Custom, Excise & Service Tax Tribunal
8. Sampatraj Ladha vs Nashik on 9 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
APPEAL NOS:
1.
E/889/2008
2.
E/746/2008
3.
E/745/2008
4.
E/1039/2008
5.
E/748/2008
6.
E/732/2008
7.
E/753/2008
8.
E/888/2008
[Arising out of Orders-in-Original No: 10/CEX/2008 dated 28/03/2008 passed by the Commissioner of Customs & Central Excise, Nashik.]
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. Ajay Kumar G. Baheti
2. Manish Agarwal
3. Mohammad A. Master
4. Harshadbhai R. Desai
5. Chandrakanth Nathwani
6. JSW Steel Ltd.
7. Ispat Industries Ltd.
8. Sampatraj Ladha
Appellants
vs
Commissioner of Central Excise & Customs
Nashik
Respondent
Appearance:
Shri S.P. Seth, Advocate for the appellant Nos. 1 to 4 & 8 Shri Nikhil Rungta, Advocate for appellant No. 5 Shri Sachin Chitnis, Advocate for appellant No. 6 Shri Roshil Nichani, Advocate for the appellant No. 7 Shri Rakesh Goyal, Additional Commissioner (AR) for the respondent CORAM:
Honble Shri P.K. Jain, Member (Technical) Honble Shri Ramesh Nair, Member (Judicial) Date of hearing: 09/04/2015 Date of decision: 09/07/2015 ORDER NO: ____________________________ Per: P.K. Jain:
Brief facts of the case are that M/s. Ispat Industries Ltd., (appellant No. 7) is a manufacturer of H.R. coils having manufacturing units in Kalmeshwar, near Nagpur and Dolvi/Taloja near Mumbai and M/s. JSW Steel Ltd. (appellant No.6) is also a manufacturer of similar goods having factory at Vasind and Boisar, 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 Nos. 6 and 7 by online auction process. Such H.R. trimmings are bidded purchased for trading by certain traders based in Viramgam (appellant Nos. 3 and 4). Such HR trimmings are cleared by appellant Nos. 6 and 7 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 who 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. 3 and 4 after bidding/purchasing the H.R. trimmings from appellant Nos. 6 and 7 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 Nos. 6 and 7 were therefore, being manipulated to indicate the name of certain manufacturers of MS ingots (in the present case, M/s. Silver Ispat Pvt. Ltd., whose appeal is dismissed under Section 35F of the Central Excise Act, 1944). Thus, M/s. Silver Ispat Pvt. Ltd, was purchasing the invoices without getting the HR trimmings and such HR trimmings were sold by appellant No. 3 to 4 to 100s of small scale units in and around Viramgam. Further, for selling the invoices, appellant No. 3 and 4 were using the services of brokers based in Mumbai e.g. Shri Manish Ramavtar Agarwal of M/s. Manish Steel Corporation and appellant No.2. Appellant No. 5 is a transport commission agent based in Nagpur. He was coordinating and ensuring that the goods cleared from appellant No. 7s unit at Kalmeshwar, Nagpur were transported to Viramgam and to the trader/SSI unit or as per the instruction of the traders (appellants Nos. 3 and 4) or brokers/dealers (such as appellant No.2). Appellant No. 5 was also ensuring that documents received from Appellant No. 7 are sent to M/s. Silver Ispat Pvt. Ltd., or broker/dealers. Further, appellant No. 5 was handing over fictitious documents to the driver from Kalmeshwar / Nagpur to Viramgam for any checking during transportation. Similarly, there were transport-commission agent based in Mumbai (M/s. Diamond Roadways) who was transporting the HR trimmings from appellant No. 6 and 7s units located in Dolvi/Taloja near Mumbai to Viramgam or from Vasind/Boisar to Viramgam. Further, documents for safe passage from Dolvi/Taloja to Viramgam or from Vasind/Boisar to Viramgam were also handled by him. Benefit of fraudulently availed credit was distributed between various persons including all the appellants. Similar modus operandi was being followed for clearance of H.R. trimmings from Uttam Galva, Khopoli and Zenith Ltd., Khopoli.
3. Based upon such invoices, M/s. Silver Ispat Pvt. Ltd., will be able to avail the credit of duty paid on HR trimmings. Brokers such as appellant No.2 who were not registered with the Central Excise department were acting behind the screen inasmuch as appellant No.2 would locate the buyers of invoices such as M/s. Silver Ispat Pvt. Ltd. in the present case, thereafter ensure that the invoices issued by appellant No.6 and 7 would indicate the name of M/s. Silver Ispat Pvt. Ltd., the said broker would coordinate with the appellant No.3 and 4 i.e. bidder who are generally based in Viramgam, get the goods transported to Viramgam and collect the invoices in the name of M/s. Silver Ispat Pvt. Ltd., and transmit the same to M/s. Silver Ispat Pvt. Ltd. Further, cash for the HR trimmings will be received from appellant No.3 and 4 many a times, through angadia services, and there after the said cash will be sent either to M/s. Silver Ispat Pvt. Ltd., so that he can issue the account payee cheque/bank drafts to the appellant Nos. 6 and 7. Sometime it is also possible that such brokers may arrange for bazaar/scavenger scrap in place of HR trimmings and sent the same to M/s. Silver Ispat Pvt. Ltd. Thus, the work of the brokers (such as appellant No.2) based in Mumbai was to look for customer for CENVATable invoices to be issued by appellant Nos. 6 and 7. Here, the invoices alone were to be sold to such customers while the goods covered by such invoices were to move to Viramgam.
4. Thus, the case of the Revenue is that M/s. Silver Ispat Pvt. Ltd., in the present case has availed CENVAT credit on the basis of duty-paying invoices issued by appellant Nos. 6 and 7 without receiving any HR trimmings covered by such invoices. M/s. Silver Ispat Pvt. Ltd., was, therefore, not eligible to take the CENVAT credit covered by such invoices, and the act is fraudulent in nature. Appeal of M/s. Silver Ispat Pvt. Ltd. was dismissed by this Tribunal for non-compliance of provisions under Section 35F. Appellant No.1 was the General Manager in M/s. Silver Ispat Pvt. Ltd. Appellant No.8 was the Managing Director but has expired on 13/11/2014. Cases against appellant No. 2 to 8 are for penalty.
5. 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. 5s premises in Nagpur. Similar documents were also recovered from M/s. Diamond Roadways, Mumbai. 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 M/s. Silver Ispat Pvt. Ltd.,s 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. Enquiries in respect of some consignments with Bhilad check post confirmed that vehicle Nos. mentioned in the invoices of JSW etc., those vehicles were passed through the check-post i.e. entered into 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 M/s. Silver Ispat Pvt. Ltd. Statements of few end-users were also recorded.
6. Based upon detailed investigation, a demand notice dated 02/01/2007 was issued to M/s. Silver Ispat Pvt. Ltd., for demand of fraudulently availed credit, interest, and penalty as also to present appellants for penalty.
7. learned counsel for appellant No.8 at the outset mentioned that Shri Sampatraj Ladha, appellant No.8 and the Director of the M/s. Silver Ispat Pvt. Ltd. has expired on 13/11/2014 and in support of this contention he produced Xerox copy of the death certificate and submitted in view of this position the appeal of Shri Sampatraj Ladha abates.
8. learned counsel further submitted that Shri Ajay Kumar G. Baheti was the General Manager of M/s. Silver Ispat Pvt. Ltd. and as a General Manager he was not the person who was checking the incoming scrap and he was concerned with over all supervision of the factory and under these circumstances it cannot be said that Shri Baheti has dealt with the goods which are liable to confiscation. Under the circumstances no penalty can be imposed on Shri Baheti under Rule 26 of the Central Excise Rules, particularly for period prior to 01/07/2007.
9. Learned counsel further submitted that Shri Manish Agarwal is alleged to be the broker and the primary submission is that in his statement Shri Manish Agarwal has admitted dealing with M/s. Bhagwati Steel Cast Ltd. but he has not admitted dealing with M/s. Silver Ispat Pvt. Ltd. It was also submitted that the show cause notice incorrectly gives the impression as if Shri Manish Agarwal has admitted all the irregularity relating to M/s. Silver Ispat Pvt. Ltd. and therefore no penalty is impossible on appellant No.2. Even late Shri Sampatraj Ladha, Director of M/s. Silver Ispat Pvt. Ltd. has named one Shri Chandresh Shah and not Shri Manish Agarwal. In any case appellant No. 2 has not dealt with any offending goods in the present case, rather he has not dealt with any goods, at the most, he has dealt with some documents and hence no penalty can be imposed under Rule 26.
10. Learned counsel further submitted that as far as appellant No.3 and 4 are concerned, they are supposed to be the Viramgam based dealers who used to bid for the goods. There are no evidences that they have physically dealt with any of the offending goods which are liable to confiscation or has been ordered to be confiscated. Under the circumstances no penalty can be imposed on them.
11. The learned counsel for the appellant No. 5 submitted that his client is only a transport commission agent who arranges transport vehicle for lifting the goods from M/s. IIL. The appellant himself has not carried out any transportation of the goods. The goods which are obtained and transported by the appellant are duty-paid goods and covered under excise invoice and it cannot be said that the goods when dealt by the appellant as transport commission agent are liable for confiscation. For invoking the provisions of Rule 26 itself require that the goods be liable for confiscation and the appellant should be aware that the said goods are liable for confiscation. It was also submitted that they had bona fide belief that the goods which are being dealt by them are duty-paid and not liable to confiscation. It was submitted that, as the transport agent the appellant has taken due precaution to ensure duty paid goods lifted and delivered. This itself shows that there was no mala fide intention on their part and there are no grounds for invoking Rule 26 to impose penalty on them. It was further submitted that there is no proposal and confiscation order for the HR trimmings which are cleared from the factory from the premises of M/s. IIL and for which the address was shown in the bill. Thus, the HR trimmings which should have been diverted has not been proposed to be confiscated nor has it been confiscated under Rule 25 of the Central Excise Rules and accordingly no penalty under Rule 26 can be imposed on the appellant.
12. The learned counsels for appellants No. 6 and 7 submitted that they have cleared the HR trimmings after bidding as per the directions of the bidder to various buyers. Further before clearance of the goods they have paid the appropriate amount of duty and since they have paid appropriate amount of duty they have not done anything wrong. If the goods have been diverted after clearance they are not responsible for the same and no penalty can be imposed on them. It was further submitted that in the case of appellant No.7, this Tribunal has set aside the penalty in the following cases:
(a) A/198-299/08/WZM/SMB/C-III dated 26/02/2008
(b) A/571-572/09/WZM/SMB/C-IV dated 07/10/2009
13. The learned Additional Commissioner (AR) submitted that the appeal of the main-appellant has been dismissed for non-compliance but it would be seen from the order-in-original that there are sufficient evidence which indicates that only invoices travelled to M/s. Silver Ispat Pvt. Ltd. and no HR trimmings covered by the said invoices was ever received by M/s. Silver Ispat Pvt. Ltd. and the HR trimmings have been transported to Viramgam wherein the same have been sold to 100s of small scale units manufacturing nails, MS wires, barbing, fencing, etc. He further submitted that appellant No.8 and appellant No.1 were Director and General Manager of the company at the relevant time. He further submitted that appellant No.1 is the son-in-law of appellant No.8. Thus, he was nor an ordinary employee but was in fact part of the management and would be the direct beneficiary of the irregularities He further submitted that it is an admitted position that appellant No.1 was incharge of the day-to-day affairs of the factory and, therefore, it is clear that he was responsible for taking the credit without receipt of the goods. Further, appellant No. 1 on 18/02/2005 promised to produce the LRs within 10 days but till date such LR has not been produced neither before the adjudicating authority or before this Tribunal. In fact, during investigation, summons were issued for production of the LR but he did not produce the same. It was further submitted that under the circumstances it cannot be said that he did not deal physically with the offending goods. The learned AR also relied upon the case laws in the case of Dr. Writers Food Products vs. Commissioner of Central Excise, Pune II reported in 2009 (242) ELT 381 (Tri.-Mumbai).
13.1. As far as appellant No.2 is concerned, learned AR submitted that it is an admitted position that Shri Manish Agarwal was a broker based in Mumbai who used to find buyers for Central Excise invoices for taking credit without receipt of the goods. It was submitted that in his statement dated 24/12/2004 he has admitted that he has made available customers for purchase of Central Excise invoices only for availing credit. He has also admitted that Viramgam based dealers used to send cash amount by Angadia service which were converted into demand drafts payable in favour of M/s. Ispat Industries Ltd. He has also agreed to the contents of the statements made by Shri Mohammed Master, Shri Harshadbhai Desai and Shri Chandrakant Nathwani and the role played by him. It was further submitted that even though in his statement, appellant No. 2 has not specifically mentioned about M/s. Silver Ispat Pvt. Ltd. but his statements were general in nature and relating to 1000s of transactions.
13.2. As far as appellant No. 3 and 4 are concerned it was submitted that although both are Viramgam based traders, it is an admitted position that they used to bid for the goods in the online auction. They have also admitted in their statement that they used to apply for change of billing address as per the instruction received from Shri Chandrakant Nathwani and Shri Manish Agarwal. They have also clarified that the payments for the HR trimmings sold were handed over to the person of Shri Manish Agarwal or sometimes through Angadia service. It was also admitted by them that they have purchased HR trimmings from M/s. JISCO and M/s. IIL for which they have not got proper records/documents. Delivery of the consignments were also accepted by appellant No. 4. Appellant No.4 has also stated that he used to issue blank letterheads to Shri Manish Agarwal for giving the same to M/s. IIL, Kalmeshwar. It was also submitted that appellant No.2 has admitted that appellant No. 4 has visited his office in Mumbai with a proposal to find out customers for the invoices.
13.3. Learned AR further relies upon the judgment in the cases of Commissioner of Central Excise vs. Navneet Agarwal 2012 (276) ELT 515 (Tri.-Ahmd.); and Vee Kay Enterprises vs. Commissioner 2011 (266) ELT 436 (P&H); in which penalties were imposed under Rule 26. It was also held that penalty is impossible under Rule 26 of the Central Excise Rules even before the introduction of sub-rule (2) of Rule 26. Learned AR also relies upon the judgment in the case of Sanjay Vimalbhai Deora vs. CESTAT 2014 (306) ELT 533 (Guj.) for imposition of penalty. In the said case, Honble Gujarat High Court has held that the person would render himself liable for penalty under Rule 26 of the Central Excise Rules, 2002 even if the goods are not confiscated or have not been rendered for confiscation. The SLP to appeal against the said order was dismissed by the honble Supreme Court. It was also submitted that the present case is on far better footing than the case of Sanjay Vimalbhai Deora (supra) as the order-in-original clearly speaks of confiscation of 3462.610 MTs of HR trimmings.
13.4. In so far as appellant No. 5 was concerned it was submitted that he was transport commission agent between the clients and lorry owners. Appellant No.5 arranged transportation of HR trimmings to Viramgam knowing very well that the invoices were going to different places in Maharashtra. He also admitted in giving fake documents to the driver of the vehicles for safe transporting of HR trimmings up to Viramgam. Appellant No. 5 used to handover the documents received from M/s. IIL, Kalmeshwar to Bombay based broker and he was in constant touch with Viramgam based traders as also the brokers based in Mumbai, e.g., Shri Manish Agarwal, appellant No.2 in this case. It was also submitted that the records recovered from his office indicated the actual destination as also the purported destination of the goods. Further, fictitious LRs in the name of Sidhivinayak Road Carriers, Raipur were also recovered. In view of these facts, appellant No.5 was concerned with the physical transportation of goods and hence is liable to penalty under Rule 26.
13.5. As far as appellant Nos. 6 and 7 are concerned, it was submitted that both are the manufacturers of HR trimmings. It was submitted that they very well knew that such HR trimmings are sent to Viramgam based traders and it was Viramgam based traders who would opt in the e-auction but still appellant No. 6 and 7 would change the billing address. It was also submitted that in almost all cases, the vehicle transporting the goods were having Gujarat based registration and it was obvious that such vehicles cannot transport goods from one point to another point within Maharashtra. Still the appellants loaded the goods on such vehicle. They knew use of H.R. trimmings, still they changed the name to Ingot manufacturers. As far as appellant No. 7 is concerned documents had been recovered from them which indicated that they were fully aware that their goods are going only to Viramgam for further manufacture of nails, barged wires, fencing, etc. Under the circumstances they have helped the other appellants to do the manipulation. Further the invoices issued by them did not indicate the correct name of the consignee and therefore, their goods are liable to confiscation even under Rule 25 and therefore penalty on them is correctly imposed.
13.6. It was also submitted that some of the judgments quoted by the counsels for various appellants were of a period before the judgment of Sanjay Vimalbhai Deora (supra). Learned AR also relied upon the judgment of this Tribunal in the case of Nashik Strips Pvt. Ltd. vs. Commissioner of Central Excise 2010 (256) ELT 307 (Tri-Mumbai) involving exactly same issue of clearance of HRT by JISCO involving Viramgam based dealers such as M/s. Akshar Trading Companies, M/s. Umiya Corporation, M/s. Master Traders and M/s. Memon Associates by employing the same modus operandi involving the same parties as in the present case. It was submitted that in the said case it was also held that penalty under Rule 26 is imposable on the Directors even if he has not dealt with the impugned goods and contravention of Central Excise Act, 1944 or Central Excise Rules,2002 alleged against appellant Director. In the said case penalties were also confirmed under Rule 26 on Viramgam based dealers.
14. We have considered the submissions made by various learned counsels to appellants as also of Additional Commissioner (AR).
15. As far as appellant No. 1 is concerned, he was the General Manager of M/s. Silver Ispat Pvt. Ltd. and also the son-in-law of Shri Sampatraj Ladha, Director of M/s. Silver Ispat Pvt. Ltd. Thus, the main beneficiary in availment of the fraudulent CENVAT credit was M/s. Silver Ispat Pvt. Ltd. Therefore, appellant No.1 was one of the main beneficiary. It was also admitted position that he was looking after the day-to-day working of the factory and it would not have been possible to carry out such a fraud without his active connivance. During investigation he has promised to produce the LRs of the goods received. However, same were not produced inspite of summoning him lateron. Thus, the only conclusion that can be drawn is that no H.R. trimmings were received by M/s. Silver Ispat Pvt. Ltd. and Shri Ajay Kumar Baheti was fully aware of the fact that credit was being taken on the basis of invoices without receiving the goods covered by such invoices. Under the circumstances he is liable to penalty under Rule 26 of the Central Excise (No.2) Rules, 2001/2002. The penalty imposed is not on the higher side. We therefore, dismiss the appeal of the appellant No.1.
16. As far as appellant No. 2 is concerned, he is a Mumbai based broker. His role was to find suitable customers who are interested in purchasing the invoices without receiving the corresponding goods. Even though in his statement, appellant No.2 has not specifically mentioned about M/s. Silver Ispat Pvt. Ltd., Shri Sampatraj Ladha has narrated about one person with the name Chandresh. The person named Chandresh could not be located. Viramgam based traders who were the bidders and actual buyers of the H.R. trimmings have named appellant No.2 as the person with whom they were in touch for the selling of invoices and also sending the money, etc. Keeping in view the over all facts, including the facts that there is no confessional statement relating to the present transactions, we reduce the penalty imposed on him from ` 5 lakhs to ` 1 lakh. However, we hold that he is liable to penalty under Rule 26 of the Central Excise Rules.
17. As far as appellants No. 3 and 4 are concerned, the main contention of the advocate for the appellants was that they are only the bidder and they are neither purchaser of the goods nor handled the goods in any way. We are not convinced with such a submission. It is an admitted position that appellant No. 3 and 4 are based in and around Viramgam and are trading in HR trimmings. They have been bidding for the same on the online auction. From the investigation it is very clear that the HR trimmings so bidded were transported to Viramgam. It is obvious that the HR trimmings covered by the invoices was purchased by them and thereafter sold by them. They have definitely involved in the sale, purchase and transportation of HR trimmings there can be no doubt that they actively handled the consignments. Rule 26 of the Central Excise Rules are applicable to any person who acquires possession of or in any way concerned in transporting, removed, 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. As mentioned earlier, the traders were actively involved with the goods. They were also actively involved in getting the names of the consignee changed to the M/s. Silver Ispat Pvt. Ltd., with an idea that the M/s. Silver Ispat Pvt. Ltd., can avail the CENVAT credit. Further, since the invoices were not indicating their name but were indicating the name of the M/s. Silver Ispat Pvt. Ltd., the goods are liable to confiscation as this contravenes Rule 25. Another submission of the learned counsel was that the show cause notice or the impugned order does not propose confiscation of the goods or held liable to such confiscation of such goods, we are unable to appreciate this position. Para 19(II) of the show cause notice, propose confiscation of HR trimmings and, therefore, appellants No. 3 and 4 are liable for penal action under the provisions of Rules 26 of the said Rules. H.R. trimmings so diverted to Viramgam were undoubtedly liable to confiscation and the appellants No. 3 and 4 have dealt with such H.R. trimmings and were concerned with such goods and were in the knowledge that such goods are liable to confiscation. Under the circumstances, the penalty imposed on them is correct. Penalty imposed is also not on the higher side. Appeals are therefore dismissed.
17.1. 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.
18. As far as appellant No.5 is concerned, he was the transport commission agent and was actively aware that the invoices are for various persons within Maharashtra while the goods have to go to Viramgam. Not only this, he also made fictitious LRs in the name of fictitious transporter based in Raipur and fictitious documents were prepared for safe passage of goods. The original documents, after procuring from M/s. IIL were handed over to the broker/dealer in Mumbai or the M/s. Silver Ispat Pvt. Ltd. Under the facts and circumstances of the case, penalty is correctly imposed and the penalty imposed is also not on the higher side. Appeal is therefore dismissed.
19. As far as the appellants No. 6 and 7 viz. M/s. JSW Steel Ltd. and M/s. Ispat Industries Ltd. are 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 the premises of appellant No. 7 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 M/s. Silver Ispat Pvt. Ltd., as consignee who were based in Mumbai. 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 HR trimmings cleared have therefore become 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 the case of appellant No.7. 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 High Court 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 that they paid correct amount of duty, and also some of the judgments quoted by them, we reduce the penalty imposed to ` 1 lakh each.
20. We note that both the sides have quoted number of other judgments in support of their contention. We had gone through the said judgments. The present case is a fact based and we find that the facts of the present case are very different compared to the facts involved in various judgments quoted and are distinguishable and we do not consider it necessary to discuss each of these judgments.
21. Appellant No.8, Sri. Sampatraj Ladha, passed away during the pendency of the proceedings. Therefore, the penal proceedings against him abate and his appeal disposed of accordingly.
22. In the result the appeals are dispose of as below:
Appeal No. Name of the Appellant Final Order
1.
E/889/2008 Ajay Kumar G. Baheti Appeal dismissed
2. E/746/2008 Manish Agarwal Penalty reduced to ` 1 lakh
3. E/745/2008 Mohammad A. Master Appeals dismissed
4. E/1039/2008 Harshadbhai R. Desai
5. E/748/2008 Chandrakanth Nathwani
6. E/732/2008 JSW Steel Ltd.
Penalty reduced to ` 1 lakh each
7. E/753/2008 Ispat Industries Ltd.
8. E/888/2008 Sampatraj Ladha Appeal abates
23. Appeals disposed of in the above terms.
(Pronounced in Court on 09/07/2015) (Ramesh Nair) Member (Judicial) (P.K. Jain) Member (Technical) */as 23