TMI Blog2015 (8) TMI 1235X X X X Extracts X X X X X X X X Extracts X X X X ..... against him, is that after taking stock of the situations in the wake of search of Unit M/s. DTL, Unit-II, he had removed Shri Rajesh Maheshwari from M/s. DTL as he found him solely responsible for this act. From this statement, no conclusion can be drawn that Shri M. Baheti was involved in day-to-day functions of the Aluminium Division of M/s.DTL or had knowledge about its activity of duty evasion. Moreover, from his statement referred to in para-15 of the show cause notice, it is seen that Shri H.P. Gupta, Advisor and Shri Rajesh Maheshwari, Manager (Finance) had been reporting to Mr. Ravindra Jain, Joint Managing Director and that during 1997-98, M/s. DTL (Aluminium Division) had become a sick unit and it had been decided to sell the assets of the aluminium division of the company to Shri Ravindera Jain and Shri Jain was inducted to run this Unit. Thus from this statement, it is clear that it is Shri Ravinder Jain, who was running the Aluminium Division and Shri M. Baheti was not involved in day-to-day functions of this Unit. In our view, therefore, the evidences on record are not sufficient to conclude that Shri Baheti was, in any way, concerned in removal of the clandestinely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ging Director, M/s. Decora Tubes Ltd. Unit-III (c) Shri Ravindernath Jain, Joint Director, M/s.Decora Tubes Ltd. (d) Shri H.P. Gupta, Advisor, M/s. DTL; and (e) Shri Rajesh Maheshwari, Manager (Finance) for - (a) Recovery of central excise duty of ₹ 2,88,67,506/- from DTL in respect of alleged clearances of Aluminium Sections, cleared clandestinely during 2001-2002 and 2002-2003 period without payment of duty alongwith interest thereon under Section 11 AB and also for imposition of penalty on it under Section 11 AC; (b) Appropriation of an amount of ₹ 7,18,431/- already paid by M/s.DTL during investigation; (c) Recovery of wrongly taken cenvat credit of ₹ 1,72,162/- from DTL in respect of clearance of 12659 kgs. of cenvat credit availed of Aluminium Billets removed without reversal of the cenvat credit; and (d) Imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri M.B. Baheti, Shri Ravindernath Jain and Shri Rajesh Maheshwari. 1.1 Thereafter on 11.7.2005, Hon'ble Madhya Pradesh High Court passed an order for liquidation of the company and an official liquidator was appointed. 1.2 The show cause notice dated 3. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eti and Shri Rajesh Maheshwari is also contrary to the provisions of law, that in any case, there is absolutely no justification for imposing penalty on Shri M.B. Baheti as he was Managing Director of Group Company M/s.DTL which has three divisions and as Managing Director of M/s.DTL he was looking after the business of Copper Division, while the Unit-III (Aluminium Division) was being looked after by Shri Ravindernath Jain, Joint Managing Director, that this fact is clear from the statement of Shri M.B. Baheti as mentioned in para-15 of the show cause notice, wherein he stated that Shri Ravindernath Jain and Shri Rajesh Maheshwari had been reporting to him on half yearly basis, that during 1997-98, M/s.DTL had become a sick unit and it was referred to BIFR for rehabilitation and hence, it was decided to sell the assets of the company to Shri Ravindernath Jain and the same was included in the BIFR scheme and to keep the unit running for various benefits to employees, creditors and as per BIFR proposal, Sh. Ravinder Jain was inducted to run the Aluminium Division, that from this, it is clear that Shri M.B. Baheti was not in-charge of day-to-day affairs of the Aluminium Division, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods clandestinely and that he was also the proprietor of SMMW to whom the excisable goods cleared from M/s.DTL were being sold. He also pleaded that the goods cleared clandestinely from DTL to SMMW were being sold from there and thus, Shri Rajesh Maheshwari is the person who is involved in sale of the goods cleared without payment of duty and while having knowledge that the goods cleared by DTL to SMMW without payment of duty were liable for confiscation. Besides, he also pointed out to para19 (iii) of the order-in-original wherein it has been stated that for the purpose of removing goods without payment of duty, a firm named M/s. SMMW under proprietorship of Shri Rajesh Maheshwari and another firm namely M/s MBMW, Indore under proprietorship of Shri Ashen Nager, another employee of M/s. DTL had been floated, that Shri Rajesh Maheshwari either used to dispatch 60% goods without payment of duty along with 40 % duty paid goods in one consignment to M/s. SMMW or used to prepare fake invoices to cover the clandestine removal of goods without payment of duty. He pleaded that two pocket diaries had been recovered from the possession of Shri Rajesh Maheshwari and Shri Maheshwari in hi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Joint Managing Director and Shri Rajesh Maheshwari, Manager (Finance). Even if the Commissioner could not adjudicate the question of duty demand against M/s.DTL in view of the liquidation order of the High Court on 11.07.2005, in our view, the Commissioner could always adjudicate the question of imposition of penalty on the appellant, Shri M.B. Baheti and Shri Rajesh Maheshwari. Moreover, though the Commissioner has confirmed the duty demand against M/s.DTL, they are not in appeal and, therefore, this Tribunal is not required to go into the question as to whether the confirmation of duty demand against M/s.DTL was correct or not. In these appeals, we are only required to go into the question as to whether penalty under Rule 26 of the Central Excise Rules, 2002 was imposable on Shri M.B. Baheti, Managing Director of the appellant company and Shri Rajesh Maheshwari, Manager (Finance) of the appellant company and whether in this regard, there is an adequate evidence on record. 8. Under Rule 26 of the Central Excise Rules, 2002, any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing or in a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rely on the direction of the Managing Director. Therefore Shri Rajesh Maheshwari has to be treated the person who was involved in acquiring possession of and in sale of the clandestinely cleared goods while having knowledge that the same were liable for confiscation. Therefore, imposition of penalty on Shri Rajesh Maheshwari under Rule 26 has to be upheld. 10. As regards, Shri M.B. Baheti, Managing Director of M/s. DTL, the Commissioner's findings in respect of him are in para-30 of the impugned order, which is reproduced as under:- 30. Shri M.B. Baheti (Noticee no.2) also admitted the fact of clandestine removal of goods from M/s. DTL inasmuch as in his statement dated28.07.2003 he has categorically stated that after taking stock of the situations in the wake of search, he had removed Shri Rajesh Maheshwari from M/s. DTL as he found him solely responsible for this act. Though Shri Baheti is vehemently denying his involvement or knowledge of clandestine activities undertook by Noticee No.I, it cannot be accepted that such large-scale evasion involving huge funds is possible without his active knowledge. The Noticee No.4 had categorically mentioned that he was reporting a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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