Custom, Excise & Service Tax Tribunal
M/S. Parental Drugs (I) Ltd. , Indore vs Cce, Indore on 31 January, 2014
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL, NEW DELHI, PRINCIPAL BENCH NEW DELHI
Date of Hearing: 23/12/2013
Date of Decision:
Excise Appeals Nos. E/550,551, 552 & 553 of 2006 and
E/482/2006-EX (SM)
(Arising out of Order-in-Original No.70/COMMR/CEX/IND/05 dated 30.09.2005 passed by the Commissioner of Central Excise & Customs, Indore)
(1) M/s.Neo Sack Ltd. (Export Divn.),
Plot No.62, Sector-I, Pithampur
(2) Shri Sunil Trivedi, Managing Director
M/s. New Sack Ltd.
(3) Shri V.P. Agrawal,
Commercial Officer, M/s.Neo Sack Ltd. (Export Division)
(4) Shri Ashok Kulkarni, Excise Manager,
M/s.Neo Sack Ltd. (Export Divn.)
(5) Shri Vinod Gupta, Managing Director,
M/s. Parental Drugs (I) Ltd. , Indore Appellants
Vs.
CCE, Indore Respondent
For approval and signature:
Honble Shri Rakesh Kumar, Member (Technical) 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? 3 Whether Their Lordships wish to see the fair copy of the Order?
4 Whether Order is to be circulated to the Departmental authorities?
Appearance:
Rep. by Shri Bipin Garg, Advocate for the appellant.
Rep. by Shri Gobind Dixit, AR for the respondent.
CORAM: Honble Shri Rakesh Kumar, Member (Technical) Final Order Nos:50313 to 50317/2014 dated 31.1.2014 Per Rakesh Kumar:
The facts leading to these appeals are, in brief, are under:-
1.1 M/s. Neo Sack Ltd. (Export Division), Pithampur (hereinafter referred to as NSLED) are manufacturers of Polypropylene/HDPE Woven sacks, PP/HDPE fabrics, Boxbags, Jumbo bags and Raschael bags chargeable to central excise duty under chapter 39 of the Central Excise Tariff. While Shri Sunil Trivedi is the Managing Director of NSLED looking after day-to-day work as well as overall working of the company, Shri V.P. Agarwal and Shri Ashok Kularni are their Commercial Officer and Excise Manager respectively. M/s. Parental Drugs (I) Ltd., India, ( hereinafter referred to as PDIL) are manufacturers of pharmaceutical products IV fluids, irrigation solutions, tablets etc. and Shri Vinod Gupta is the Director of PDIL.
1.2 On receipt of an intelligence about duty evasion by NSLED by adopting various modus operandi, like clearance of goods under parallel invoices without payment of duty or under invoices with fake entries regarding debit of duty in RG-23 A Part-II account or PLA, their factory premises were searched by the jurisdictional central excise officers on 23.1.2002 in course of which certain documents including invoices which appeared to be parallel set of invoices were recovered. During investigation, inquiry was made with Sunil Trivedi, Managing Director of NSLED; Shri V.P. Agrawal and Shri Ashok Kulkarni, Commercial Officer and Excise Manager respectively of NSLED, Shri Jonny John, Excise Officer, PDIL; Shri Vinod Gupta, Managing Director, PDIL and Shri Nathulal Jain, Authorized person of M/s. Nirmala Roadlines, in whose trucks, certain consignments of bags alleged to have been cleared without payment of duty to PDIL, had been transported. Besides this, inquiry was made with the following persons of the customer companies
(i) Shri Vaibhav Dubey, Prop. M/s. Saaj Packers, Pithampur.
(ii) Shri Sanjay Sachdeva and Shri Amitabh Agarwal, Authorised Signatoryof M/s. Sachdeva Plastics and M/s. Aask Packagings respectively.
(iii) Shri Vipin Agarwal, Partner, M/s. Vipin Foundary, Pithampur.
Shri H. Trivedi, Director, M/s. Zenith Metal Pvt. Ltd., also a customer of NSLED did not turn up for inquiry before the investigating officers. Based on the scrutiny of the documents and statements of the above persons, a show cause notice dated 24.06.2004 was issued to NSLED, its Managing Director and two employees mentioned above and Shri Vinod Gupta, Managing Director, PDIL for ---
(a) Confirming the duty demand of Rs.63,72,323/- against NSLED under proviso to Section 11A (1) of Central Excise Act, 1944 along with interest on it under Section 11AB ibid;
(b) Imposition of penalty on NSLED under Section 11 AC and Rule 25 of the Central Excise Rules, 2002; and
(c) Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri Sunil Trivedi, Shri V.P. Agrawal and Shri Ashok Kulkarni of NSLED and Shri Vinod Gupta of PDIL.
1.2.1 The allegation-wise break-up of the duty demand of Rs.63,72,323/- is as under:-
(a) Goods removed without payment of duty under parallel set of invoices (Chart-I of SCN) Rs. 8,42,641/-
(b) Goods removed without payment of duty
under invoices bearing fake/bogus debit
entries (Chart III & IV of SCN) Rs.19,38,934 &
Rs. 2,98,802/-
(c) Removal of goods without payment
of duty under invoices showing debit
entries in RG-23 A Part-II Account or
PLA without sufficient balance in their
accounts (Chart V of SCN) Rs. 4,66,975/-
(d) Goods removed to M/s. PDIL under
commercial invoices without issue of
central excise duty and without
payment of duty Rs.12,89,279/-
(e) Goods cleared without payment of
duty only under commercial invoices Rs.13,16,386/-
(f) Goods cleared without payment of duty
by showing fake debit entries in invoices Rs. 2, 19,305/-
1.3 The SCN was adjudicated by the Commissioner vide order-in-original no.70/Commr/CEX/IND/05 dated 5.10.2005 by which
(a) duty demands of Rs.8,21,949/-; Rs.3,18,375/- and Rs.12,89,279/- out of the above mentioned duty demands of Rs.8,42,641/- (Chart-I), Rs.19,38,934/- (Chart-III) and Rs.12,89,279/- (Chart VI) respectively were confirmed along with interest thereon under Section 11 AB and other duty demands were dropped;
(b) amount of Rs.4,91,322/- paid by NSLED was appropriated towards the duty demand;
(c) penalty of Rs.19,38,281/- was imposed on NSLED under Section 11 AC of Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002; and
(d) penalty under Rule 26 of the Central Excise Rules, 2002 was imposed on other noticees as under:-
(i) Shri Sunil Trivedi Rs.1,00,000/- (ii) Shri V.P. Agrawal Rs. 25,000/- Shri Ashok Kulkarni (iii) Shri Vinod Gupta Rs.1,00,000/-
While the total duty demand confirmed against NSLED is Rs. 24,29,603/- penalty under section 11AC imposed on NSLED is only Rs. 19,38,281/- (Rs. 24,29,603/- minus Rs. 4,91,322/- paid before adjudication).
1.4 Against the above order of the Commissioner, these five appeals have been filed. In these appeals only the duty demands of :-
(i) Rs.6,49,002/- out of the duty demand of Rs.8,21,947/- mentioned in para 45 (i) of the impugned order-in-original and (ii)the duty demand of Rs.12,89,279/- mentioned in para 45(iii) of the impugned order-in-original have been challenged.
2. Heard both the sides.
3. Shri Bipin Garg, Advocate, ld. Counsel for the Appellants, pleaded that out of total duty demand of Rs.19,38,281/- being contested in the appeal filed by NSLED, the duty demand of Rs.12,89,279/- is on the basis of the commercial invoices no.309A dated 5.12.2002, 314 A dated 6.12.2000, 339 dated 18.12.2000 and 340 dated 19.12.2000, issued to PDIL and the remaining duty demand of Rs.6,49,002/- is based on the allegation of clearing the goods without payment of duty under parallel set of invoices, that as regards the allegation of the duty evasion of Rs.12,89,279/- (Chart-VI of the show cause notice) based on the commercial invoices issued to PDIL, out of these invoices, invoice no.339A dated 19.12.2000 does not pertain to PDIL but pertains to M/s. Jain Packaging and the invoice no. 339 dated 18.12.2000 has been taken into account twice and thus, this duty demand is based only on the four commercial invoices no.309A dated 5.12.2000, 314A dated 6.12.2000, 339 dated 18.12.2000 and 340 dated 19.12.2000, that the Departments allegation is that under these commercial invoices, the goods PP Jumbo bags had been supplied to PDIL without payment of duty and without issue of central excise invoices, that this allegation is totally incorrect as the goods mentioned in these commercial invoices had been cleared against AR-4s filed by PDIL as Merchant Exporter for the export of these consignments and the same cleared under Central Excise Invoices had been transported directly from the factory of NSLED to ICD, Pithampur for export out of India, that the fact that the goods covered under these four AR4s have been exported out of India is clear from the packing list and shipping bills, that the shipping bills filed by PDIL mention NSLED as the manufacturer, that the description, quantity and value of the goods as mentioned in the commercial invoices issued by NSLED to PDIL matches with the corresponding details the given in the AR4s and the shipping bills, that since the supply of goods by NSLED to PDIL for export out of India was against letter of credit opened by PDIL through State Bank of India, in terms of the condition of the bank for payment against letter of credit, the transportation of the goods from the factory of NSLED to PDIL, Indore had to be shown but the goods covered the AR4s had been sent directly to ICD, Pithampur and had been exported out of India, that while statement of Shri Nathu Lal of the Transport Company had been recorded, who has made a statement regarding transportation of the goods to the factory premises of the PDIL in Indore, no inquiry has been conducted with the driver of the truck, who had transported the goods, that in this regard Shri Vinod Gupta, Managing Director, PDIL has also given the clarification, but the same has been disregarded, that the goods under the cover of four commercial invoices issued by NSLED to PDIL are the same as the goods cleared for export out of India against four AR4s filed by PDIL and the goods which had been exported out of India under the shipping bills filed by PDIL, that in view of this, the confirmation of the duty demand of Rs.12,89,279/- is without any basis, that as regards the duty demand of Rs.6,49,002/- it is part of the total duty demand of Rs.8,49,641/- based on the allegation of clearing the goods without payment of duty under parallel invoices (Chart I of the Show Cause Notice), that out of this demand, the Commissioner has confirmed the demand of Rs.8,21,949/- out of which the appellant themselves have accepted the non-payment of duty of Rs.1,72,947/- which has already been paid by them, that the appellant (NSLED) are contesting only the duty demand of Rs.6,49,002/- based on the 18 invoices which are alleged by the department to be the parallel invoices, that these invoices are quadruplicate copies of the invoices found in the file No. 229 recovered from the factory of NSLED and based on their comparison with the triplicate copies of the invoices found in File No. 228 recovered from the same factory, bearing the same numbers but issued to different consignees with different quantity and value of the goods, the department has alleged that the 18 quadruplicate copies of the invoices are parallel invoices under which the goods had been cleared without payment of duty, that this allegation is not correct, as during December, 2002, due to error in computer programming, the computer system of NSLED had started generating invoice numbers which had earlier been generated, that the goods covered under the 18 invoices have actually been cleared on payment of duty though under the invoices bearing the different numbers but to the same parties as those mentioned in the quadruplicate invoices, that the clearance of the goods mentioned in the 18 quadruplicate copies of invoices are reflected in the RG-I Register, that the fact of the computer generating defective invoices is clear from the fact that in 11 quadruplicate invoices, the value of the goods based on quantity supplied and rate per unit shown in the upper portion of the invoices is different from the value of the goods and the central excise duty and sales tax thereon mentioned in the lower portion of the invoices and therefore the 18 quadruplicate invoices do not represent the actual invoices under which the goods had been cleared, that in respect of the alleged parallel invoices (quadruplicate copies of invoices found in file no. 229), bearing numbers 723 dated 17.12.2002, 724 dated 17.12.2002, 725 dated 17.12.2002, 726 dated 17.12.2002, 727 dated 17.12.2012, 731 dated 17.12.2002, 736 dated 18.12.2002, 737 dated 19.12.20002, 739 dated 19.12.2002, 749 dated 21.12.2002, 750 dated 21.12.2002, 751 dated 21.12.2002, 752 dated 21.12.2002, 758 dated 24.12.2002, 774 dated 3.1.2003 and 778 dated 30.12.2002) the correct invoices are Nos. 714 dated 16.12.2002, 716 dated 17.12.2002, 717 dated 17.12.2002, 718 dated 17.12.2002, 721 dated 17.12.2002, 719 dated 17.12.2002, 730 dated 18.12.2002, 733 dated 19.12.2002, 732 dated 19.12.2002, 745 dated 21.12.2002, 744 dated 21.12.2002, 743 dated 21.12.2002, 746 dated 21.1.2002, 754 dated 24.12.2002, 778 dated 3.1.2003 and 771 dated 30.12.2002 respectively, that under the above mentioned correct invoices the duty had been paid, that in case of quadruplicate invoice No. 726 dt. 17.02.2007, 727 dated 18.02.2002 & 731 dated 20.12.2002, except for invoice number all the particulars date, buyers name and duty debit entry, are correct and the goods have been cleared on payment of duty, that in case of quadruplicate copy of invoice no. 738 dt. 19.12.2002, only date is incorrect and the correct date is 20.12.2002 and in case of quadruplicate invoice no. 740 dt. 19.12.2002, only duty debit entry no. and invoice date is incorrect and correct debit entry no. is 1537 dated 20.12.2002 and correct invoice date is 20.12.2002 and that in view of this, the duty demand of Rs.6,49,002/- based on the above mentioned 18 quadruplicate copies of the alleged parallel invoices is without any basis, that when the duty demand of Rs.19,38,281/- is not sustainable, the penalty of this amount imposed on NSLED under Section 11 AC is not sustainable and for the same reason, penalties of Rs.1 Lakh each imposed on Shri Sunil Trivedi, Managing Director, NSLED and Vinod Gupta, Managing Director of PDIL and penalty of Rs.25,000/- each on Shri V.P. Agarwal and Ankush Khullar would not be sustainable.
4. Shri Govind Dixit, the learned Departmental Representative, defended the impugned order by reiterating the findings of the Commissioner. In respect of the duty demand of Rs.12,89,279/- against NSLED based on the commercial invoices issued by them to PDIL, he pleaded that in respect of the commercial invoices mentioned in para-27 of the impugned order-in-original to PDIL, there are no central excise invoices issued, and these clearances have been made to PDIL without payment of duty, that receipt of the goods covered under these commercial invoices in the premises of PDIL is confirmed by Shir Nathu Lal of Shri Nirmala Road Lines, the transporter and this fact is also confirmed by Shri John Johny, authorized signatory of PDIL and that the goods received in the factory of PDIL under the commercial invoices mentioned in para-27 of the impugned order are different from the goods which had been cleared for export against AR4s and had been exported from the ICD, Pithampur. He also pointed out that while the commercial invoices have been issued on 5.12.2000, 6.12.2000, 18.12.2000 and 19.12.2000, the exports have been made after about 10 days and that the vehicle numbers mentioned in the commercial invoices are also different from the vehicle numbers mentioned in the excise invoices. As regards the duty demand of Rs.6,49,002/- based on the 18 quadruplicate copies of the invoices found in the file 229 recovered from the factory premises and which are alleged to be the quadruplicate copies of the parallel invoices under which the goods have been cleared without payment of duty, he pleaded that the appellants plea that the invoices of the same numbers got generated due to some problem in computer programming and that duty has been paid in respect of each of the consignments mentioned in these invoices, though under different invoices, is false, as the particulars of the quadruplicate copies of the invoices do not tally with the invoices, which according to the appellant, bear the correct invoice no. In this regard, he reiterated the findings of the Commissioner in para-19 and 20 of the impugned order.
5. I have considered the submissions from both the sides and perused the records.
6. Coming first to the duty demand of Rs.12,89,279/- based on the six invoices mentioned in para-27 of the impugned order, it is seen that while the commercial invoice at sl.no.3 in para-27 of the impugned order is 339 dated 18.12.2000, the commercial invoice mentioned against S. No. 5 bears the same number and date. Therefore, the invoices at sl.no.3 and 5 in para 27 are the same. As regards the invoice no.339 A dated 19.12.2000 at sl.no.6, on perusal of copy of the same which is placed on record, it is seen that this invoice had been issued to M/s. Jain Packaging and as such, it has nothing to do with the clearances made to PDIL, Indore. Thus, the duty demand of Rs.12,89,279/- is based only on the four commercial invoices issued by NSLED to PDIL invoices no.309 A dated 5.12.2000, 314 A dated 6.12.2000, 339 dated 18.12.200 and 340 dated 19.12.2000. The departments allegation is that the goods sold to PDIL under these four commercial invoices had been cleared without issue of excise invoices and without payment of duty. Though as per records of the transport company, M/s. Nirmala Road Lines and the statements of Shri Nathu Lal of the Transport company and of Shri John Johny of PDIL, the goods covered under these commercial invoices had been received in the premises of PDIL, Indore and had not gone to ICD, Pithampur for export, according to NSLED and PDIL, these four consignments in respect of which commercial invoices No. 309 A dt. 5.12.2000, 314A dt. 6.12.2000,339 dt. 18.12.2000 and 340 dt. 19.12.2000 had been issued, had been cleared for export under excise invoices no. 227 dt.5.12.2000, 230 dt. 6.12.2000, 239 18.12.2000 and 240 dated 19.12.2000 for export out of India and had, indeed, been exported out of India.
6.1 On comparing the particulars of the goods sold to PDIL under commercial invoice no.309 A dated 5.12.2000 with the particulars of the goods mentioned in the corresponding excise invoice no.227 dated 5.12.2000 issued by NSLED to PDIL, it is seen that the particulars are the same. These particulars tally with the description of the goods mentioned in the AR4 and also the description mentioned in the shipping bill. The AR4 had been filed by PDIL against which the goods had been cleared for export. Similarly, the particulars of the goods covered under the commercial invoice no.314 A dated 6.12.2000, 339 dated 18.12.2000 and 340 dated 19.12.2000 are identical with the particulars of the goods mentioned under excise invoice no.230 dated 6.12.2000, 239 dated 18.12.2000 and 240 dated 19.12.200 respectively and also the particulars mentioned in the corresponding AR-4s and the shipping bills. All the shipping bills have been filed by PDIL as exporter and mention NSLED as the manufacturer. Not only this, vehicle numbers as mentioned in the excise invoice tally with the vehicle nos. mentioned in the corresponding commercial invoices. This lends credence to the contention of the NSLED, that the goods in respect of which the commercial invoices no.309 A dated 18.12.2000 and 314A dated 6.12.2000, 339 dt.18.12.2000 and 340 dt. 19.12.2000 had been issued to the PDIL, had, in fact, been cleared for export against the AR-4s filed by PDIL and had been transported directly to ICD, Pithampur, but just to comply with the condition of bank through which the payment had been made by PDIL to NSLED, the LRs mentioned the address of the PDIL, Indore as the consignees address. The statement of Shri Nathu Lal of Nirmala Road Lines that the goods have been delivered at the premises of PDIL at Indore is simply based on their documents and in this regard, no inquiry has been conducted with the driver of the trucks to ascertain as to whether the goods covered under the four commercial invoices after their clearance from the factory had been transported to the ICD, Pithampur or to the premises of PDIL at Indore. In view of this, the Commissioners conclusion that the goods covered under the commercial invoices no.309A dated 5.12.2000, 314 A dated 6.12.2000, 339 dated 18.12.2000 and 340 dated 19.12.2000 had been cleared to PDIL, Indore without issue of excise invoices and without payment duty and are different from the consignments of identical goods in identical quantity, exported by PDIL, Indore from ICD, Pithampur, is not correct. Therefore, the duty demand of Rs.12,89,279/- is not sustainable and the same has to be set aside.
7. The duty demand of Rs.6,49,002/- is based on the 18 quadruplicate copies of the invoice no.723, 724, 725, 726 each dated 17.12.2002, 727 dated 17.12.2002, 731 dated 17.12.2001, 736 dated 18.12.2002, 737 dated 18.2.2002,738 dt. 19.12.2000, 739 dt.19.12.2000, 740 dated 19.12.2002, 749 dt.21.12.2002, 750 dt.21.12.2002, 751 dt.21.12.2002, 752 dt. 21.12.2002, 758 dt.24.12.2002, 774 dt.3.1.2003 and 778 dt.30.12.2002 found in file no.229 seized from the NSLED factory and are alleged to be the parallel invoices, as file no.228, also seized from the factory of NSLED contained triplicate copies of the invoices bearing the same invoice number but issued to different parties. According to the NSLED, in 16 cases the invoices bearing invoices numbers already generated had got generated due to fault in the computer programming and the goods covered under these invoices had been cleared on payment of duty, though under invoices bearing different invoice nos. They have also given the details of the correct invoice nos. under which the goods have been cleared and on comparing these details with the details in the quadruplicate copies of the 16 invoices it is seen that except for the invoice nos., the basic details specially the PLA/RG-23 A Pt-II debit entry nos. for payment of duty and the consignees names are matching. It is also seen that in case of quadruplicate invoice no.726 dt. 17.12.2002, 727 dt.18.12.2002 and 731 dt. 20.12.2002 except for the invoice number all other particulars are the same as those in the invoice no.718 dt. 17.12.2002, 721 dated 17.12.2002 and 719 dt. 17.12.2002 respectively. In case of quadruplicate invoice no. 738 dt.19.12.2000, only date is incorrect and correct date is 20.12.2002 and in case of quadruplicate copy of invoice no.740 dt.19.12.2002 except for duty debit entry number, all other particulars are correct and the correct duty debit no. is 1537 dt. 20.12.2002. It is not disputed that the clearance of the goods mentioned in the 18 quadruplicate copies of invoices are reflected in RG-I Register though under different invoices. On going through the 18 disputed quadruplicate copies of invoices, it is seen that out of 18 invoices, 11 invoices are defective inasmuch as the details in the upper portion rate per unit, quantity supplied and value does not match with the value on which excise duty has been calculated, as indicated in the lower portion of invoices. Therefore the 18 quadruplicate copies of invoices recovered from file no. 229 seized from the factory of NSLED cannot be treated as parallel invoices representing clearances made without payment of duty and hence the duty demand of Rs.6,49,002/- based on the same is not sustainable.
8. In view of the above discussion, the confirmation of the duty demand of Rs.19,38,281/- (12,89,279/- + 6,49,002/-) along with interest against NSLED and imposition of equal amount of penalty under section 11AC on on them is set aside and for the same reason penalty of Rs.1 Lakh imposed on Shri Vinod Gupta, Managing Director of PDIL is also set aside.
8.1 As regards penalty under Rule 26 of the Central Excise Rules, 2002 of Rs.1 Lakh on Shri Sunil Trivedi, Managing Director, NSLED, since the part of the duty demand confirmed by the Commissioner, which has not been challenged is Rs.4,91,322/- and even of the setting aside the duty demand of Rs.19,38,281/- , the duty demand of Rs. 4,91,32/- would still remain, the penalty on him is reduced to Rs.20,000/- (Rupees Twenty Thousand only).
8.2 As regards penalty of Rs.25,000/- each imposed on Shri Vinod Agarwal, Commercial Officer and Ankush Khullar, Excise Manager, since they are employees of NSLED, and there is no evidence on record to prove that they had dealt with any goods cleared without payment of duty, in the manner specified in Rule 26 of the Central Excise Rules, 2002, penalty on them is not sustainable and the same is set aside.
9. The appeals stand disposed of as above.
(Rakesh Kumar ) Member (Technical) Ckp.
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