Custom, Excise & Service Tax Tribunal
Sunil Saraogi vs Jaipur Ii on 30 April, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI
PRINCIPAL BENCH, COURT NO. 1
EXCISE APPEAL NO. 52508 OF 2016
[Arising out of common Order-in-Original No. JOD-EXCUS-000-COM-
0011-16-17 dated 25.05.2016 passed by the Commissioner of Central
Excise, Jaipur]
SHRI SUNIL SARAOGI Appellant
Gulmohar, 6 C, Middleton Street, Kolkata-700071
Vs.
COMMISSIONER OF CENTRAL EXCISE- Respondent
JAIPUR II Commissioner of Central Excise, Commissionerate, Jaipur II, NCR Building, Statue Circle, C-Scheme, Jaipur Appearance Present for the Appellant : Shri A K Prasad, Advocate Present for the Respondent: Shri Bhagwat Dayal, Authorised Representative WITH E/52838/2016, E/50058/2017, E/50079/2017, E/50080/2017 E/50090/2017, E/50104/2017, E/50105/2017, E/50109/2017 E/50126/2017, E/50134/2017, E/50144/2017, E/50158/2017 E/50202/2017, E/50206/2017, E/50208/2017, E/50217/2017 E/50237/2017, E/50238/2017, E/50259/2017, E/50286/2017 E/50290/2017, E/50291/2017, E/50292/2017, E/50319/2017 E/50347/2017, E/50363/2017, E/50549/2017 Appearance Present for the Appellant : Shri Pradeep Jain, Advocate Present for the Respondent: Shri Bhagwat Dayal, Authorised Representative CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT HON'BLE MR. P. V. SUBBA RAO, MEMBER ( TECHNICAL ) FINAL ORDER NOS. 55674-55701/2024 DATE OF HEARING : 11/01/2024 DATE OF DECISION: 30/04/2024 2 P V SUBBA RAO:
1. All these appeals arise out of the same impugned order and hence they are being disposed of together.
2. Pursuant to specific information that two trucks with specific registration numbers were carrying non-duty paid gutka, one of the trucks was intercepted by the officers of Central Excise, Jodhpur on National Highway No. 8 at Bharuch, at the night of 31.03.2008. In follow up action, the officers intercepted the other truck on
02.04.2008, at the Daulatabad Ghat and also identified the godown where the second truck had already off-loaded its cargo. In further follow up actions, the officers identified a whole network of transport, storage places and, godowns who were engaged in manufacture, transportation and sale of gutka clandestinely manufactured by M/s Shree Raj Exports Pvt Ltd., Mata Ka Than, Jodhpur. During investigations, large number of unaccounted for raw material and finished goods were seized and trucks involved in transporting the non-duty paid gutka were also seized along with several documents which were recovered from various premises. In respect of these seizures, separate show cause notices were issued.
3. Having completed the investigation, a show cause notice dated 07.11.2012 was issued to M/s Shree Raj Exports Pvt Ltd. alleging evasion of duty. It was also proposed to impose penalties. The show cause notice dated 07.11.2012 also covered 48 other co- noticees including Sunil Sarogi (Noticee No. 13) as the Director of M/s Shree Raj Exports Pvt Ltd. It also covered various transporters 3 and transport companies who transported the clandestinely removed gutka.
4. On behalf of the Sunil Sarogi, appellant in Excise Appeal No. 52508 of 2016, Shri A K Prasad, learned counsel for the appellant made the following submissions:
(i) Sunil Sarogi was asked to show cause as to why penalty under rule 26 of the Central Excise Rules, 2002 should not be imposed upon him. The show cause notice did not discuss his role in the alleged evasion. Nothing is brought on record in the show cause notice to support his alleged involvement in transporting, removing, depositing, keeping, concealing or selling excisable goods which Sunil Sarogi had known or had reasons to believe are liable for confiscation;
(ii) It is true that Sunil Sarogi was the Director of Shree Raj Exports Pvt Ltd. but he was not the executive director and had no active role to play in activities of the company. Arun Joshi, Director of the firm was his friend and on his request he had consented to be the director of the firm and his role was only on papers;
(iii) On 09.07.2003, he was appointed as Director but he resigned on 07.09.2007. Therefore, he had no role 4 as Director after this period. The seizure in this case were made much later in 2008;
(iv) In paragraph 41.10 of the impugned order, the Commissioner has clearly held Sarogi to be a "dummy director". Thus, the adjudicating authority himself held that the appellant was a Director only on papers and was not exercising any executive part of the company and, therefore, the appellant was not even aware about the activities of the company and he was not concerned, in any way with the removal of the goods which were liable for confiscation.
5. Learned counsel submits that despite his own clear findings, the Commissioner imposed penalty of Rs. 1 crore upon Sunil Sarogi. Further, in the adjudication order itself the Commissioner sanctioned prosecuting against Sunil Sarogi in sub-para 8 of 52.8.1 of the impugned order. This order needs to be set aside insofar as Sunil Sarogi is concerned on the following grounds.
(a) It is a non-speaking order passed without application of mind reproducing the show cause notice which shows that adjudicating authority had not applied his mind at all;
(b) The appellant has consistently been saying in all his statements that he had never been associated with the functioning of M/s Shree Raj Export Pvt Ltd; 5
(c) The appellant further made specific submissions that he had resigned from the company on 07.1.2007 and further sent several reminders to the company with copies of resignation letters. None of these were disputed by the Commissioner nor were any questions put to the other Directors or employees of the company on the issue to rebut these submissions. Therefore, the Commissioner should have accepted that Sunil Sarogi had resigned and he should not have imposed any penalty on him. Sunil Sarogi was not the Director of the company at the time of its incorporation in 2000 and became the Director only on papers on 09.07.2003;
(d) Having accepted that Sunil Sarogi was only a dummy Director, the Commissioner still imposed penalty of Rs.
1 crore on Sunil Sarogi without any basis. A large number of statements were recorded during investigation but nothing in any of the statements impleaded Sunil Sarogi and both the statements of Sunil Sarogi were exculpatory. Sunil Sarogi never received any remuneration or commission from the company nor did he have any share in it. In view of above no penalty under section 26 of the Central Excise Rules could have been imposed upon Sunil Sarogi.
6. We have considered the submissions insofar as Sunil Sarogi is concerned.
6
7. Perusal of the records shows that Sunil Sarogi was the Director only on papers of Shree Raj Export and he had no involvement in its functioning. He has been clearly held to be a dummy Director in the impugned order. Sunil Sarogi further states that he had resigned from the company in 2007 itself well before the present period of dispute. Rule 26 of the Central Excise Rules is as follows;
" Rule 26- 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 rules, shall be liable to a penalty not exceeding the duty on such goods or rupees ten thousand, whichever is greater."
8. As can be seen, penalty under Rule 26 can be imposed only on any person who acquires possession of or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any manner dealing with the excisable goods which he knows or has reason to believe are liable for confiscation under the act or the rules. Sunil Sarogi has been held to be a dummy Director in the impugned order and it was also his submission that he had no active role to play in the company and had only agreed on his name as a Director on papers except of his friendship with the owner of the firm. It is impossible to conceive of any role which Sunil Sarogi may have had in possessing, transporting etc., or dealing with in any manner with the gutka which was clandestinely manufactured and removed and which was held liable for confiscation. Detailed investigations were conducted by the department and several statements were 7 recorded during the course of the investigation. Nothing in these pointed to any role of Sunil Sarogi in the manufacture and clearance of gutka in this company either legally or illegally. Under these circumstances, the penalty imposed on Sunil Sarogi under Rule 26 needs to be set aside.
9. Alleged role of other appellants in these appeals are as follows:
Sr. Appeal No. Appellants Penalty under No. rule 26(Rs)
1. E/52838/2016 Kasam Abdul Rehman 10,00,000/-
Patni Owner of KGN Transport Company
2. E/50058/2017 Abdul Aziz Patni S/O 10,00,000/-
Abdul Rashid Patni
Partner of Gujarat
Marathwada Transport
Service
3. E/50079/2017 Mohammad Ashfaq 10,000/-
4. E/50080/2017 Mazid Khan 10,000/-
5. E/50090/2017 Mohammad Ali 10,000/-
6. E/50104/2017 Abdul Aziz 10,000/-
7. E/50105/2017 Hanif Khan 10,000/-
8. E/50109/2017 Mohammad Ismail 10,000/-
9. E/50126/2017 Abdul Rashid 10,000/-
10. E/50134/2017 Umardin 10,000/-
11. E/50144/2017 Mohammad Yunus 10,000/-
12. E/50158/2017 Firoz Khan 10,000/-
13. E/50202/2017 Mohammad Ali 10,000/-
14. E/50206/2017 Mohammad Mustkin 10,000/-
15. E/50208/2017 Mohammad Rafiq 10,000/-
16. E/50217/2017 Gujarat Marathwada 10,000/-
Transport Service
17. E/50237/2017 Mohammad Rais 10,000/-
18. E/50238/2017 Chand Miohamamad 10,000/-
19. E/50259/2017 Bashir Khan 10,000/-
20. E/50286/2017 Mohammad Mustak 10,000/-
21. E/50290/2017 Abdul Latif 10,000/-
22. E/50291/2017 Mohammad Yaseen 10,000/-
23. E/50292/2017 Mohammad Sharif 10,000/-
24. E/50319/2017 Mohammad Bashir 10,000/-
25. E/50347/2017 Abdul Sattar 10,000/-
26. E/50363/2017 Mohd Salim 10,000/-
27. E/50549/2017 Abdul Hamid 10,000/-
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10. These appellants are assailing the imposition of penalty under Rule 26 on them on the following grounds:
(i) These appellants were transporters of goods and were involved in transporting the allegedly clandestinely removed Pan Masala;
(ii) Imposition of penalty under rule 26 on appellants is not proper and correct or legal;
(iii) The appellants were only involved in booking for various transporting companies or were owners of the trucks or drivers of the trucks in which the Gutka was transported;
(iv) The appellants were semi-literate and were not directly involved in allegedly clandestinely removed Gutka;
(v) The penalties imposed on the appellants may be set aside.
11. Learned authorized representative appearing for the revenue strongly supports the impugned order and asserts that it calls for no interference. He prays that these appeals may be dismissed.
12. We have considered the submissions on both sides with respect to these appeals.
13. It is true that the transporters and trucks drivers may or may not be very well educated. It is also a fact that every truck driver and transporter who transports commercial goods carries with him the Bill to cover the goods which he was transporting. Every driver 9 takes this precaution because if there is a check by any authority on the way, he can show the Bills. Secondly, once the goods reach the destination he shows the Bills to the recipient and gets an acknowledgment that the goods in the Bills received. Therefore, no matter how less educated the driver might be, he will certainly know that he has to carry the goods only with the Invoice or Bill. Therefore, we find no force in the submissions of the appellant that the penalties imposed on them must be set aside.
14. In view of above, we dismiss appeals listed at serial number 1 to 27 and uphold the penalties imposed under rule 26 on the appellants.
15. Excise Appeal No. 52508 of 2016 filed by Sunil Sarogi is allowed and the impugned order is set aside, insofar as it pertains to him. All other appeals are dismissed and the impugned order is upheld insofar as it relates to them.
[Order pronounced on 30.04.2024] (JUSTICE DILIP GUPTA) PRESIDENT (P. V. SUBBA RAO) MEMBER ( TECHNICAL) Tejo