TMI Blog2014 (7) TMI 478X X X X Extracts X X X X X X X X Extracts X X X X ..... chana Wadhwa: All the appeals are being disposed of by a common order as they arise out of same impugned order passed by the Commissioner, Central Excise, NOIDA. The challenge in the present appeals is to penalties imposed upon the various applicants in terms of provisions of Rule 26 of Central Excise Rules, 2001/2002 and Rule 13/15 of Cenvat Credit Rules, 2002/2004 as detailed below:- 1. Shri Mukesh Garg ₹ 66,55,075/- 2. Ms. Mamta Garg ₹ 47 ,80,983/- 3. Shri Naveen Agarwal ₹ 13,33,321/- 4. Ms. Aruna Agarwal ₹ 2,09,760/- 2. Briefly discussed the facts of the case are that one M/s. Minda HUF Ltd. (herein referred to as HUF) was engaged in the manufacture of automobile locksets and was availing the benefit of Cenvat credit of duty paid on various inputs and capital goods. Inquiries were conducted and it was found that the some of the firms, including the present applicants, were not having the facility to manufacture the inputs and were neither registered with Central Excise department. They were only issuing invoices, without supply of goods or inputs, on the basis of which M/s. HUF was availing the credit. It is s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court decision in the case of Onkar S Kanwar was in respect of Kar Vivad Samadhan Scheme, the same would not be applicable to settlement of dispute before the Settlement Commission. The third Member, resolved the said difference of opinion by observing as under:- 26. The points of difference are therefore, are answered as under:- (a) While the provisions of KVS Scheme and those relating to settlement of cases under the Customs Act are not completely identical, the underlying objective in both the scheme is similar and it is for this reason that the case laws in respect of cases under KVSS including in the case of Onkar S. Kanwar do not become entirely irrelevant. (b) The question as to who played the main role is irrelevant for the reason that once the case is settled by the Settlement Commission, it is settled in its entirety and such a case then cannot be adjudicated qua other co-noticees. (c) The case against all co-noticees comes to an end once the order of settlement is passed in respect of the person entitled to file an application before the Settlement Commission and therefore, penalty imposed upon the appellants cannot be sus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... could not be followed and the appellants' appeal should be decided on merits, after considering their role in the entire bogus transaction. When the legal issues stand decided by the precedent decision of the Tribunal, and there being no contra decision, the same are required to be followed. Hon'ble Bombay High Court in the case of Tejus Proprietary Concern of Tejus Rohitkumar Kapadia vs. Union of India reported as [2012 (275) ELT 175 (Bom)] has observed that Tribunal is duty bound to follow the binding precedent and further observed that the CESTAT as a judicial body, must realize the importance of doctrine of precedent as in our legal system. Deference to judgements of the Supreme Court is a matter of constitutional principle. Equally unless Coordinate Benches of the Tribunal have due deference and regard for decisions rendered by the Tribunal, the elements of certainty and consistency in the judicial process which lie at the heart of judicial functioning would be seriously disrupted. 9. Before we part with the matter, we would like to observe that the stay order passed by the Tribunal directing the appellant to deposit 25% of the penalty was challenged before Delhi Hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es were conducted and it was found that the some of the firms, including the present applicants, were not having the facility to manufacture the inputs and were neither registered with Central Excise department. They were only issuing invoices, without supply of goods or inputs, on the basis of which M/s HUF was availing the credit. It is seen that M/s HUF along with other three co-noticee approached the Settlement Commission who vide their order FO No. 555/CE/07/(PB) dated 05.07.2007 appropriated the entire amount of ₹ 2,20,00,975/- paid by M/s HUF along with payment of interest at the rate of 10%. Further, the said M/s. HUF alongwith the other co-appellants were granted full immunity from fine, penalty and prosecution. Para 3. The present appellants during the course of adjudication, pleaded before the Commissioner that inasmuch main appellant has not been imposed with any penalty and the other co-noticee placed upon the same platform, have also been granted immunity from fine and prosecution, the imposition of penalty upon them would be neither justified nor warranted. For the above proposition, they relied upon the Tribunal's decisions in the case of SK ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th M/s Meerut Steels, Modinagar and M/s Vas Techno Engineers, Ghaziabad. M/s Sagar Welding Electrodes, Modinagar's partner Shri N.P. Gupta admitted that he never supplied any goods of MHL with the invoices. 15. Transport enquiry showed that there was no transportation of goods in vehicles shown to be used for the same. The vehicles were either nonexistent or not capable of transporting the goods shown to have been dispatched by the supplier. That leads to the conclusion that the Noticee no. 5 to Noticee no 20 were indulging in passing of the Cenvat credit issuing fake and bogus invoices enabling MHL to illegally enrich themselves at the cost of the exchequer by the extent of Cenvat credit taken on the strength of such bogus/fake invoices. They colluded and abetted with MHL to evade payment of Central Excise duty deliberately and defrauded Government passing on illegal Cenvat credit without manufacturing and supplying any goods mentioned in the fake invoices. 16. On the above factual back ground and on perusal of draft order and interpretation adopted by learned Judicial Member following Tribunal's judgement in the case of S.K. Colombowala Vs. CCE (supra), to grant imm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... granted to a tax-payer who had made declaration under Section 88 of the Finance Act. 17. Reliance was placed on Supreme Court judgement in the case of O nkar S. Kanwar [2002 (145) ELT 266 (SC) by Hon'ble Tribunal without appreciation of the principle laid down in that judgment. Hon'ble Court repelling the arguments of the assessee that once immunity is granted to the company under Kar Vivad Scheme, that immunity is extended to its Directors, held in Para 12 of the judgment as under:- 11. Mr. Vellapally, on the other hand, submitted that only one show cause notice had been issued. He submitted that in the same show cause notice the Company was called upon to show cause why excise duty and penalty be not levied and the Directors/Officers were also called upon to show cause why penalty be not levied on them. He submitted that Section 91 of the Kar Vivad Samadhan Scheme makes it clear that no payment being made and a certificate being granted, immunity is granted against prosecution for any offence and from imposition of penalty. He submitted that once the Company settled under the said scheme, there was immunity in respect of the matter for which the show cause no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sults in substantial prejudice to public interest but is offensive to several well established principles of law. It also leads to grave public mischief. Section 72 of the Contract Act, or for that matter Section 17(1)(c) of the Limitation Act, 1962, has no application to such a claim for refund . [Emphasis supplied] 19. Hon'ble High Court of Punjab Haryana too in the case of M/s Vee Kay Enterprises Vs. C.C.E. reported in 2011 (266) E.L.T. 436 (P H) held that penalty under rule 26 ibid is imposable on Dealers of Cenvatable goods when only invoices are raised to pass on Cenvat Credit while no raw materials are supplied by the Dealers. The relevant para 10 of the judgment is reproduced for appreciation: 10. Inspite of non-applicability of Rule 26(2), penalty could be levied as the appellant was concerned in selling or dealing with the goods which were liable to confiscation inasmuch as the appellant claimed to have sold the goods in respect of which the cenvat credit was taken. In such a case, Rule 25(1)(d) and 26(1) are also applicable. The person who purports to sell goods cannot say that he was not a person concerned with the selling of goods and merely is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence with an advice to the Single Bench to decide the issue on merit. As is reported in 2013 (298) E.L.T. 540 (Tri.- LB). 22. In view of above, I differ with findings and decision recorded by Hon'ble Member (Judicial) and hold that immunity cannot be extended to appellants who were not before Settlement Commission. 23. Once I have arrived at the findings that immunity cannot be extended to the four appellants namely Ms. Mamta Garg, M/s Mukesh Garg, Shri Naveen Agarwal and Ms. Aruna Agarwal. It is also necessary to crystalise their role in perpetuating fraud of fraudulent passing of illegal credit on the strength of fake invoices. In this regard I have perused detailed and in depth findings recorded by adjudicating authority. Role of all these appellants is highlighted in para 15, para 16, para 17 and para 18. For easy reference, para 16.1, 16.2 17.4, 17.5 17.6, 17.10, para 18 (relating to M/s Techno Engineers, M/s SRG Machines, M/s Ajanata Enterprises, M/s HSN, Engineering) are reproduced. Para 16.1 It is to mention that M/s Minda HUF Limited, Noida engaged in the manufacture of automobile lockers, falling under chapter 87 of CETA, 1985, were availing facility ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drawn out of wire rod. In this context, I would like to mention statement of Shri Deeraj Singh dated 27.10.2006 and of Shri Madhav Srivatava dated 09.11.2006 and statement of Anil Kumar Maheshwari dated 15.11.2006 vide which Shri Maheshwari has provided details of items purchased from above said suppliers, but the said suppliers were not having such facility to manufacture said specific items. Thus, I am inclined to conclude that these firms were not having any facility to manufacture goods shown as supplied to MHL, on which they have availed Cenvat credit. Para 17.5 Some suppliers were not registered with the department. I find that the most of the above said firms were issuing central excise invoices without obtaining proper registration from the central Excise department as mentioned in first part of notice. Instead, they used fake registration number in the Cenvatable invoices. Para 17.6 Non receipt of the goods at the premises of MHL I find that as these suppliers were not having needed manufacturing facility and in most of the cases they were not registered with the department, it was concluded that MHL was using invoices issued by these non-existent/fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s etc. Non-receipt of goods under the cover of the invoices issued by M/s SRG Machines at MHL, is clear from the statement of various key officials of MHL, bank enquires, transport enquires. (ii) M/s Ajanta Enterprises, Near Vishal Dharm Kanta Modinagar: (Owner - Shri Mukesh Garg) The units found located in the given address was engaged in the manufacture of steel wire [by using wire rod mostly received from SAIL]. Shri Mukesh Garg, proprietor of the unit stated that this firm is engaged in manufacture of steel wire, wire products and fabrication of steel parts. He stated that the items shown consigned to MHL were made as per drawing supplied by MHL but he failed to produce any such drawing. However, when the facts stated by him thereof could not be manufactured through fabrication being specialized parts of automobile locks. (iii) M/s Techno Engineers, Netaji Subahash Nagar, Near Vishal Dharamkanta, Modinagar (Distt. Ghaziabad). (Owner Mrs. Aruna Aggarwal) On verification, no unit in the name and style was found in existence of the given address. This unit, which was engaged in passing of fraudulent cenvat credit was owned by one Smt Aruna Agarwal resident of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onestly by them is also an indirect from of corruption in this civilized society of democratic State. Such act of evasion of excise duty not only affects the economy of the State but destroy the cultural heritage also. Unless nipped in the bud at the earliest, it is likely to cause turbulence shaking of the socio-economic-political system in an otherwise healthy, wealthy, effective and vibrant society and ultimately, such excise duty or the tax evaders can create a parallel economy in the state which may pose a serious threat to the nation. In the present State of affairs, the economic offences are undoubtedly more grave in nature than those offences which are otherwise said to be grave. 25. As regards to imposition of penalty which is quasi criminal in nature considering the tax fraud engineered by the appellants they are no less than evaders causing serious threat to economy and also enriched at the cost of revenue, no imposition of penalty shall send a message to the society that evasion is rewarded with incentive. Judgement of Hon'ble High Court of Punjab Haryana in the case of V.K. Enterprises as referred in previous paras is also relevant. Therefore, it is justified ..... X X X X Extracts X X X X X X X X Extracts X X X X
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