Tax Management India. Com
Law and Practice  :  Digital eBook
Research is most exciting & rewarding


  TMI - Tax Management India. Com
Follow us:
  Facebook   Twitter   Linkedin   Telegram

TMI Blog

Home

2013 (10) TMI 406

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ided his presence from the officers as several important documents relating to Capt. R.K.Gupta and M/s Musk Tobacco were found in his residence - they had full knowledge that the Cigarettes removed by Must Tobacco clandestinely were non-duty paid which were liable to confiscation under Central Excise law - Shri Shankar Pal Pradhan and Shri Raghu Raghuvar Dayal are liable to penal action for their acts of omission and commission under Rule 26 of the Central Excise, 2002. Waiver of Pre-deposit – Relying upon Benara Valves Ltd. & Or. v. Commissioner of Central Excise & Anr. [2006 (11) TMI 6 - SUPREME COURT OF INDIA ] - Tribunal has not committed any error of law in directing the appellants to deposit ₹ 1 crore for stay of remaining amount of excise duty and penalties - The Tribunal has directed the appellants to deposit a lumpsum amount of ₹ 1 crore giving benefit for excise duty and penalty as also various amounts of penalties imposed on the appellants - it was found that all the appellants had acted with common design and purpose to evade excise duty by clandestinely removing excisable goods, the demand on lumpsum basis does not suffer from any arbitrariness - The Tri .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... arettes. Some of the documents revealed that the unaccounted raw materials were being received by M/s R.K. Cigarettes, Varanasi and that there are common Directors in M/s R.K. Cigarettes and M/s Musk Tobacco. The statement of various persons were recorded during investigation under Section 14 of the Act and show cause notice dated 18.5.2010 was issued to the appellants demanding central excise duty of Rs.7,74,09,518/- under Section 11A along with interest. The show cause notice also proposed to impose penalty under Section 11AC of the Central Excise Act. 5. The applicants objected to the show cause notice dated 18.5.2010. The case was adjudicated by the Commissioner, Central Excise and Service Tax, Lucknow confirming duty of Rs.7,74,09,518/- and equal amount of penalty on M/s Musk Tobacco, and various kinds of penalties on other applicants as follows:- "(a) I confirm the demand of duty amounting to Rs. 7,74,09,518/-(Rupees Seven Crores Seventy Four Lakhs, Nine Thousand five Hundred and Eighteen only) on M/s Musk Tobacco India Pvt. Ltd., Manpur Nagaria, P.O. Neoli, Distt. Kashi Ramnagar under the provision of Section 11A of Central Excise Act, 1944. I order the recovery of inter .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... otice on the ground that M/s Musk Tobacco was involved in manufacture of cigarettes clandestinely from the unaccounted for raw materials received by them and clearing it clandestinely without payment of duty through different directors and employees of the company and also involvement of Smt. Bushra Gupta; Smt. Megha Gupta; Shri Shankar Pal Pradhan and Shri Raghuvar Dayal apart from the main role played by Raj Kumar Gupta, who was master mind in setting up of Musk Tobacco and is the main person acting behind the entire operations of Musk Tobacco. He misled the officers, gave wrong statement, deliberately gave confused reports of the functionaries like Raghu, Shankar Pal, A.K. Saxena and Rahul Chauhan. The involvement of Shri Vidyut Raj Gupta with his father Shri Raj Kumar Gupta for playing an active role in the setting up of unit was also confirmed in evading payment of central excise duty and for which all these persons were held liable for penalty. The modus operandi of the group of persons in evasion of excise duty is summarized in the findings of the Commissioner, Central Excise as follows:- "I find that Capt. R K Gupta and his son Vidyut Raj Gupta were the master mind behind .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... e from the personal accounts of either Shri Raj Kumar Gupta or his son Shri Vidyut Gupta for procurement of machineries. Even the cheques were signed by Capt Raj Kumar Gupta as Director of the company, although officially he was not the director. This indicates that he was actively involved in the functioning and financial dealings of M/s Musk Tobacco which is not possible unless he had interest and stake in the company. (iv) I found that Shri R.K.Gupa was managing all payments for purchase of raw material and machinery. As it emerged during scrutiny that cheque No. 232901 of SBI, Neoli issued from account No. 1000025305 for Rs. 1.20 Lakhs to M/s jackson Ltd. for supply of D.G. Set to M/s Musk Tobacco, was signed by Shri R.K.Gupta. Also DD No. 25363 of Rs. 30.00 Lakhs was issued by SBI, New Friends Colony, New Delhi in favour of M/s Dynmic Tools for supply of a unit of cigarette maker and the payment was made from account no. 30080714177 of Shri R.K.Gupta. Similarly, payment to M/s Budhan Engg. Pvt. Ltd., for supply of wrapping machine was made vide DD No. 25362 of Rs. 10.00 Lakhs from account No. 1760010002593 of Shri R.K.Gupta. Further, Shri Indrajeet Yadav in his statement d .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... ment was nothing but dispatch statement of spare parts dispatched by Shri Inderjeet Yadav. These spare pats were supplied to M/s Musk Tobacco and Capt. Gupta has kept it safely in Shankar Pal's residence. (ix) Some of the employees of Gupta agricultural farm were looking after the activities of M/s Musk Tobacco. As stated by Shri Rahul Chauhan in his statement, M/s Musk Tobacco was located inside the agricultural farm and, therefore, it was looked after by some of the persons who were apparently shown to have been working with Gupta Agricultural Farm. Names of Shri Raghuvar Dayal, Shri Shankar Pal, Shri Ajay Saxena, Shri Rahul Chauhan were appearing in the ledger of the farm. All these persons were paid employees they were also attending to the work as shown from one Attendance Register. Although Shri Rahul Chauhan Shri A.K.Saxena referred that they were not the same persons, it however was not correct, as they themselves identified many persons like Shri Raghuvar Dayal, Shankar Pal in the register being the persons of Gupta Agricultural Farm. Thus it is evident that the persons, though shown to have been inducted to work in the farm were actually working in M/s Musk Tobacco. .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... his evasive replies. He suppressed crucial information which was in his knowledge possession. This proves his connivance abetment beyond beyond doubt in evasion of Central Excise duty by M/s Musk Tobacco Pvt. Ltd., which has made him liable to action under Rule 26 of the Central Excise Rules, 1994. Similarly the role of Shri Raghu / Shri Raghuvar Dayal, as already discussed, who never appeared to explain the contents of the documents recovered from his residence inspite of repeated summons. He deliberately avoided his presence from the officers as several important documents relating to Capt. R.K.Gupta and M/s Musk Tobacco were found in his residence. I hold that Shri Shankar Pal Pradhan and Shri Raghu Raghuvar Dayal were had full knowledge that the Cigarettes removed by Must Tobacco clandestinely were non-duty paid which were liable to confiscation under Central Excise law. Thus Shri Shankar Pal Pradhan and Shri Raghu Raghuvar Dayal are liable to penal action for their acts of omission and commission under Rule 26 of the Central Excise, 2002." 7. The appellants have filed separate Excise Appeal Nos.366 to 373 of 2012 and Excise Appeal No.508 of 2012 in which they filed .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... er Director of M/s Musk Tobacco (India) Pvt. Ltd., Manpur (Nagaria), Kanshi Ram Nagar. The penalty of Rs.1 crore has been imposed with observations that the appellant was actively involved in the functioning of M/s Musk Tobacco (India) Pvt. Ltd., whereas no penalty can be imposed under Rule 26 of the Central Excise Rules, 2002 without putting the appellant to notice. The penalty is based upon presumption that order detriment to a person can be passed without issuing show cause notice. The Addl. Director General, Directorate General, Central Excise (Intelligence), New Delhi has erroneously issued notice to M/s Musk Tobacco (India) Pvt. Ltd., Manpur (Nagaria), Distt. Etah, when there was no proposal to impose penalty on the appellant. The imposition of penalty of Rs.1 crore upon the appellant by common judgment dated 10.1.2013 is grossly illegal and is liable to be set aside. Shri Thakrey further submits that imposition of penalty is quasi criminal proceedings and hence a common order contains a lot of ambiguities cannot be treated as reasoned or speaking order. The impugned order has not distinguished the specific liability and has failed to appreciate the independent merits of the .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

..... he provisions are "undue hardship to such person" and "safeguard the interests of revenue". Therefore, while dealing with the application twin requirements of considerations i.e. consideration of undue hardship aspect and imposition of conditions to safeguard the interest of Revenue have to be kept in view. 12. As noted above there are two important expressions in Section 35(F). One is undue hardship. This is a matter within the special knowledge of the applicant for waiver and has to be established by him. A mere assertion about undue hardship would not be sufficient. It was noted by this Court in S. Vasudeva v. State of Karnataka and Ors. (AIR 1994 SC 923) that under Indian conditions expression "Undue hardship" is normally related to economic hardship. "Undue" which means something which is not merited by the conduct of the claimant, or is very much disproportionate to it. Undue hardship is caused when the hardship is not warranted by the circumstances. 13. For a hardship to be 'undue' it must be shown that the particular burden to have to observe or perform the requirement is out of proportion to the nature of the requirement itself, and the benefit which the applicant woul .....

X X   X X   Extracts   X X   X X

→ Full Text of the Document

X X   X X   Extracts   X X   X X

 

 

 

 

Quick Updates:Latest Updates