Custom, Excise & Service Tax Tribunal
M/S A. Navinchandra Steel Ltd vs Commissioner Of Central Excise, ... on 20 September, 2012
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
WEST ZONAL BENCH AT MUMBAI
COURT NO.1
APPEAL NO. E/ 1497, 1498/06, E/1741 to 1752/06, & 1803/06
(Arising out of Order-in- Original No.03/SK-03/2006/Thane.1 dtd. 31.1.2006 passed by the Commissioner of Central Excise, Thane.I )
For approval and signature:
Honble Mr S.S.Kang, Vice President
Honble Mr.Sahab Singh, Member(Technical)
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1. Whether Press Reporters may be allowed to see : No
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 : Yes
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
authorities?
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M/s A. Navinchandra Steel Ltd.
Alpesh Gosalia
M/s Bhuwalka Steel Industries Ltd.
Shri Suresh Kumar Bhuwalka
Shri Satish Harjivandas Gandhi
Shri Dilip Patil
Shri Pappu Babu Singh
Shri Lalit Upadhyaya
Shri Ramesh Chandran
Shri Pundalik Patil
Shri Pramod Raut
Shri Pradip Pattanayak
Shri S. K. Mishra
Shri Vishwas Thakare
Shri Pramod Deshmukh
:
Appellants
VS
Commissioner of Central Excise, Thane.I
Respondent
Appearance
Shri Vipin Kumar Jain, Advocate ( BSIL & its employees) for Appellants
Shri Prakash Shah, Advocate (ANSL and Alpesh Gosalia) for appellants
Shri K.M.Mondal, Special Counsel for Respondent
CORAM:
Mr. S. S. Kang, Vice President
Mr.Sahab Singh, Member(Technical)
Date of hearing: 21/08/2012
Date of decision 20/09/2012
ORDER NO.
Per : Sahab Singh
These appeals arise out of Order-in-Original No.03/SK-03/2006/Thane.I dated 31.1.2006 passed by the Commissioner of Central Excise, Thane.I. By the impugned order, the Commissioner has confirmed the duty demand of Rs. 7,57,99,871/- under Sec.11A of the Central Excise Act, 1944 together with interest at the appropriate rate under Sec.11AB of the said Act against M/s. Bhuwalka Steel Inds.Ltd. (for short BSIL). The Commissioner has also imposed penalty on it under Sec.11AC of the said Act equal to the amount of duty. The Commissioner also held that goods valued at Rs. 47,37,49,194/- are liable for confiscation under Rule 25 of the Central Excise Rules, 2002. The Commissioner also ordered appropriation of the amounts of Rs. 25,19,040/- Rs. 7,47,211 and Rs. 85,00,000/- deposited/debited in the Cenvat register during the investigation. The Commissioner has also imposed penalty of Rs. 50 lakhs each on Shri Surersh Kumar Bhuwalka, Managing Director and Shri Satish Gandhi, Director of the appellant company.
2. Besides the above, the Commissioner has also imposed penalty of Rs. 50,000/- each under Rule 26 of the Central Excise Rules, 2002 on the following appellants:-
(1) Shri Dilip Patil ( A.No.E/1744/06-Mum) (2) Shri Pappu Babu Singh (A.No.1745/06-Mum) (3) Shri Lalit Upadhyaya (A.No.1746/06-Mum) (4) Shri Ramesh Chandran (A.No.1747/06-Mum) (5) Shri Pundalik Patil (A.No.1748/06-Mum) (6) Shri Pramod Raut ( A.No.1749/06-Mum) (7) Shri Pradip Pattanayak (A.No.E/1750/06-Mum) (8) Shri S.K.Misra (A.No.E/1751/06-Mum) (9) Shri Vishwas Thakare (A.No.E/1752/06-Mum) (10) Shri Pramod Deshmukh (A.No.E/ 1803/06-Mum) 2.1 The Commissioner has also imposed penalty of Rs. 25 lakhs each on M/s. A. Navinchandra Steel Ltd. (for short ANSL) and its director Shri Alpesh Gosalia under Rule 26 of the CER, 2002. Hence these appellants have filed these appeals against the impugned order before this Tribunal.
3 The brief facts of the case are that BSIL is engaged in the manufacture of TOR Steel, MS rounds, squares, angles, beams, flats, channels etc. falling under Chater 72 of the CETA, 1985. Based on information that BSIL was removing excisable goods without payment of duty and without accounting for the same in their records, the officers of Commissioner of Central Excise, Thane.I visited the premises of BSIL, its authorized dealers ANSL, premises of transporters who transported the goods from BSIL to the customers of ANSL on 23.6.2003 and conducted searches and seized various incriminating documents.
3.1 During the course of search of the factory premises, the officers ascertained the stock of finished goods and raw materials in the presence of Shri Satish Gandhi , Director of BSIL. The officers found shortage of finished goods to the extent of 294.900 M.T. However, no shortage was found of raw materials and furnace oil. Shri Satish Gandhi accepted the shortage of finished goods allegedly removed without payment of duty.
3.2 During the course of further investigation, the officers found that ANSL was the authorized agent/dealer to whom TOR steel was supplied by BSIL. ANSL has various sister concerns like M/s. A.N.Steels, M/s. Alpesh Steels, M/s. Akai Steels, M/s. Arcs Tools and Hardware etc. Shri Alpesh Gosalia, Director of ANSL was found to be managing all the sister-concern.
3.3 Investigation revealed that BSIL had adopted a unique method to evade central excise duty. They were preparing central excise invoices for clearance of finished goods. These invoices were later destroyed once the goods safely reached the Octroi Naka or pre-determined destinations. On the following working day, another set of invoices bearing the same invoice numbers which were destroyed were prepared and the goods were removed afresh under these invoices showing central excise duty payable. TOR steels which were removed without payment of duty were normally supplied to ANSL or to its sister concerns or in the name of any other company suggested by Shri Alpesh Gosalia including M/s. Kudrat traders.
3.4 Duplicate copies of the invoices meant for the transporters and corresponding weighment slips were placed in a cover and closed with cello tape or otherwise. This cover was handed over to the transporter arranged by Shri Alpesh Gosalia, who had given specific instructions to the transporters not to open this cover and that they should hand over the cover to their Octroi Agents. Shri Alpesh Gosalia was arranging to collect the covers containing duplicate copies of invoices. In certain cases, he was keeping photocopies of these invoices for his accounting purpose and thereafter the duplicate copies of the invoices were returned to Shri Satish Gandhi, Director of BSIL or to the person authorized by Shri Satish Gandhi. Payments for these goods were made in cash.
3.5 Shri Aslpesh Gosalia, in order to account for the goods received without payment of duty from BSIL, had floated various concerns in the name of various persons like M/s. Kudrat Traders, M/s. Sagar Trading Co. M/s. Vijay Sales Corporation etc. 3.6 In the follow up action, statements of various persons including those of S/Shri Satish Gandhi, Suresh Bhuwalka both Directors of BSIL, Alpesh Gosalia, Director of ANSL and their employees were recorded. In their statements, they had admitted removal of goods without payment of duty, destruction of documents etc. S/Shri Suresh Bhuwalka, Satish Gandhi and their employees also admitted that no records were maintained for purchase of raw materials used in the manufacture of finished goods removed without payment of duty.
3.7 After completion of investigation, show-cause notice dated 19.12.2003 was issued by the Commissioner of Central Excise, Thane.I to BSIL demanding duty of Rs. 1,42,88,622/- for the period April,2001 to June, 2003 by invoking the proviso to Sec.11A(1) of the Central Excise Act, 1944. The notice also proposed imposition of mandatory penalty on BSIL under Sec.11AC, recovery of interest on the duty not paid under Sec.11AB of the said Act, imposition of penalties under Rule 26 of the CER, 2001 and 2002 on various persons including S/Shri Suresh Kumar Bhuwalka, Satish Gandhi, Alpesh Gosalia and others.
3.8 On receipt of the notice, BSIL and other co-noticees filed applications before the Honble Settlement Commission, Customs & Central Excise Additional Bench, Mumbai for settlement of their case. However, the said applications were rejected by the Honble settlement Commission by its order dated 24.6.2004 on the ground that the applicants have not made full and true disclosure of the duty liability.
3.9 Against the aforesaid order of the Honble Settlement Commission, BSIL moved the Honble Bombay High Court by filing a writ petition No.2582/2004. the Honble Bombay High Court by its order dated 6.10.2004 passed the following order:-
3. Having considered the submissions of the learned counsel for the parties, we are satisfied that the following order shall meet the ends of justice:
(i) The respondent No.2 shall issue addendum to the show cause notice dated 19th Dec., 2003 within three weeks from today.
(ii) Upon such addendum being issued to the show cause notice dated 19th December.2003, the petitioner shall be at liberty to make fresh application before the Settlement Commission under Sec.32-E of the CEA, 1944 or, if advised, may amend the application dated 20th January, 2004.
(iii) The final order dated 21st June, 2004 passed by the Settlement Commission (majority as well as minority) is rendered ineffective. The Settlement Commission shall reconsider afresh the application that may be made by the petitioner under Sec.32-E after receipt of addendum to the show cause notice dated 19th December, 2003 or the amended application dated 20th January, 2004 in accordance with law uninfluenced by the earlier order dated 21st June, 2004.
(iv) Needless to say that the petitioner shall be at liberty to apply for copy of the report dated 10th March, 2004 forwarded by the Commissioner of Central Excise, Thane.1 under Sec.32F(1) of the Central Excise Act, 1944 to the Settlement Commission. 3.10. Pursuant to the above direction of the Honble Bombay High Court, the Commissioner of Central Excise, Thane.I issued an Addendum/Corrigendum dated 19.10.2004 to BSIL demanding duty of Rs. 7,57,99,871/- together with interest, proposing imposition of penalty on it under Sec.11AC of the CEA, 1944, proposing confiscation of the goods valued at Rs. 47,37,49,194/- under Rule 25 of the CERs 2001/2002 and proposing appropriation/adjustment of various amount deposited/debited in their Cenvat Register towards duty liability.
3.11. On receipt of the aforesaid addendum/corrigendum, BSIL made an amendment application to the Settlement Commission. The said application alongwith the applications of other co-noticees was again rejected by the Honble Settlement Commission on the same ground of not making full and true disclosures of its duty liability vide its final order dated 2.6.2005.
3.12. Consequent upon rejection of their applications by the Honble Settlement Commission, the Commissioner after obtaining their replies to the notice and granting them personal hearing, passed the impugned order dated 31.1.2006 as mentioned hereinabove. The said order is challenged in the present appeals.
4. We have heard at length Shri Vipin Kumar Jain, Ld.Advocate for BSIL and its officers/employees and Shri Prakash Shah, Ld.Adocate for ANSL and its Director Shri Alpesh Gosalia. We have also heard Shri K.M.Mondal, Ld. Special Counsel for the Revenue.
5. Shri Vipin Kumar, Ld.Advocate for BSIL made the following submissions:-
5.1. That the present case is squarely covered by the Tribunals decision in the case of Air Carrying Corporation Pvt.Ltd. reported in 2008(229)ELT 80 wherein in almost similar circumstances, the demand of duty confirmed by the same respondent on the basis of alleged excess fuel consumption was set aside both on merits as well as on limitation. This decision of the Tribunal has been affirmed by the jurisdictional High Court as reported in 2009(248)ELT 175.
5.2. That the demand of Rs. 7,57,99.871/- raised through addendum/corrigendum dated 20.10.2004 is not sustainable on merits.
5.3. That the charge of clandestine removal cannot be sustained merely on the basis of theoretical calculation of assumed production based on one particular raw material or fuel.
5.4 That existence of evidence of clandestine removal to some extent ( even if such evidence was not contested by the assessee) does not entitle the Revenue to raise a demand for the past period where no such evidence exists. Various case laws were cited in this regard in support of the contention. It was also submitted that the standard Input-Output Norm published in the Foreign Trade Policy cannot be made a basis for alleging clandestine manufacture and removal of goods and sought support from various case laws.
5.5. That demand of Rs. 7,57,88,871/- issued through addendum/corrigendum is also barred by limitation as the same was based on the data of fuel consumption, recorded production and published standard Input-Output Norm which were within the knowledge of the department at the time of issue of original show cause notice.
5.6. That the department had deleted the original allegations contained in paras 51 and 52 of the show cause notice dated 19.12.2003 and had chosen to raise the demand only on the basis of fuel consumption which is not sustainable both on merits and limitation.
5.7 That the documentary evidence relied upon by the department are photocopies and that too were seized from the premises of third party (ANSL). The Commissioner has brushed aside the request for inspection of the original of the documents and that in view of the Supreme Court Rules in the case of CC vs East Punjab Traders 1997(89)ELT 11(S.C.) and the judgment of Punjab & Haryana High Court in the case of CCE vs. Nand Mangal Steels 2008(286)ELT 701, photocopies of the documents could not be considered as reliable evidence as they are amenable to manipulations.
5.8 That the Commissioner has placed blind reliance on the statement s of various employees and Directors of the appellant company and of ANSL and transporters . The said statements were retracted not only in the course of investigations but also at the time of filing replies to the show cause notice. In the light of the retraction, the burden has been shifted to the department to prove correctness and voluntariness of these statements in view of the judgment of the Supreme court in the case of Vinod Solanki vs UOI 2009(273)ELT 157(S.C.). The Commissioners refusal to permit cross examination of the persons whose statements are sought to be used against the assessee is unfair and unjustified and is against the principles of natural justice. Case laws were also cited in support of this contention. He submitted that when these statements are read in their entirety, the same disprove the departments case of alleged evasion, beyond the amount of Rs. 1,42,88,622/- and none of these statements recorded during the investigations even suggested that clandestine removal had taken place in respect of 285 invoices which are stated to have been destroyed.
5.9 Without prejudice to the above contentions, it was submitted that the impugned order passed by the Commissioner has violated the principles of natural justice inasmuch as the Commissioner has denied the cross examination of the witnesses, though a specific request was made and the Commissioner has not considered the evidences submitted alongwith reply in Annexure 1 to 11.
5.10. That even going by the Standard Input-Output Norm, the average consumption of Furnace oil would be 52.04 litres and not 50 litres for manufacture of 1 M.Ton of finished goods. Hence the calculation of duty is also incorrect.
6. Shri Prakash Shah, Ld.Advocate appearing for ANSL and its director Shri Alpesh Gosalia made the following submissions:
6.1 That there is no finding recorded by the Commissioner for imposing penalty on ANSL under Rule 26 of the CERs 2002 and penalty under Rule 26 can be imposed only on the person who has dealt with offending goods, which he has reason to believe, are liable for confiscation. He submitted that penalty under Rule 26 cannot be imposed on the firm as held by the Tribunal in the case of Universal Radiators Ltd. vs. CCE, Coimbatore 2008(223)ELT 630 and in the case of Woodmen Industries vs. CCE, Patna -2004(164)ELT 339 and the appeal filed by the Commissioner against this decision of the Tribunal has been dismissed by the Honble Apex Court as reported in 2004(170)ELT A 307. The Larger Bench decision of the Tribunal in the case of Steel Tubes of India Ltd. reported in 2007(217)ELT 506 was also cited to say that any person occurring in Rule 209A will not apply to unnatural body corporate.
6.2. With regard to Alpesh Gosalia it was submitted by the Ld.Counsel that there is no finding that the appellant had any involvement in respect of demand raised in addendum dated 20.10.2004 and the appellant has not physically handled the offending goods and hence no penalty can be imposed on him under Rule 26 of the CERs 2002. Ld.Counsel also adopted the submissions made on behalf of the BSIL and also added that in any event, penalty on this appellant be substantially reduced in view of the above said submissions.
7. Countering the submissions made on behalf of the appellants, Shri K.M.Mondal, Special Counsel appearing for the Revenue made the following submissions:
7.1 That the Tribunals decision in Air Carrying Corporations case supra is factually distinguishable from the present case. In Air Carrying Corporations case the department could not find any missing invoice numbers in between the recorded invoices and the seized invoices whereas in the case of BSIL, the department has found 285 missing numbers of invoices in between the recorded invoices and the seized invoices. This apart, in Air Carrying Corporations case there was proof of substantial damage of the furnace resulting in higher consumption of furnace oil and that too, only during 2002-03 whereas in the case of present appellant(BSIL) there was no proof of any damage to the furnace and hence there was no justifiable ground for higher consumption of furnace oil. He also submitted a comparison chart showing year-wise consumption of furnace oil in liters per M.T. of CTD bars during the period 1999-2000 to 2003-2004 of Air Carrying Corpn. and BSIL. He also relied upon the Apex Court judgment in the case of CCE, Calcutta vs. Alnoori Tobacco Products 2004 (229) ELT 80 (S.C.) holding that circumstantial flexibility, one additional or different fact may make a word of difference.
7.2. That the duty demanded based on consumption of furnace oil alone as per the Standard Input-Output Norm can be sustained. He relied on the Apex Court judgment in the case of Triveni Rubber and Plastics vs. CCE. Cochin 1994(73)ELT 7 (S.C) holding that duty demand can be sustained based on the electricity consumption alone and this judgment is squarely applicable to the present case. He submitted that this judgment has been followed by the Tribunal in the case of Alfa Spring Ltd. vs CCE, Kanpur 2006(198)ELT 74 (T).
7.3. That the Directors and employees of BSIL and ANSL had admitted in their statements about the destruction of documents including invoices under which excisable goods were removed without accountal and without payment of duty and that on the following day excisable goods were removed using the same invoice numbers. Referring to Annexure C-4 of the show cause notice and B-11 of the addendum he submitted that during 1.4.2003 to 19.6.2003 excisable goods were removed under minimum number of 460 invoices which were not accounted for. Out of these, only 175 copies of invoices could be seized from the premises of ANSL. The total quantity of goods cleared under these invoices is 2329.37 M.Ts. As the balance 285 invoices could not recovered having been destroyed by the appellant, the department had no other alternative but to adopt the input-out norms based on furnace oil consumption to quantify the production of finished goods removed.
7.4. That in the given circumstances, adoption of Standard input-out norm (50 Ltrs of furnace oil : 1 M.T. of finished goods) was the correct method to determine the quantum of production of finished goods and calculate the duty accordingly. At this stage, drawing our attention to Annexure B-6 to the addendum/corrigendum to the show cause notice, he clarified that total duty of Rs. 7,57,99,871/- raised in the addendum also includes duty amounting to Rs. 1,09,03,459 on account of clandestine clearance and Rs. 3783163 on account of shortages raised in the original show cause notice.
7.5. That as per Standard Input-Output Norm, the quantification of production passed on fuel consumption cannot be faulted. He submitted that as per their records during the period 22.4.2002 to 16.5.2002 only 5790.26 MT of finished goods were shown to have been manufactured and at the same time 1228.39 MT of finished goods were removed without accounting and without payment of duty. If these clandestinely removed goods were added to the production during the said period, the average consumption of furnace oil is only 44.762 Ltrs/PMT. It is also supported by the admission of Shri Pradip Patnaik, quality Control in charge of BSIL that consumption of furnace oil is only 40 to 45 Lts for manufacture of one M.T. of finished goods. Therefore, the duty demand raised in the addendum based on the fuel consumption is quite justified.
7.6. On the point of cross examination, vis-`-vis violation of principles of natural justice, he submitted that the present case is not made out merely on the basis of statements of various persons but it is based mainly on the documentary evidence recovered from the premises of the appellant, its authorized agent ANSL, transporters and others and also the shortages of finished goods found on 11.7.2002 and 23.6.2003. Therefore, there is no violation of principles of natural justice by denying the cross examination of the witnesses. He drew our attention to para 55 of the impugned order wherein the Commissioner has recorded a finding that cross examination of the witnesses cannot be asked for as a matter of right. It depends on facts and circumstances of each case. In the present case, although some of the witnesses retracted their statements, in their subsequent statements, they had re-confirmed their original statements as correct. Further, the appellant could not make out any case for cross-examination of witnesses except saying that cross-examination is necessary inasmuch as the allegation in notice has been denied. Referring to the evidence of retraction filed by witnesses stating that their statements were obtained under threat and co-ercion, Shri Mondal submitted that the affidavits are all dated 5.1.2006 and the same are identically worded. The same have been filed after more than two years. Such evidences do not inspire any confidence. Moreover, most of the witnesses are Directors and employees of the appellant. In short, he submitted that there was no violation of principles of natural justice by denying cross-examination of the witnesses. He relied upon the following decision in this regard:
(i). Fortune Impex vs CCE,Calcutta 2001(138)ELT 556
(ii) Gulabchand Silk Mills Pvt.Ltd. vs. CCE, Hyderabad.II 2005((184) ELT 263.
7.7. On the point of limitation, Shri Mondal suibmitted that this is a clear case of suppression of production and clandestine clearance of the finished goods. Merely because the fact of furnace oil consumption was known to the department, that does not take away the extended period of limitation for alleged suppression of production and clandestine clearance of finished goods. He, therefore submitted that the date of knowledge of the department is not the relevant date as held by the Honble High Court in the case of CCE, Surat vs. Neminath Fabrics Pvt.Ltd 2010(256)ELT 369(Guj). He further stated that consumption of furnace oil had been made the basis of computation of duty demand as per the Standard Input-Output norms and this basis was made known to the appellant by issue of addendum/corrigendum to the show cause notice. Therefore, neither the show cause notice nor its addendum/corrigendum is barred by limitation particularly when the period of demand from April 2001 to June, 2003 remains the same. Further, the addendum/corrigendum is not a separate show cause notice. This is a part and parcel of the original show cause notice. He stated that as long as the basis of quantification is made known to the assessee before passing the order, the addendum cannot be said to be barred by limitation nor the proceedings can be held to be vitiated. In this connection, he relied upon the Tribunals decision in the case of BEST & Co. vs. CC, New Delhi 2009(239)ELT 294(T) and the Tribunals decision in the case of Sara Services & Engg.Pvt. Ltd. vs. CCE, Meerut -2010(254)ELT 486(T).
7.8 On the question of penalties, he submitted that in the facts and circumstances of the case, penalties imposed by the Commissioner on various persons for their omission and commission are justified.
7.9. Summing up his submissions, Shri Mondal submitted that the impugned order deserves to be confirmed.
8. In his rejoinder, the Shri Vipinkumar Jain, the Ld.Advocate for BSIL and others mainly emphasized the following points:-
8.1. That demand raised in the addendum/corrigendum goes beyond 285 invoices allegedly destroyed by the appellant. It has been issued as a result of rethinking on the part of the department based on fuel consumption for the entire period 2000-2001 to 2003- 2004 . It is therefore a fresh show cause notice.
8.2. That it is incorrect to say that the addendum had been issued pursuant to the order of the Honble High Court. Before the Honble High Court the Revenue wanted to issue addendum/corrigendum to the show cause notice and hence the Revenue was given liberty to do so.
8.3 Details of consumption of furnace oil were known to the department and so also the Standard Input-Output norm published by the Exim Policy which was published in public domain. Therefore, extended period of limitation is not available to the department.
8. 4. That the Tribunals decision in Air Carrying Corporation which is affirmed by the Honble High Court is squarely applicable to the present case. Further since the Honble High Court had affirmed the decision of the Tribunal on merits, it is not required to give any finding on limitation.
8.5. That the departments reliance on the Gujarat High Court judgment in the case of Neminath Fabrics Pvt.Ltd. regarding limitation of time is totally misplaced.
8.6. Similarly, the departments reliance on the Supreme Courts ruling in the case of Triveni Rubber & Plastics given in the context of Rule 173E of the erstwhile Central Excise Rules 1944 is also not relevant on the merits of this case.
8.7 Ld.Counsel also submitted that in the interim reply filed on 6.1.2006 it was specifically mentioned that the repairs were carried out to the furnace for its smooth functioning of the mill as well as to reduce the consumption of furnace oil. Mr. B.R.Rao of M/s. Techno Therma Furnaces was engaged to carry out the repairs in a phased manner. He also referred to survey on furnace oil consumption in U.K. relied upon in the reply and also letter dated 22.11.2004 of Petroleum Conservation Research Association regarding the guidelines for energy saving. However, the Commissioner has not considered any of these documents. Hence, he submitted that the matter should go back to the Commissioner for fresh consideration.
9. We have considered the submissions of both sides including the written submissions. We have examined the relevant records also. We find that in the original show cause notice dated 19.12.03, total duty amounting to Rs. 1,42,88,622 was demanded for the period April, 2001 to June, 2003. This duty demand is based on documentary evidences recovered and seized from the premises of the appellant BSIL, its authorised dealer ANSL and transporters who transported the finished goods from BSIL to the customers of ANSL and shortage of finished goods found in the stock by the Central Excise Officers during their visit to the factory of the appellant on 11.7.02 and 23.6.03. In para 56 of the impugned order dated 31.1.2006, the Commissioner has noted the details of the demand. We further find that against the original show cause notice BSIL and other co-noticees filed applications before the Settlement Commission, Customs and Central Excise, Mumbai for settlement of the case. In the applications so filed BSIL admitted the duty liability of Rs. 1,09,03,459/- only out of the total duty amount of Rs. 1,42,88,622/- . The balance duty amount of Rs. 3385163/- attributable to shortage of finished goods was not admitted by BSIL. However, the Settlement Commission by its majority order dated 21.6.2004 rejected the application of BSIL on the ground that the applicant has not made full and true disclosure of its duty liability. Consequently, the applications of other co-noticees were also rejected.
9..1 Against the aforesaid order of the Settlement Commission, BSIL filed W.P.No.2582/04 in the Honble Bombay High Court. Thereupon, the Honble High Court by its order dated 6.10.04 passed the order as reproduced in para 3.9 above.
9.2. Consequent upon the direction of the Honble Bombay High Court, the Commissioner of Central Excise, Thane.I issued addendum/corrigendum dated 19.10.2004 to BSIL interalia demanding duty amounting to Rs. 7,57,99,871/-.
9.3. On receipt of the aforesaid addendum/corrigendum to the show cause notice BSIL made an amendment application to the Settlement Commission. In the said amendment application BSIL again restricted its duty liability to Rs. 1,09,03,459/-.However, during the hearing before the Settlement Commission, full duty amount of Rs. 1,42,88,622 demanded in the original show cause notice was admitted as seen from para 6(1) of the order dated 2.6.2005 of the Settlement Commission. However, the Settlement Commission rejected the application of BSIL again on the ground that the applicant has failed to make a true and full disclosure of its duty liability.
9.4 In the light of the above admitted position, we are convinced that the duty demand of Rs. 1,42,88,622/- raised in the original show cause notice which is based on documentary evidence as well as shortage of finished goods is required to be confirmed against BSIL. Consequently, equal amount of penalty will also be imposable on it under Sec.11AC of the Central Excise Act, 1944. Accordingly, we confirm the duty demand of Rs. 1,42, 88,622/- and equal amount of penalty of Rs.1,42,88,622/- under Sec.11AC of the Act against BSIL.
10. We find that as per Annexure B-6 to the addendum/ corrigendum dated 19.10.04, the total duty demanded is Rs. 7,57,99,871/- inclusive of the duty demand of Rs. 1,42,88,622/- raised in the original show cause notice. We have already confirmed the duty demand of Rs. 1,42,88,622/-. Accordingly, the duty demand remained to be considered comes to be Rs. 6,15,11,249/- (Rs. 7,57,99,871 Rs. 1,42,88,622/-). The remaining duty amount of Rs. 6,15,11,249/- has been calculated based on furnace oil consumption only as per the Standard Input/Output norms of the Exim Policy. This has been seriously contested by the appellant on various grounds. We shall now examine the same.
10.1 Ld. Advocate for BSIL contended that the present case is squarely covered by the Tribunals decision in the case of Air Carrying Corporation vs, CCE Thane.I 2008(229)ELT 80 (Tri-Bum) wherein in the similar circumstances the demand of duty raised by addendum/corrigendum on the basis of alleged excess fuel consumption has been set aside by the Tribunal both on merits as well as on limitation and this decision has been fully affirmed by the Honble Bombay High Court as reported in 2009(248)ELT 175(BOM). The Ld.Special Counsel for the Revenue has however submitted that the facts of the present case are substantially different from those in Air Carrying Corporations case and hence the Tribunals decision in Air Carrying Corporations case will not be applicable to the present case. He sought to distinguish the two cases in the following manner: (i) In Air Carrying Corporations case, the department could not find any missing invoice number in between the recorded invoice and seized invoice, whereas in the case of BSIL, the department has found 285 missing numbers of invoices in between the recorded invoices and the seized invoices;
(ii) In Air Carrying Corporations case there was proof of substantial damage to the furnace resulting in higher consumption of furnace oil and that too, only during 2002-2003 whereas in the case of BSIL, there was no proof of any damage to the furnace and hence there was no justifiable reason for higher consumption of furnace oil.
(iii) Average year-wise consumption of furnace oil in litres per M.T. of CTD Bars by BSIL is much more than that of Air Carrying Corporation. This was shown to us in tabular form which is reproduced:
Year-wise average consumption of furnace oil in liters per M.T. of CTD bars A. Air Carrying Corporation.
1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 46.29 39.08 35.38 176.86 45.55 B. BSIL 1999-2000 2000-2001 2001-2002 2002-2003 2003-2004 44.135 Information incomplete 53.308 64.227 68.795 10.2. Ld.Special counsel for the Revenue also submitted that unlike in the case of Air Carrying Corporation, in the present case addendum had been issued pursuant to the order of the Honble High Court dated 6.10.04. He, therefore, submitted that the Tribunals decision in Air Carrying Corporations case will not be applicable to the present case. He also relied on the Apex Court judgment in the case of CCE, Calcutta vs. Alnoori Tobacco Products -2004(229)ELT 80 (S.C.) wherein the Honble Apex Court has observed that circumstantial flexibility, one additional or different fact may make word of difference in a case.
10.3 Considering the submissions of both sides, we agree with Ld. Spepcial Counsel for the Revenue that factually the case of BSIL is not similar to that of Air Carrying Corporation and hence the Tribunals decision in Air Carrying Corporations case cannot be straightaway applied to this case, particularly in view of the Honble Apex Court judgment cited supra.
11. It was contended by the Ld.Advocate for BSIL that the impugned order has been passed in violation of principles of natural justice on two counts, firstly, the appellant BSIL had not been shown the original of the documents relied upon in the impugned order. The appellant was given only photo copies of the documents seized from the premises of ANSL. In this connection, the ld.Counsel has relied upon the Supreme Court ruling in case of East Punjab Traders (supra). and the judgment of High Court of Punjab & Haryana in the case of Commissioner of Central Excise vs. Nand Mangal Steel (supra) to submit that photo copies of documents are not reliable evidence. Secondly, the appellant has been denied cross- examination of the witnesses who have retracted their statements. Ld. Counsel specifically drew our attention to the appellants letter dated 27.12.05 (at page 26 of the PB Vol.VII) clearly stating that the contents of the show cause notice are not admitted and hence cross examination of the persons requested vide letter dated 22.12.05 is required. Further, the persons whose statements have been relied upon in the proceedings have retracted their statements. He also took us through various affidavits filed by the employees of the appellant company. He submitted that in the light of retraction, the burden has been shifted to department to prove the correctness of the statements. In this connection, he relied upon the judgment of the Supreme Court in the case of Vinod Solanks case (supra). .
11.1. As per the records, we find that the department has seized photo copies of 175 duplicate invoices (transporters copies) from the premises of appellants authorized dealer ANSL. As per the statement of Shri Alpesh Gosalia, Director of ANSL he used to send back the original copies of duplicate invoices received by him to Shri Satish Gandhi, Director of BSIL who used to destroy the same. However, sometimes, he used to keep photo copies of those invoices for his billing purposes. It is these photo copies of the duplicate invoices which were seized by the department. These invoices were shown to the employees of the appellant who identified their signatures on the invoices and authenticated them. Therefore, the genuiness of these invoices cannot be doubted. We have perused the judgment of the Apex Court in East Punjab Traders cited supra. We find that in that case photo copies relied upon by the department were not duly authenticated and the same did not bear any signature. Hence, the Honble Apex Court held that the authenticity of the document is in doubt. This judgement has no application to the facts of the present case. We have also perused the judgment of Punjab & Haryana High Court in the case of Nand Mangal Steel cited supra. In this case, demand of duty was confirmed on the basis of photo copies of parallel invoices procured from the informer which was not issued by the appellant. Therefore, it was held that the demand raised on such document is not sustainable. This judgment has also no application to the facts of this case where Shri Satish Gandhi, Director of the appellant company has himself admitted destruction of the original of the invoices under which the goods were cleared without payment of duty.
11.2 Regarding the alleged denial of cross examination, we find that the grievance of the appellant is not genuine. The appellant was requested by the department vide its letter dated 26.12.05 to justify its request for cross examination of witnesses. We have not found any satisfactory justification shown by the appellant for cross examination of witnesses except for showing its letter dated 27.12.05 that the contents of the show cause notice are not admitted. We are unable to accept this as a valid ground for cross examination of the witnesses. Hence the Commissioner has rightly denied cross examination of the witnesses which cannot be demanded as a matter of right. Further we find that the case of the department is based mainly on the basis of documentary evidences and the statements of various persons only corroborate the same. The Ld.Advocate also contended that the persons whose statements have been relied upon in the proceedings have retracted their statements more than once and finally by affidavits but the Commissioner has not considered the same. We find that in the present case though, some of the witnesses had retracted the statements, they had reconfirmed the same as correct in their subsequent statements. We have also perused the affidavits of retraction filed by the employees of BSIL. The affidavits are all dated 5.1.06 and are identically worded. This apart, these affidavits of retraction have been filed after more than 2 years. Therefore, in the facts and circumstances of the case, we do not think that cross examination of the witnesses was at all necessary.
11.3. We have gone through the judgment of the Honble Apex Court in the case of Vinod Solanki. We find that this judgment has been given in the context of Foreign Exchange Regulation Act, 1973. This judgment does not help the appellant. On the contrary it helps the case of the department. In para 22 of the judgment, the Apex Court has held that evidences brought on record by way of confession which stood retracted must be substantially corroborated by other independent and cogent evidences. In the present case, the department has relied upon various documentary evidences which are listed below:
i) 175 duplicate copies of invoices ( transporters copies) together with weighment slips of the appellant seized from the premises of its authorized agent ANSL;
(ii) Haulier report (summary of weighment slips) seized from the premises of the appellant BSIL;
(iii) Transporters documents seized from the premises of transporters
(iv) Documents recovered from the customers of ANSL and
(v) Shortage of 294.900 MT of finished goods found on 23.6.2003 and shortage of 1230.000 MT of finished goods and 70723 ltrs. of furnace oil found on 11.7.2002.
These evidences have been finally accepted by the appellant by accepting the duty demand raised in the original show cause notices. The statements of various persons only corroborated the documentary evidences. Therefore, in the facts of this case, we do not think that there has been any violation of principles of natural justice by denying the cross examination of the witnesses. We find that in the present case, the Tribunals decision in the case of Furtune Impex vs CCE, Calcutta 2001 (138)ELT 556 is more appropriate. In para 12 of this decision, the Tribunal has held as follows:
12 ---------------------------------------------------------------
The learned Advocate has also emphasised that non-allowing of cross-examination of 26 persons sought by him also vitiates the proceedings. The cross-examination of the witness, wherever necessary, has to be allowed in Departmental Proceedings. But it is not required that in each and every case cross-examination should necessarily be allowed. There is no absolute right of cross-examination provided in the Customs Act. This was the view held by the Calcutta High court in the case of Tapan Kumar Biswas V. UOI, 1996 (63) ECR 546. Cross-examination of witnesses cannot be demanded as of right. The presumption is that unless the noticee makes out a case for cross-examination he will not be granted cross-examination. The appellate Tribunal in the case of Debu saha v. Collector of Customs, 1990 (48) ELT 302 (T) held that it is no doubt true that in all cases, cross-examination need not be granted, but it all depends on the circumstances of each case. The tribunal also observed in that case that if the Collector comes to the conclusion that the cross-examination is not material then by assigning reasons, he can reject the prayer. We find tat the learned Advocate, in his letter dated 9.3.1996 had given a list of 26 persons for cross-examination without indicating the specific reasons for cross-examining them. Some of the persons mentioned therein are co-noticees and some of them are Director/partner/employee of his clients. It has been held by the Tribunal in the case of Calicut Rubber co. v. CCE, Cochin, 1996 (81) ELT 320 (T) that if the Appellants are accused persons the question of calling them for cross-examination does not arise. Again he had mentioned a number of officers by designation without indicating their names and role played by them in the investigation of the matter against his client. We also note that the learned Advocate ahs not disputed the fact that the cartons contained very old/used/broken QTMs of clocks and the value was only Rs. 80,000/- as against the declared value of Rs. 29,88,500/-. There is also no rebuttal by the learned Advocate that these goods were sent for export through Kishn Daga. In view of these facts and circumstances we are of the view that it cannot be claimed by him that there was violation of principles of natural justice by not allowing the cross-examination of the persons sought by him. The Apex court in Surjeet Singh Chhabra v U.O.I, 1997 1996 (89) ELT 646 (S.C.) held that in view of confession made by him, it binds him and, therefore, in the facts and circumstances of this case the failure to give him the opportunity to cross-examine the witness is not violative of principles of natural justice.
-------------------------------------------------- 11.4 In view of our foregoing findings, we hold that there was no violation of principles of natural justice in passing the order.
12. On merits of the case, the Ld.Counsel for BSIL has contended that the charge of clandestine removal cannot be sustained merely based on theoretical calculation of assumed production based on one raw material or fuel. In support of his contention, the ld.Advocate relied upon the following decision:
(1) CEE, Indore vs. G.M. Products -2007 (207) ELT 723 (Tri- Del.) ;
(2) Nav Karnataka Steels Pvt.Ltd. vs. CCE, Belgaum 2008(225)ELT 454 (Tri-Bang.) (3) Bhawani Shankar Castings Ltd. vs. Commr.of C.Ex. Jalandhar 2009 (246) ELT 332 (Tri-Del.);
(4) R.A. Castings Pvt.Ltd. vs. CCE, Meerut.I -2009(237)ELT 647 (Tri-Del.);
(5) P.V.Varghese vs. Cegat 2008(232)ELT 420 (Ker.) (6) Utility Alloys Pvt.Ltd. vs CCE, Cochin 2005(184) ELT 80 (Tri- Bang.) 12.1 Ld. Counsel has also contended that the Input-Out Norm published in the Foreign Trade Policy cannot be made a basis for alleging clandestine manufacture and removal of goods and in support of his contention he relied upon the following decisions:-
(i) Hindustan Coca Cola Beverages Pvt.Ltd. vs. CCE, Thane.1 2006(205)ELT 700 (Tri-Mum);
(ii) Govind Rubber Ltd. vs. CCE, Jaipur.I 2005(192)ELT 775 (Tri-Del.);
(iii) CCE, Indore vs., Agarwal Indotex Ltd. 2010 (261) ELT 935(Tri-Del.);
(iv) PCL Oil & Solvents Ltd. vs. CCE, Vapi 2009 (246)ELT 528 (Tri-Ahmd.)
(v) Suzlon Fibres Ltd. vs CCE, Surat 2008(230)ELT 166 (Tri-Ahmd.);
(vi) Commissioner vs Pepsicao India Holding Ltd. 2008(232)ELT A 197(Bom);
(vii) Pepsico India Holdings Ltd. vs. CCE, Mumbai 2002(146)ELT 468(Tri-Mum) and
(viii) Commissioner vs. Pepsico India Holding Ltd. 2003 (151) ELT A 298.
12.2 Ld.Advocate has also submitted that the Apex Court judgment in the case of Triveni Rubber & plastics relied upon by the Revenue is not relevant for the purpose.
12.3. Without prejudice to the foregoing submissions, the Ld.Advocate has submitted that even going by the Standard Input-Output Norm, the average consumption of furnace oil would be 52.04 Ltrs and not 50 Ltrs for consumption of One M.T. of finished goods. As per SION it is 50 Kg. Furnace oil ( 52.04 Ltrs) required for manufacture of 1 M.T. of finished goods. Therefore, the recalculation of duty will be necessary. We agree with the Ld. Advocate and consequently the matter is required to be remanded.
12.4 The Ld.Advocate has also made grievance that the appellant vide its reply dated 6.1.2006 produced evidences in Annexure 1 to 11 regarding causes of excess fuel consumption. In particular he referred to the following documents:-
i) letter dated 6.12.2003 of M/s. Techno Therma Furnaces regarding refurbishing of furnace of Unit III at their Wada Plant. (Annexure.9)
(ii) Survey on furnace oil consumption in U.K.(Annexure.10)
(iii) Letter dated 20.2.2004 of Petroleum Conservation Research Association.(Annexure.11) However, the Commissioner has not considered the same. The Commissioner has dismissed the same simply by observing that they are not backed by any facts and figures.
12.5 At this stage, Ld.Special Counsel for Revenue has submitted that it is not correct to say that documents produced were not considered. From the findings of the Commissioner it is quite clear that he has considered the same and that is why he has observed that they are not backed by any correct figures.
13. We have considered the above submissions. Documents produced whether relevant or otherwise need to be examined and findings need to be recorded thereon. We have not found any specific findings in the impugned order in this regard. The Commissioner has merely observed that they are not backed by any facts and figures. We are therefore of the view that matter requires re-examination by the Commissioner. Accordingly, we set aside the duty demand raised in the addendum/corrigendum excluding duty amount of Rs. 1,42,88,622/- covered by the original show cause notice which we have already confirmed in para 9.4 above and remand the matter back to the Commissioner for denovo adjudication. It is needless to say that before passing the order afresh the Commissioner shall give adequate opportunity of being heard.
13.1 As we are remanding the matter, we have not examined the case laws cited by both sides on merits of the case. The Commissioner shall examine the same and see whether or not they applicable to the facts of this case.
14. On limitation, the Ld.Counsel for BSIL has submitted that the demand of duty raised in the addendum/corrigendum is based solely on the basis of consumption of furnace oil as per Standard Input-Output norms published by DGFT. The details of furnace oil consumption were known to the department even at the time of issue of original show cause notice. Therefore, the extended period of limitation under proviso to Sec.11A(1) of Central Excise Act, 1944 is not available to the department. As against this, Ld.Counsel for Revenue has submitted that it is true that duty demand raised in addendum/corrigendum has been made on the basis of consumption of furnace oil. However, this is not the basis for invoking the extended period of limitation, The extended period of limitation has been invoked for clandestine manufacture and clearance of finished goods without payment of duty. This has been established on record. In his submission, addendum/corrigendum is an integral part of the original show cause notice though the basis of computation of duty has been changed in addendum/corrigendum. In his submission, as long as the basis of computation of the duty has been made known to the assessee, there cannot be any grievance. The law requires that if the basis of computation of duty is changed that must be intimated to the assessee for effective rebuttal. In the present case it has been done. Therefore, the grievance is not genuine. Just because the department could not collect the invoices beyond 175 under which the goods were removed without payment of duty it cannot be contended that there was no clandestine removal beyond 175 invoices. According to him as per records during the period 1.4.2003 to 19.6.2003 alone there were atleast 460 invoices issued by the appellant under which clandestine clearances have taken place but the department could seize only 175 of them. Remaining 285 invoices have been admittedly destroyed by BSIL. Therefore, it cannot be contended that there was no evidences to prove the charge of clandestine clearances except under 175 invoices. Just because the fact of furnace oil consumption was known to the department that does not take away the extended period of limitation for alleged suppression of production and clandestine clearances of finished goods. The departments knowledge about furnace oil consumption has no relevance to the extended period of limitation. Period of limitation is to be computed from the relevant date as prescribed in Sec.11A(3)(ii) of the Central Excise Act, 1944. We see considerable force in this submission and we hold that demand of duty raised in the addendum/corrigendum is not barred by limitation. 15. We find that the Commissioner has imposed penalty of Rs. 50 lakhs each on S/Shri Suresh Kumar Bhuwalka, Managing Director and Satish Gandhi Director of BSIL under Rule 26 of CERs, 2002 for various acts of omission and commission in relation to the alleged clandestine manufacture and clearances of the finished excisable goods. As we are partly remanding the matter, we set aside the penalties imposed on them. We make it clear that the Commissioner is at liberty to impose suitable penalty on them under Rule 26 of the CERs, 2002 having regard to the totality of the facts and circumstances of the case.
16. We find that the Commissioner has imposed penalty of Rs. 50,000/- each on S/Shri Ramesh Chandran, Pramod Raut, Viswas Thakre, Pramod Deshmukh, Pundalik Patil, Pappu Singh, Dilip Patil, Lati Upadhaya, S.K.Misra and Pradeep Patnaik under Rule 26 of the CERs, 2002. They were employees of BSIL at the material time. Some of them were excise-in-charge, some were authorized signatory and some were typists and clerks. Penalties have been imposed on them on the ground that some of them prepared invoices and some of them have signed the same under which excisable goods were removed without payment of duty. From their statements recorded during the investigation, we find that they have done so at the instance of Shri Suresh Gandhi, Director of BSIL. They had not done anything on their own in order to gain anything by doing so. In the light of these facts, we do not think imposition of penalties on them is justified. Hence, we set aside the penalties imposed on them.
17. The Commissioner has imposed penalty of Rs. 25 lakhs each on ANSL and its Director Alpesh Gosalia under Rule 26 of CERs, 2002. Penalties have been imposed on the ground that they were also party to the wrong doings of BSIL in clandestine removal of goods without payment of duty. ANSL was the authorized dealer of BSIL. Shri Alpesh Gosalia being the Director of ANSL was receiving most of the goods cleared from BSIL without payment of duty. As per understanding with Satish Gandhi of BSIL, he was receiving duplicate copies of invoices (transporters copy) alongwith weighment slip of BSIL in sealed cover meant for destruction once goods safely reached the pre-determined destination. He used to hand over these invoices to the representative of Satish Gandhi for purpose of destruction. Sometime, he used to keep photo copies of invoices for billing purpose. He made cash payment to Satish Gandhi or to the person nominated by Satish Gandi for such transaction.
17.1 Ld.Advocate for ANSL and Shri Aspesh Gosali submitted that the Commissioner has not recorded any finding against ANSL. Moreover, ANSL is not a person being a limited company. Hence imposition of penalty on it under Rule 26 of the CERs, 2002 is not sustainable in view of the Tribunals decision in the case of Universal Radiators Ltd. vs. 2008(223)ELT 630 and in the case of Woodmen Industries vs. CCE, Patna 2004(164)ELT 339. He also submitted that the departments appeal against the Tribunals decision in Woodmen Industries has been dismissed by the Honble Apex Court as reported in 2004(170)ELT A 307 thereby affirming the Tribunals decision. He also cited the Larger Bench decision in the case of Steel Tubes of India Ltd. reported in 2007(217) ELT 506. We have gone through the cited decisions. In the case of Woodmen Industries the Tribunal has held that Rule 26 permits imposition of penalty on a person and not on the firm. Appeal against this decision by the Commissioner was dismissed by the Honble Apex Court as cited above. In the case of Universal Radiators Ltd. the Tribunal has only followed the decision of Woodmen Industries. Larger Bench decision in the case of Steel Tubes of India Ltd. is also to the similar effect. It is well settled that mere dismissal of civil appeal at the stage of admission is not affirmation of the Tribunals decision. Further, we find that in the case of M/s. Agarwal Trading Corporation & Ors. Vs A.C.C. Calcutta and Ors. Reported in 1983 (13) E.L.T 1467 (S.C) relied upon by the Ld. Special Counsel for Revenue, the Honble Supreme Court in para 7 of the judgment held as under:-
7. The second contention that because the firm is not a legal entity, it cannot be a person within the meaning of Section 8 of the Foreign Exchange Regulation Act or of section 167(3), (8) and (37) of the Sea Customs Act, is equally untenable. There is of course, no definition of person in either of these Acts but the definition in Section 2(42) of the General Clauses Act, 1897, or Section 2(3) of the Act of 1868 would be applicable to the said Acts in both of which person has been defined as including any company or association or body of individuals whether incorporated or not. It is of course contended that this definition does not apply to a firm which is not a natural person and has no legal existence, as such clauses (3), (8) and (37) of Section 167 of the Sea Customs Act are inapplicable to the appellant firm. In our view, the explanation to S. 23-C clearly negatives this contention. In that a company for the purposes in that section is defined to mean any body corporate and includes a firm or other association of individuals and a Director in relation to a firm means a partner in the firm. From the above judgment, it is quite clear that firm is also a person. Therefore, penalty can be imposed on the firm under Rule 26 of the Central Excise Rules. The cited decision of the Tribunal is per incuriam and hence the same has no precedential value. This decision has been followed by the Tribunal in the case of Shrishti Impex Pvt.Ltd. vs. CCE, Thane.1 -2008(232)ELT 210 (Tri-Mum) and in the case of Shivang Ispat Pvt.Ltd. vs. CC&E, Mumbai 2009(246)ELT 506 (Tri-Mum).
17.2 In view of the above, we hold that penalty can be imposed on the firm as a person under Rule 26 of the Central Excise Rules, 2002. However, we take note of the fact that the Commissioner has not recorded any finding against ANSL for imposition of penalty on it under the said Rule. Only on this consideration, we set aside the penalty imposed on ANSL.
17.3 In so far as Shri Alpesh Gosalia is concerned, we are convinced that he was actively concerned with wrong doing of BSIL in clandestine removal of goods without payment of duty. However, the Ld.Counsel submitted that Shri Alpesh Gosalia had no role in so far as the demand of duty raised in addendum/corrigendum is concerned. We are unable to accept this submission. It is not the case of the appellant that his role was restricted to only 175 photo copies of invoices recovered from his premises. As per his statement, sometimes he used to keep photo copies of duplicate invoices( transporters copy) for his billing purpose. It would, therefore, follow that he did not always keep photo copies of invoice received by him in sealed cover. He used to send the same to Satish Gandhi or to his representative for the purpose of destruction once the goods safely reached the pre-determined destination. Therefore, the imposition of penalty on him under Rule 26 of the Central Excise Rules, 2002 is quite justified. It is needless to say that Rule 26 is wide enough to penalize even a person dealing with the goods in any manner which he knows or has reason to believe are liable for confiscation under the Central Excise Act, 1944 or Rules made thereunder. Physical handling of the goods is not necessary to attract the penal action under Rule 26. However, we feel that imposition of penalty of Rs. 25 lakhs on him is on higher side. We, therefore, reduce the penalty to Rs. 15 lakhs (Rupees Fifteen lakhs only).
18. In the result, the appeals are disposed of as follows::
i) Duty demand of Rs. 1,42,88,622/- raised in the original show cause notice is confirmed.
(ii) penalty of Rs. 1,42,88,622/- is imposed on BSIL under Sec.11AC of the Central Excise Act, 1944;
(iii) Demand of duty raised in the addendum/corrigendum excluding the duty amount of Rs. 1,42,88,622/- is set aside and this part of matter is remanded back to the Commissioner for re-adjudication in the light of our observations made in this order. Consequently, the appeal of the BSIL is partly rejected and partly allowed by way of remand.
(iv) Penalties on Shri Suresh Kumar Bhuwalka, Managing Director and Shri Satish Gandhi, Director of BSIL are set aside. The Commissioner shall be at liberty to impose suitable penalties on them under Rule 26 of the Central Excise Rules, 2002 having regard to the totality of the facts and circumstances of the case.
(v) Penalties on S/Shri Ramesh Chandran, Pramod Raut, Viswas Thakre, Pramod Deshmukh, Pundalik Patil, Pappu Singh, Dilip Patil, Lati Upadhaya, S.K.Misra and Pradeep Patnaik under Rule 26 of the CERs, 2002. are set aside and their appeals are allowed in toto.
(vi) Penalty on ANSL is set aside and its appeal is allowed.
(vii) Penalty on Shri Alpesh Gosalia is reduced to Rs. 15 lakhs (Rupees Fifteen lakhs only) from Rs. 25 lakhs. Consequently, his appeal is partly allowed.
(Pronounced in Court on 20/09/2012 ) S. S. Kang Vice President Sahab Singh Member(Technical) pv 44