted that the statements of Shri Pawan Agarwal was recorded with reference to a computerized calculation based upon the records of Shri Chandrakant Nathwani and it was submitted that as per the statement, the violation was only in respect of invoices appearing in the reconciled computerized statement which is part of statement dated 11/10/2004. This statement is only for the period 2003-04. However, the show cause notice alleged contravention is for period beyond the same. It was also submitted that as far as the appellant No. 6 is concerned, only few invoices had been found in the statements and the show cause notice has extended the allegation to what was cleared after investigation, in respect of which no investigation was made.

14. The learned counsel for appellant No. 7 submitted that this is a proprietary concern of Shri Ramavtar Aggarwal and he has not given any power of attorney to his son Shri Manish R Aggarwal. Shri Manish R Aggarwal helps his father in the working of M/s. Manish Steel Corporation. He further submit that Manish Steel Corporation is nowhere connected with the commission agent business carried out by Shri Manish Aggarwal and the said firm is nowhere connected nor related or authorised Manish R Aggarwal to carry out any commission agent activity. As such the appellant is neither aware nor concerned with the action taken by Manish Aggarwal. It was submitted that there is no investigation at the firms end and there is no reason to impose such heavy penalty. For the reasons mentioned for the earlier appellants penalty under Rule 26 cannot be imposed on them.

15. Learned counsel for appellant No. 8 submitted that his client has carried out work of commission agents for finding customers for the excise invoices of goods so sold in on-line auction process. He further submitted that his role was only for finding customers who required Central Excise invoices and he has to pay by Demand Draft on their behalf to appellant No. 18. He further submitted that he has only helped in the sale of excise invoices or transfer of funds through angadia services and he has not dealt with the physical delivery of the goods. It was submitted that since his client has dealt with only invoices and payments he is not concerned with the excisable goods so cleared and, therefore, there is no question of imposition of penalty under Rule 26. Rule 26 was amended w.e.f. 01/03/2007 and for the prior period the same cannot be applied.

16. The learned counsel on behalf of appellant No. 9 submitted that they are trading in iron and steel and participated in online auction and appellant is only a bidder and not buyer or receiver of the said goods. He further submitted that the adjudicating authority in para 253 of the impugned order has observed that change in billing address is a common in the said business and it is not an irregular or illegal activity. It was further submitted that the show cause notice only makes a general allegation about all co-noticees and does not enumerate the exact role of the appellant. The learned counsel submitted that in the impugned order there is no finding that the goods are liable to confiscation and, therefore, the penalty under Rule 26 cannot be imposed and for this purpose he relied upon the following judgments:

(i) Air Carrying Corporation Ltd. vs. Commissioner of Central Excise 2008 (229) ELT 80;
(ii) M.N. Shah vs. Commissioner of Central Excise 2008 (232) ELT 110;
(iii) Castrol India Ltd. vs. Commissioner of Central Excise 2008 (222) ELT 408.

17. It was also submitted that penalty has also been imposed on the Managing Director under the same rule and penalty both on the Managing Director as also on the Company cannot be imposed. The learned counsel for appellant No. 9 submitted that his client has confirmed in the statement that they have not received any goods or any Central Excise invoices and has only participated in the auction and thereafter has transferred their right to procure the goods at fixed price by giving letters for change in the name which is permitted under the said auction scheme. It is submitted that they have not physically dealt with the goods or excise invoices and therefore penalty under Rule 26 cannot be imposed. Sub-rule (2) of Rule 26 was introduced w.e.f. 01/03/2007 and the case pertains to the period prior to that.

18. The learned counsel for appellants Nos. 11, 12, 13 and 14 submitted that they are bidder for online auction and the statements of all the four are similar. The learned counsel further submitted that they are neither Central Excise registered dealers nor have they availed CENVAT credit nor they have sold any goods to the main appellant. They have only transferred their right to lift the goods by giving the change in the billing address which is not illegal. The learned counsel submitted that no penalty can be imposed under Rule 26 on them for the reasons mentioned earlier.

19. The learned counsel for appellant No. 17 main contention was that, as far as his client is concerned, his client is only a commission agent and he gets a fixed amount for arranging the truck. He has no role in actual transportation of the goods or in any other manner. Since he is only a commission agent no penalty can be imposed on him under Rule 26 even the goods have been held to be confiscable and hence no penalty is even otherwise imposable under Rule 26.

20. The learned counsel for appellant No. 18 submitted that his client has paid the duty on the H.R. Trimmings and have followed all the excise laws strictly and the goods have been cleared after payment of appropriate duty and the goods are therefore not liable to confiscation under Rule 25 and therefore, there is no question of any penalty on his client under Rule 26. The learned counsel also quoted few judgments in their own case wherein no penalty was imposed on his client.

21. The learned Additional Commissioner (AR) reiterated the various points made in the investigation. The learned ARs first submission is that the learned counsel for the main appellant has not stated anything in defence of the allegation made against the main appellant but has only attempted to find out some imaginary missing links in the investigation. The learned AR submitted that the present appellant in the past has been found to avail CENVAT credit on the basis of fake invoices in the case reported in 2013 (293) ELT 417. It was further submitted that except the fact that the appellant has taken CENVAT credit based on the invoices issued by Ispat Industries, appellant has not produced any document whatsoever to prove the receipt of H.R. trimmings. There was no gate register to indicate the receipt of the goods. There was no goods receipt note. There was no weighment slip from an independent weighing bridge. There was no transport documents whatsoever to indicate the transportation of the goods from Kalmeshwar/Nagpur or Dolvi/near Mumbai to their unit in Nasik. In the absence of any of these documents it cannot be said that the goods covered by the said invoices were transported to appellants unit and received by the appellant. It was further submitted that one of the points made in the show cause notice was that most of the vehicle numbers are of Gujarat registration. Any vehicle which is of Gujarat registration cannot undertake transportation of the goods from one place to another place within Maharashtra. Such transportation can be done by vehicle having Maharashtra registration alone. Not a single word has been uttered in respect of this allegation. Even in respect of few vehicles which were having registration of Maharashtra, the owners of the vehicle in their statements had clearly stated the truth. It is not in dispute that the appellant himself has never participated in the online auction. It is also a fact that in all the online auction bidders were mainly from Viramgam or Indore. The reason for Viramgam is that the HR trimmings were required in the units located in and around Viramgam. It was also submitted that if we carefully go through the statements, the appellant No. 3 who is the General Manager of the main appellant, in his initial statement, have stated in his statement that the transportation is arranged by M/s. Ispat Industries and M/s. Ispat Industries have paid for the transportation of the goods. This is totally contrary to the facts in the joint confrontational statement recorded. Officials of M/s. Ispat Industries have stated that they have not arranged any transportation and there is no question of paying the freight charges by them. It is thereafter that the appellant No.3 started claiming that they were paying the freight charges. However, except making bald statements no consignmentwise details of the freight amount paid and the corresponding documents such as voucher, etc. have been produced at any point of time, either during adjudication or before this appellate Tribunal. The learned AR further submitted that Rule 7 of the CENVAT Credit Rules cast obligation on the appellant to prove that the CENVAT availed by him is corresponding to the goods received by him. The learned AR further submitted that the department has permitted cross-examination of all the persons including investigating officer and it is only a few people who did not turn up when the cross-examination was carried out. The main person Shri Chandrakant Nathwani, appellant No. 17 who has transported more than 90% of the goods stood to his statement. The learned AR further submitted that even without the cross-examination of the said official and other persons case stands on its own leg and therefore no harm or prejudice has been caused to the main appellant.

22. As far as appellant No. 2 and 3 are concerned the learned Additional Commissioner (AR) submitted that these people were the Managing Director and General Manager who were looking after the day to day affairs of the company and such thing cannot happen without their active connivance and therefore they are liable to penalty. As far as appellants Nos. 4, 5, and 6 are concerned, they are the people who were instrumental or link between the invoice seller and the invoice purchaser i.e., between the bidders and the main appellant and without their active help offence of this complexity could not have taken place and therefore they dealt with the offending goods and therefore liable to penalty. Similar is the position in respect of appellants Nos. 7 and 8. As far as appellants Nos. 9 to 15 are concerned they are all bidders/traders based in Viramgam and after online bidding they have issued letters to the appellant No. 18 to change the name of buyer/consignee. It is because of their letter that the above fraud has taken place. It is they who wanted to sell the CENVATable invoices to persons who wanted the invoices and they sold the goods separately to persons who wanted only the goods and not the invoices. Learned AR submitted that they were actively involved with acquiring, transferring, purchasing, selling of the goods and perpetuated the fraud and they have been correctly imposed penalty under Rule 26. As far as appellant No. 16 and 17 is concerned, the learned AR submitted that both the transporters have actively connived inasmuch as the H.R. trimmings were sent to Viramgam based dealers and fraudulent documentation was prepared for safe transportation from Maharashtra to Gujarat. It was submitted that appellant No. 17 has actively connived and he was the person who at all time was handing over the letters for change in the name of buyer consignee to M/s. Ispat Industries Ltd., Kalmeshwar/Nagpur. It was also submitted that these people have issued document in the name of fake transport company based in Raipur, Chatishgarh, namely, Sidhivinayaka Road Carriers when no such transporter exist at that address. This was to cover up the illegal activities. Appellant No. 17 and 16 were concerned in the transportation of the offending goods. It was also submitted that as far as appellant No. 18 is concerned, it is on record from the document recovered from them that they were aware that the goods are being transported and are going to Gujarat and are being used by Viramgam based small scale units. There was, therefore, no reason for them to indicate that the consignees as the units located within Maharashtra. In fact from the documents recovered during the search, it is very clear that at one time due to heavy rain in the Viramgam area, they did not get good biddings. This itself shows that they were fully aware that their HR trimmings are being used in the Viramgam units and, therefore, the name of the consignee should have been some units based in Viramgam. But their document/invoices showed Maharashtra based Ingot manufacturers / steel furnace units. Further, almost all invoices indicate Gujarat registered vehicle who are not permitted to move freight from one place to other in Maharashtra. Some of the vehicles were three wheelers, oil tankers, etc. In view of the said fact, penalty is impossible on appellant No. 18. The learned AR relies on the judgment of this Tribunal in the case of main appellant Bhagwati Steelcast Ltd. vs. Commissioner of Central Excise, Nashik 2013 (293) ELT 417 (Tri.Mumbai.). The learned AR further submitted following case laws in support of his various contentions:

(a) Sanjay Vimalbhai Deora vs. CESTAT 2014 (306) ELT 533 (Guj.);
(b) Joaquim Alemao vs. Commissioner of Customs 2005 (188) ELT 231.

23. We have carefully considered the rival submissions of both the sides. The main allegation against the appellant is that they have taken the CENVAT credit without receiving the goods covered by the corresponding invoices. A somewhat similar issue has come up before this Tribunal in another case of main appellant viz. Bhagwati Steelcast Ltd. vs. CCE, Nashik reported in 2013 (293) ELT 417. In para 73 of the said order, this Tribunal has explained the scheme of the cenvat credit and is reproduced below for ready reference:-

73. It follows from the above that the? method of implementation adopted in India is the tax credit method. This economic concept of Value Added Tax has been encapsulated within the framework of Central Excise law as follows :
73.1 Under Section 37 of the Central? Excise Act, 1944, the Central Government has been given the power to make rules to carry out, in effect, the purposes of the Act. Clauses (xvi)(a) and (xvi)(aa) of sub-section (1) of the said Section provides for making of rules to provide for mechanism for credit of the duty paid or deemed to have been paid on the goods used in or in relation to the manufacture of the goods and the credit of service tax leviable under the Finance Act, 1994 used in or in relation to the manufacture of excisable goods.
73.2 Rules 11 of the Central Excise? Rules, 2002 stipulates that no excisable goods are to be removed from a factory or warehouse except under an invoice signed by the owner of the factory or his authorised agent. Sub-rule (2) of the said Rule stipulates that the invoices shall be serially numbered and shall contain registration number, address of the concerned Central Excise Division, name of the consignee, description, classification and date of removal, mode of transport and vehicle registration number, rate of duty, quantity and value of goods and the duty payable thereon. The proviso to the said rule provides the dispensation of the copies of the invoices i.e., original copy for the buyer, duplicate for the transporter and triplicate for the assessee. Sub-rules (4) to (6) deal with certain procedural requirements relating to invoices and sub-rule (7) provides that the provisions of said Rule shall apply mutatis mutandis to goods supplied by a first stage dealer or a second stage dealer. Similar provisions were stipulated in the Central Excise Rules, 2001 and also the Central Excise Rules, 1944 to the same effect.
73.3 The Cenvat? Credit Rules, 2004, deal with the procedure relating to availment of credit. As per Rule 3, a manufacturer or a producer of final products or a provider of taxable service shall be allowed to take credit (hereinafter referred to as Cenvat credit) of the duties specified therein paid on any inputs or capital goods and received by the manufacturer for use in or in relation to the manufacture of final products. Rule 4 of the said Rule stipulates that Cenvat credit in respect of inputs may be taken immediately on receipt of the inputs in the factory of the manufacturer or in the premises of the provider of output service. Rule 9 of Cenvat Credit Rules, 2004 deals with the documents and accounts on the basis of which the Cenvat credit can be taken and this includes an invoice issued by a manufacturer, an importer, a first stage dealer or second stage dealer. Sub-rule (2) further stipulates that no Cenvat credit shall be taken unless all the particulars as prescribed under the Central Excise Rules, 2002 or the Service Tax Rules, 1994 are contained in the said document. In case any particulars are missing, Cenvat credit may be taken only with the prior approval of the jurisdictional Asst./Dy. Commissioner of Central Excise, if he is satisfied that the goods or service covered by the document have been received and accounted for in the books of account of the receiver. Sub-rule (4) of the said rule further stipulates that the Cenvat credit in respect of input or capital goods purchased from a first stage dealer or second stage dealer shall be allowed only if such first stage dealer or second stage dealer, as the case may be, has maintained records indicating the fact that the input or capital goods was supplied from the stock on which duty was paid by the producer of such input or capital goods and only an amount of such duty on pro rata basis has been indicated in the invoice issued by him. Sub-rule (5) further stipulates that the burden of proof regarding the admissibility of the Cenvat credit shall lie upon the manufacturer or provider of output service taking such credit. Similar provisions existed in Rule 57A of the Central Excise Rules, 1944, Rule 7 of the Cenvat Credit Rules, 2001 and 2002.
73.4 From the above? provisions of law, it becomes evident that to avail Cenvat credit, the inputs or capital goods should have suffered the stipulated duty by the producer/manufacturer of such goods and the goods should be received by the manufacturer availing credit in his factory and the inputs or capital goods so received should be utilised in or in relation to the manufacture of final products. In respect of inputs received from a first or second stage dealer, an additional condition is stipulated to the effect that the inputs or capital goods were supplied from the stock on which duty was paid by the producer of such goods and only an amount of such duty on pro rata basis has been indicated in the invoices issued by him. It is further stipulated that the burden of proof regarding admissibility to Cenvat credit shall lie upon the manufacturer taking such credit. Sub-rule (2) of Rule 7 of the Cenvat Credit Rules, 2001/2002 (as they stood at the relevant time) further stipulated that a manufacturer/producer taking Cenvat credit on inputs or capital goods shall take all reasonable steps to ensure that the inputs or capital goods in respect of which he has taken Cenvat credit are goods on which appropriate duty of excise as indicated in the document accompanying the goods has been paid and the manufacturer shall be deemed to have taken reasonable steps if he satisfies himself about the identity, name and address of the manufacturer/supplier issuing the document specified in the said Rule either from his personal knowledge or on the strength of a certificate given by a person with whose handwriting or signature he is familiar with or on the strength of a certificate issued to the manufacturer or supplier by the jurisdictional Superintendent of Central Excise.
73.5 The Central? Excise duty regime underwent a significant change with effect from 1-10-1996. Under the new regime, assessment of the tax liability by the department which hitherto existed was done away with and self assessment facility was extended to the assessees.
73.6 Paragraphs 134? and 135 of the Finance Ministers Budget Speech for the year 1996-97 lucidly explains the new regime which was introduced.
134.?Our excise procedures are outdated and not in tune with the times. They need to be modified. They should encourage voluntary compliance with tax laws by the tax payers. With effect from 1st October, 1996, assessees would no longer be required to furnish copies of invoices along with the monthly returns. All that they would be required to furnish to the excise department will be a simple Return indicating the duty paid on self-assessment basis. Wherever possible the assessees computers could also be linked to the Departments computers for on line assessment.
135. I also propose to introduce a scheme of selective audit by?the excise officers and dispense with the existing scheme of routine examination and checking of returns and documents furnished by the assessees. This scheme would also come into force from 1st October, 1996. While introducing the new regime, in para 138 thereof, the Finance Minister also observed as follows :
138. The Modvat scheme which provides for duty credit on inputs?and capital goods has been liberalised considerably over the past few years. Still, there are problems about the coverage of certain inputs and capital goods. I propose to clarify the scope of eligible capital goods by specifying the heading and sub-headings of the tariff relating to capital goods in the Modvat Rules. It is also a matter of concern that there is misuse of the Modvat credit scheme. At present, Modvat invoices can be issued by any dealer registered with the excise department and this facility is reportedly being misused. Therefore, I propose to restrict the issue of Modvatable invoices by dealers up to two stages. Suitable provisions are also being made in the Modvat Rules for charging of interest in the case of wrong availment of Modvat credit and for mandatory penalty for misuse of Modvat facility. It is in this background and context, the issues involved in the present case need to be examined. At the outset we observe that the main appellant is engaged in the manufacture of MS ingots for which they require iron and steel scrap. The goods involved in the present case are HR trimmings. These are nothing but HR coils having varying width from 1 to 3. These goods are not iron and steel scrap in the conventional sense. These may be waste and scrap as far as manufacturer M/s. Ispat Industries is concerned but can be used for the manufacture of MS wires which has vide variety of applications like in the manufacture of nails, fencing wire, etc. It is also common knowledge that such HR trimmings fetch higher value than the scavenger scrap or bazaar scrap. There is no reason for any prudent MS ingots manufacturer to use such HR trimmings in coil form for melting. We find that the main appellant has not produced any independent evidence whatsoever to support that the H.R. trimmings covered by the invoices were received by them except the copy of the invoices. We are not convinced that any manufacturer will receive goods worth crores and crores of rupees without any transport documents whatsoever. The main appellants claim that he has paid for the transportation of the goods, but during the original adjudication as also before this Tribunal, main appellants has not produced consignmentwise details supported by any voucher etc. of any amount paid to any transporter of such H.R. Trimmings. In fact, if the H.R. Trimmings were received by them, there was no reason that the appellant could not have produced such transportation details during the adjudication of the case or before this Tribunal. It is strange that the General Manager of the main appellant in the initial statement claimed that the transportation is being arranged by M/s. Ispat Industries and the freight is being paid by them. It was only during confrontational joint statement that he was compelled to admit that transportation is not being arranged by M/s. Ispat Industries and they are not paying freight charges. From that time onwards main appellant started claiming that they themselves were paying freight charges. We also find that it is a normal established practice that the truck driver would collect the freight charges either from the consignor or from the consignee or at the actual place of delivery. In the present case, all the five traders/bidders based in Viramgam have admitted that the freight charges were being paid by them or the buyer of the goods when such HR trimmings were being unloaded at Viramgam or nearby area. These statements leads to far more credibility than the bald claim of the main appellant. Further, we find that it is undisputed that consignments were transported through the trucks having Gujarat registration Number. For the transportation of the goods within the State of Maharashtra such trucks cannot undertake this activity. None of the appellants have contradicted this allegation or said anything about this allegation. We also find that the incriminating documents recovered from M/s. SKT i.e. the office of the transport commission agent Shri Chandrakant Nathwani (appellant No. 17) clearly indicates the vehicle number, date, weighment of the goods, the destination where the goods are unloaded and other details. Shri Nathwani in his statements explained the contents of this register and have admitted that consignments were invariable going to Viramgam. It is also clear that in large number of cases Shri Chandrakant Nathwani was coordinating with M/s. Ispat Industries Ltd.s office to get the name of the consignee/buyer changed based upon the letter from the original bidder. The Register A5 and A7 recovered from M/s. SKT are reliable evidences. Shri Chandrakant Nathwani during cross-examination stuck to his statement. Even the learned counsel for the main appellant has admitted during the hearing that he cannot deny the irregular availment of credit in respect of the consignments found mention in the two registers. It is noted that the two registers are for a very limited period and the registers for the remaining period could not be recovered during the search. Similar position has emerged from M/s. Diamond Roadways (appellant No. 16) who were the transporter in respect of such HR trimmings cleared from M/s. Ispat Industries factory in Dolvi, Taloja. We also note that all the bidders have admitted in their statement that the goods were sold in Viramgam or nearby area and for selling invoices they got in touch with Shri Pawankumar Agarwal or Manish Agarwal i.e. appellant No. 4 and 8, who in turn found the customers for the CENVATable invoices. It is also clear from the statement that many a times the cash was sent to appellants Nos. 4 and 8 to get the same converted into Demand Draft and submitted to M/s. Ispat Industries Ltd. Sometime, even the bidders themselves have got the demand drafts and sent either to these brokers or to Mr. Chandrakant Nathwani. The main submission of the learned counsel that Shri Pawankumar Agarwal, Shri Manish Agarwal and Shri A.P. Dutta, Investigating Officer were not made available for cross-examination, we note that the said persons were called by the adjudicating Commissioner but did not turn up. We note that Shri Pawankumar Agarwal and Shri Manish Agarwal are the co-noticees in this case. Even if we ignore the statements of these two co-noticees, even then whole case would stand on its own foot. We also note that no statements of Shri A. P. Dutta were recorded. Even Shri Duta presented himself on one occasion for cross-examination but could not be cross-examined. We also note that number of other officers were offered for cross-examination and were cross-examined. We do not find any consequence coming out from such cross-examination. We have also gone through the various case laws submitted by the appellant relating to cross-examination. We find, as mentioned earlier, the two persons who did not turn up for cross-examination are the co-noticees and in view of this Tribunals decision in the case of Maya Mahal Industries reported in 1995 (80) ELT (Tri.) and also in view of Article 20(3) of the Constitution of India, the two cannot be forced for cross-examination. This Tribunal in the case of Jagdish Shanker Trivedi reported in 2006 (194) ELT 290 (Tri.-Del.) has observed as under:-
7.?We first take up the contention that there was denial of principles of natural justice by not offering the witnesses for cross-examination by the appellant Ashish Kumar Chaurasia, despite his request that all witnesses should be examined. We have already noted that the appellant, Ashish Kumar Chaurasia had cross-examined two officers on 19-6-1995. It also transpires that summons were sent to Ram Avatar Singhal, Ram Kumar Mishra and Ram Bilas Mandal (driver), Jagdish Shanker Trivedi and Dilip Kumar Singhal, who refused to be cross-examined on the ground that they cannot be compelled to give incriminating evidence against themselves in view of their fundamental right guaranted by Article 20(3) of the Constitution under which no person accused of any offence shall be compelled to be a witness against himself. Section 124(c) which provided that no order confiscating any goods or imposing any penalty on any person shall be made under Chapter IV unless the owner of the goods or such person is given a reasonable opportunity of being heard in the matter, does not specify any right of cross-examination.

24. In any case, even if we ignore their statements, we do not see that it will make any difference in the conclusion. In view of this position we reject the contention of the learned counsel for the appellants, as far as it relates to cross-examination.

25. Another contention of the learned counsel was that order was based upon assumption and presumption without corroboration. We are unable to accept this view. In fact we find that the case was very well investigated and is based upon incriminating documents. All the bidders, transporters, brokers, etc. have been covered. Even some of the vehicle owners were called and they have submitted that their vehicles were not used for transportation of HR trimmings from Kalmeshwar/Dolvi to Nasik. We also note that the enquiries with the RTO has indicated the use of oil tankers, autorikshaw, etc. for the transportation of scrap. May be in this particular case, the number of such vehicles are few but the fact is that such modus operandi was being used and few numbers will not make any difference. While it may be true that there is no requirement under the Central Excise Rules to keep the lorry receipts, but when the transportation of the goods is being questioned and the Revenue has been able to produce a catena of evidences, the appellant was required to produce at least some independent evidences relating to the transportation of the goods from Nagpur/Dolvi to their unit. We find that the appellants have not been able to produce any document to support their claim that the goods were transported from Nagpur/Dolvi to Nasik and received in their factory. Even otherwise, we do not find that it will make any commercial sense for the main appellant to use HR trimmings instead of bazaar or scavenger scrap. We also note that all these evidences were shown to the Managing Director of the main appellant, who after going through the statements and other evidences, could not say anything as to why these are wrong. On the contrary, he accepted and even made a part payment of duty liability and promised to pay the remaining amount.

26. The learned counsels contention that there is no investigation on alleged movement of scrap lifted in the name of the appellants from Ispat Industries to SSI units located at Viramgam, we do not find any force in the said contention as records recovered from transporter/transport commission agent proves beyond doubt, and statements of the transporter Shri Chandrakant Nathwani, of M/s. SKT, Nagpur, Diamond Transports, Mumbai and M/s. Nar Narayan Transport, Ahmedabad, (who actually transported in large number of cases) were recorded. What is required to be proved in this case is that H.R. Trimmings were not received by the main appellant. This is sufficient. The fact that enquiries were not made through the sales tax check post also does not make the case weak. We also do not find any substance in the appellants contention that the reliance placed on the statements of Shri Vishnubhai Patel, Manger of M/s. Nar Narayan Transport and records seized from them is incorrect. In fact, in our view, reliance should be placed on these statements as M/s. Nar Narayan Transport were the actual transporter of the goods from Kalmeshwar to Viramgam. Similarly, statements of Viramgam based traders have evidentiary value. Similarly we find other contentions are baseless. Appellants counsel instead of presenting any positive evidence to support that HR trimmings have indeed transported to this factory and received by them is only raising baseless doubts relating to transportation to Viramgam.

27. We have also gone through the case laws mentioned by the learned counsel in this respect. We do not find that the facts of the present case are anywhere comparable with the facts in those cases. We also note that the Managing Director of the appellant-firm has admitted that he knew Shri Manish Agarwal and Shri Pawankumar Agarwal and in our view the contention that the statements of Shri Manish Agarwal and Shri Pawankumar Agarwal is of no consequences is required to be outrightly rejected. The fact that the payment to M/s. Ispat Industries is made through Demand Draft does not in any way negate the fact that the goods were not received by the appellant but were diverted to Viramgam. Since M/s. Ispat Industries Ltd. wanted payment through Demand Draft the drafts were made sometime by the appellant after receiving the cash through Angadia services or the Demand Drafts were made by Shri Pawankumar Agarwal or Shri Manish Agarwal, and sometime even the bidder based in Viramgam. Making the payments through banking channel is only part of manipulation to give colours of genuine transaction.

28. The learned counsels submission that extended period of limitation is not applicable, this contention is required to be outrightly rejected as this is a case of fraudulent availment of CENVAT credit by producing documents without receiving the goods. The fact that the unit was audited will not make any difference as during audit all that is checked up is the invoices with reference to the credit availed. We find that the whole case is based upon the information received and such modus operandi cannot be detected during the audit. The fact that the appellant was only receiving the invoices and not the goods was never in the knowledge of the department. Even otherwise, even if it is in the knowledge of the department, it is an act of fraud and extended period of five years will be available to the Revenue irrespective of the knowledge of the Revenue. We have also gone through the case of Commissioner of Central Excise vs. Juhi Alloys (supra). The facts of that case is totally different. In the present case it is not a question of taking reasonable steps by the appellant but it is a case of fraudulent availment of CENVAT credit without receiving goods. We have also gone through the judgment in the case of Commissioner of Central Excise vs. Tata Motors (supra). The facts in that case are totally different as mentioned earlier.

29. The learned counsel also submitted that the demand may be limited to based upon A5 and A7 register. We do not find any merit in the said contention. The said two documents were recovered and are for a limited period. However, the same modus operandi was being followed and the investigations are based upon the details of the auction conducted by M/s. Ispat Industries Ltd, the invoices on which the appellant has availed credit and the name; details of the online bidder and thereafter change of the name from online bidder to the present appellant. We do not find any merit in the submission of the appellant and is therefore required to be summarily rejected. We have gone through the three judgments namely, Alfa Ceramics Industries vs. Commissioner of Central Excise 2002 (145) ELT 454; Commissioner of Central Excise vs. Ratna Fireworks 2005 (192) ELT 382 and Thumbay Holdings vs. Commissioner of Central Excise 2011 (272) ELT 225 and the facts in all the three cases are totally different. In the present case, the appellant has not been able to produce any evidence whatsoever in respect of any consignment covered by the notice which has been received by them and therefore, we uphold the impugned order in respect of appellant No.1 and reject the appeal.

30. The learned counsel also submitted that penalties on Shri Mahendra Kumar Agarwal, appellant No.2 who was the Managing Director and Shri K.D. Singh, General Manager, is liable to be set aside. We do not find any merit in the contention of the appellants. We find that in the present case, Central Excise invoices indicated the name of the main appellant as the consignee which is far from the truth. In all the cases covered, the real consignees were Viramgam based traders. Since the invoices did not reveal the true name of the consignee and the consignee names were got changed with the willful intention to avail the CENVAT credit fraudulently and thereby evade payment of duty, we hold that the goods are liable to confiscation under Rule 25(1)(d) and, therefore, penalties under Rule 26 on appellants No.2 and 3 are correctly imposed and accordingly their appeals are rejected.

31. As far as Shri Pawan Kumar Agarwal, appellants Nos. 4, 5 and 6 are concerned, we note that these appellants were instrumental in finding the buyer of the CENVATable invoices thereby helping in the fraudulent availment of the CENVAT credit by the main appellant. Appellant No. 5 and 6 name were appearing in the invoices of M/s. Ispat Industries Ltd. They were, therefore, concerned in dealing with the excisable goods which they knew are liable to confiscation and therefore, penalty under Rule 26 is correctly imposed and we uphold the same. As far as the quantum of penalty is concerned, we find force in the argument of the Consultant of these three appellants. We accordingly, reduce the penalty amount on appellant No. 2 to ` 4 lakhs and on appellants Nos. 5 and 6 to ` 2 lakhs each.

32. As far as appellant No. 7 is concerned, learned counsel for the appellant has submitted that the said company was owned by Shri Ramavtar Aggarwal who was not concerned with any of these transactions and all these transactions have been done by Shri Manish Agarwal in his personal capacity. We find from the appeal filed by M/s. Manish Steel Corporation that M/s. Manish Steel Corporation is a sole proprietary concern of Shri Ramavtar Aggarwal. It is also stated in the statement of fact that the said concern is engaged in the business of brokering of various iron and steel products and the business activity is being looked after by Shri Manish Agarwal, son of proprietor Shri Ramavtar Aggarwal, who was holding the power of attorney of the concern. In view of the said averment in the appeal memorandum we do not find any substance in the arguments of the learned counsel. Since Shri Manish Agarwal has also acted on behalf of M/s. Manish Steel Corporation in diverting the goods to Viramgam and invoice to the main appellant, the goods are liable to confiscation and the penalty imposed on M/s. Manish Steel Corporation is upheld. However, penalty imposed on M/s Manish Steel Corporation is reduced to ` 8 lakhs.

33. As far as Shri Manish Agarwal is concerned he was definitely concerned in dealing with the said goods and actively involved in diverting the goods to Viramgam and invoices to main appellant. These goods are liable to confiscation and we therefore, uphold the penalty imposed on him  under Rule 26. Penalty imposed on Shri Manish Agarwal is, however, reduced to ` 8 lakhs.

34. As far as appellants Nos. 9 to 15 are concerned, they are all bidders, who thereafter sold the goods to the Viramgam based traders/sellers/manufacturing units or sold the right to lift the goods and also helped in getting the CENVATable invoices issued in the name of the main appellant. Rule 25 and Rule 26 are as under:

Rule 25 - Confiscation and Penalty.
(1)?Subject to the provisions of Section 11AC of the Act, if any producer, manufacturer, registered person or a warehouse or a registered dealer, -
(a) remove any exciseable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or
(b) does not account for any exciseable goods produced or manufactured or stored by him; or
(c) engages in the manufacture, production or storage or any exciseable goods without having applied for the registration certificate required under section 6 of the Act; or
(d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty, then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer, as the case may be, shall be liable to a penalty not exceeding the duty on the exciseable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or [rupees two thousand] whichever is greater.
(2)?An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. Rule 26. Penalty for certain offences :
(1)?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 these rides, shall be liable to a penalty not exceeding the duty on such goods or [two thousand rupees], whichever is greater.
(2)?Any person, who issues-
(i) an excise duty invoice without delivery of the goods specified therein or abets in making such invoice; or
(ii) any other document or abets in making such document, on the basis of which the user of said invoice or document is likely to take or has taken any ineligible benefit under the Act or the rules made thereunder like claiming of CENVAT Credit under the CENVAT Credit Rules, 2004 or refund, shall be liable to a penalty not exceeding the amount of such benefit or five thousand rupees, whichever is greater. In the present case, the purported consignee as per the invoice was different from the actual consignee who were Viramgam based traders. Thus, the manipulation in the name of consignee was done with the sole purpose of evading excise duty by mis-using the credit of duty paid on the HR trimmings. In view of the said position, in our view, the goods are confiscable under Rule 25(1)(d) and penalty is also imposable on the appellants.

35. We also note that the Honble High Court of Gujarat in the case of Sanjay Vimalbhai Deora vs. CESTAT reported in 2014 (306) ELT 533 (Guj.), has held that a person would render himself liable for penalty for indulging in activities mentioned in Rule 26 of the Central Excise Rules, 2002, even if goods are not confiscated or had not been rendered liable for confiscation. We also note that as in that case, even in the present case all the appellants have full knowledge about every stage of removing, keeping, selling, concealing the excisable goods and the same would not have been possible without their active participation and connivance with each other. We also note that the said judgment of the Honble Gujarat High Court has been upheld by the Honble Supreme Court as reported in 2014 (309) ELT A131 (SC). Further, the Honble Punjab & Haryana High Court in the case of Vee Kay Enterprises vs. CCE reported in 2011 (266) ELT 436 (P&H), has held as under:-

9. As regards applicability of provisions introduced on 1-3-2007 to alleged acts committed prior to the said date, the matter is covered by orders of this Court referred to above which are not shown to be distinguishable. Accordingly, we hold that the amended provisions will not apply to the acts committed prior thereto.
10. Inspite of? non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely issued invoice or that he did not contravene a provision relating to evasion of duty. The appellant issued invoices without delivery of goods with intent to enable evasion of duty to which effect a finding has been recorded and which finding has not been challenged. We are, thus, unable to hold that appellant was not liable to pay any penalty.
11. As regards? alternative submission of the appellant, that even if there is jurisdiction to levy penalty equal to the amount of duty evaded distinction in culpability may be found in person who actually evades the duty and the person who enables the same to be done. This distinction in culpability may be required to be gone into from case to case. The Tribunal does not seem to have been conscious of this issue.
12. The penalty? prescribed is admittedly not the minimum. Its quantum will thus be in discretion to be exercised having regard to mitigating or aggravating circumstances. In the context of exercise of discretion of imposition of appropriate sentence, it was observed in State of Karnataka v. Puttaraja, AIR 2004 SC 433 :-
10.?It has been very aptly indicated in Dannis Councle MCGDautha v. State of Callifornia, 302 US 183 : 28 LD 2nd 711, that no formula of a foolproof nature is possible that would provide a reasonable criterion in determining a just and appropriate punishment in the infinite variety of circumstances that may affect the gravity of the crime. In the absence of any foolproof formula which may provide any basis for reasonable criteria to correctly assess various circumstances germane to the consideration of gravity of crime, the discretionary judgment in the facts of each case, is the only way in which such judgment may be equitable distinguished. Since in the present case the Tribunal has not considered the issue of quantum of penalty, the matter may require fresh consideration of the Tribunal to determine the quantum of penalty which ought to be levied on the appellant. Accordingly, we allow these appeals partly as above and remand the matters to the Tribunal for passing an appropriate orders on the quantum of penalty.

36. We find penalty imposed on them is not on the higher side and is reasonable. We therefore, uphold the same and their appeals are rejected.

37. As far as penalty on appellant No. 16 is concerned, judgment of Honble High Court of Punjab and Haryana High Court in the case of Commissioner of Central Excise vs. Deepak Roadways reported in 2010 (254) ELT 26 (P&H) is relevant. However, we find that the said transporter was concerned with only consignments transported from Dolvi and we also note that in the present show cause notice, majority of the consignments are from Kalmeshwar and in view of this fact the penalty imposed on M/s. Diamond Roadways is reduced to ` 2 lakhs.

38. As far as penalty on Shri Chandrakant Nathwani, appellant No. 17 is concerned, we find that he was not only arranging the transportation of the goods and he was in full knowledge and was actively involved in getting the name of the consignee changed and sending the CENVATable invoices to Shri Manish Agarwal or Shri Pawankumar Agarwal while the goods were being transported to Viramgam. In view of the said fact the penalty under Rule 26 is correctly imposed on him and we find that the penalty imposed is not on the higher side and we uphold the same. We also keep in mind the judgment of the honble High Court of Punjab & Haryana in the case of Commissioner of Central Excise vs. Deepak Roadways reported in 2010 (254) ELT 26 (P&H).

39. As far as the appellant No. 18, M/s. Ispat Industries Ltd. is concerned, while we note that before clearing the goods they have paid the appropriate amount of duty. However, we also note that the goods were being transported in the Gujarat registered vehicle while the consignee name and address is that of Maharashtra, and such vehicles cannot take such freight. We also note that from the documents recovered from their premises, it was very clear that they were fully aware that the HR trimmings were consigned to Viramgam based bidder and are being used by SSI units there. Under these circumstances, it was incorrect on their part to indicate the name and address of the main appellant in the present case and since they have changed the name of the consignee in spite of the fact that the goods were being transported to Viramgam or nearby area in different State. The goods are therefore liable for confiscation as discussed earlier and they are liable to penalty. We have also gone through the few judgments quoted by learned counsel in their own case. These judgments were passed by the Single Member of this Tribunal. More over the said judgments have been passed before the judgment of honble Punjab & Haryana in the case of Vee Kay Enterprises vs. Commissioner of Central Excise reported in 2011 (266) ELT 436 (P&H) as also in the case of M.S. Metals vs. Commissioner of Central Excise, Haryana 2014 (309) ELT 241 (P&H). Keeping in mind the over all facts and circumstances of the case, particularly they paid correct amount of duty, and also some of the case laws quoted by them, we reduce the penalty imposed to ` 1 lakh.

40. We note that both the sides have quoted number of case laws in support of their contention. We had gone through the said case laws. The present case is a fact based case and we find that the facts of the present case are very different compared to the facts involved in various case laws quoted and we do not consider it necessary to discuss each of these case laws.

41. In the result the appeals are dispose of as below:

Appeal No. Name of the Appellant Final Order
1.

E/722/2008 Bhagwati Steel Cast Ltd.

Appeals rejected

2. E/652/2008 Mahendra Kumar Agarwal

3. E/733/2008 K. D. Singh

4. E/736/2008 Pawankumar Agarwal Penalty reduced to ` 4 lakhs

5. E/737/2008 Surahbhan Rajkumar Pvt. Ltd.

Penalty reduced to ` 2 lakhs each

6. E/738/2008 Shree Durga Iron & Steel Pvt. Ltd.

7. E/656/2008 Manish Steel Corporation Penalty reduced to ` 8 lakhs

8. E/657/2008 Manish Agarwal

9. E/658/2008 Geeta Metal Pvt. Ltd.

Appeals rejected

10. E/659/2008 Vinay Kumar Kalani

11. E/653/2008 Harkishan B. Soneji

12. E/654/2008 Harshadbhai R. Desai

13. E/655/2008 Mohammad A. Master

14. E/660/2008 Mohsin H. Memon

15. E/632/2008 Mori Chelabhai Devabhai

16. E/739/2008 Daimand Roadways Penalty reduced to ` 2 lakhs

17. E/634/2008 Chandrakanth Nathwani Appeal rejected.

18. E/706/2008 Ispat Industries Ltd.

Penalty reduced to ` 1 lakh

42. Appeals disposed of in the above terms.

(Pronounced in Court on 26/06/2015) (Ramesh Nair) Member (Judicial) (P.K. Jain) Member (Technical) */as 2