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2015 (10) TMI 2403 - CESTAT MUMBAI

2015 (10) TMI 2403 - CESTAT MUMBAI - TMI - Penalty under Rule 26 - fraudulent availment of CENVAT credit - Fraudulent rebate claim - Confiscation of goods - Held that:- so called merchant exporters or Rule 12B manufacturers have dealt with the goods inasmuch as they purchased the goods from market and in order to claim the rebate/or avail CENVAT credit they approached Muni Group of Companies and purchased certain invoices from them so as to fraudulently show as if the goods were purchased from M .....

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to Muni Group of Companies through account payee cheques. However, immediately, thereafter, Muni Group of Companies have issued cheques in the name of some other entities. These cheques were, in turn got discounted by the merchant exporter/appellants. In some cases, the amounts were paid by crossed bearer cheques to Muni Group of Companies. However, these cheques were, in reality, not deposited in the accounts of Muni Group of Companies, but were deposited either in the name of certain dealers .....

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se goods are liable to confiscation under Rule 25(1)(d) of the Central Excise Act, 1994. In view of the above said position, there can be no doubt that penalty is imposable under Rule 26 on the merchant exporter/manufacturer under Rule 12B. - Goods procured from some other sources would be non-duty paid goods otherwise, there was no need for them to get the invoices from Muni Group of Companies. The findings recorded above in respect of merchant exporters equally be applicable in the case of .....

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form of rebate which thereafter will be distributed among themselves. - Penalty on merchant exporters is allowed or dismissed on the basis of their involvement in fraudulent transaction. - Appeal disposed of. - APPEAL NOS: E/723/2010, E/665/2010, E/674/2010, E/675/2010, E/676/2010, E/677/2010, E/682/2010, E/702/2010, E/733/2010, E/738/2010, E/782/2010, E/797/2010, E/879/2010, E/910/2010, E/929/2010 & E/1621/2010 - order NO. A/3314-3329/15/EB - Dated:- 29-9-2015 - Shri P.K. Jain, Member (Tech .....

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lty under Rule 26 of the Central Excise Rules, 2002. All the appeals are arising out of the common order-in-original based upon the investigation against Muni Group of companies relating to fraudulent availment of CENVAT credit amounting to ₹ 11,61,61,197/- (Eleven Crore Sixty One Lakh Sixty One Thousand One hundred Ninety Seven only) and thereafter passing it so as to get it encashed or utilise it for payment of duty liability. The penalty imposed on various appellants are as under: S. No .....

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ali, Proprietor of Shree Ganesh Enterprises 2,00,000/- 8. Shri Ayush Murarilal Agarwal, Proprietor of Namaste Exports, Authorised Signatory of Prime Exports & Daffodils Exports 50,00,000/- 9. Shri Ajit Singh B Choraria, Proprietor of Shubham Silk Mills, Authorised Signatory of Shubham Textiles, Shubhlaxmi Textiles & Shubhlaxmi Exports 50,00,000/- 10. Shri Ajay Rameshchandra Mittal, Proprietor of K.V. Corporation, Shubhlaxmi and Sejal Overseas 50,00,000/- 11. Shri Naresh J. Doshi, Partner .....

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Apex Corporation, M/s. Mansa Traders, M/s. Globe Traders and M/s. Venkatesh Mercantile Pvt. Ltd. got themselves registered under Rule 12B of the Central Excise Rules and fraudulently took credit on the invoices without receiving any inputs and thereafter they issued ARE-1s and invoices to various merchant exporters or other Rule 12B manufacturers without any corresponding goods. The quantum of fraudulently availed credit is ₹ 11,61,61,197/- (Eleven Crore Sixty One Lakh Sixty One Thousand .....

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xporter. Most of the other appellants are Rule 12B manufacturers, who would utilise the fraudulent invoices issued by Muni Group for payment of their duty liability and perhaps ultimately get those encashed as rebate. Few appellants have other role which will be discussed while considering individual appeals. 3. From the investigation, it is clear that certain banking transactions had taken place which proved that whenever any bearer cheque were issued for purchase of goods against the ARE-1s or .....

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unt of bearer cheques were issued to the merchant exporters/Rule 12B manufacturers from these accounts. In some cases, some payments have been shown to be made in the account to the local supplier of Surat against supply of fabric/textile item, etc. which have been exported against ARE-1s/Rule 12B manufacturers. The claim of the merchant exporter/Rule 12B manufacturers relating to the transport of the goods from the Muni Group of companies to the purported buyers viz: merchant exporter/Rule 12B .....

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merchant exporter for claiming rebate of duty on exports against ARE-1s. The merchant exporters in these cases have knowingly purchased bogus ARE-1s from Muni Group of Companies and presented these ARE-1s to the customs authorities at the time of exports along with the goods so as to justify the duty-paid nature of the export goods and enabling them to claim rebate of duty from excise authorities later on. Investigation also revealed that Superintendent of Central Excise in-charge of Muni Group .....

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tted that they are merchant exporter and they have purchased processed fabrics from M/s. Muni Group of Companies and exported under the claim for rebate of duty and the said claim was made by M/s. Muni Group of Companies and the appellants have not received any rebate in respect of the any of the exports. It was further submitted that the departments case is that Muni Group of Companies has availed CENVAT credit on various inputs which are shown as having been used in the manufacture of fabrics .....

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export goods were liable to confiscation. It was submitted that the Commissioner has not indicated as to who and under which provisions of law, the goods allegedly procured from the local market and exported are liable to confiscation. 5.2. In respect of appellant No. 4 and 6, it was submitted that they are Rule 12B manufacturer and they have purchased grey fabrics from Muni Group of Companies and availed CENVAT credit of the duty paid by Muni Group of Companies. Such goods were processed by job .....

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the open market and that such goods are liable to confiscation. It was submitted that the Commissioner, however, has not indicated that as to how and under which provision of law the goods allegedly procured from the market and exported are liable to confiscation. 5.3. As far as appellant No. 7 is concerned, it was submitted that he was name sake proprietor of Shree Ganesh Enterprises whose name was used by Shri Shyam Sunder Sharma of Surya Exports for discounting of cheques. It was, however, s .....

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nd adjudication order are a duplication of proceedings in respect of very same export goods which are subject matter of an earlier show cause notice and adjudication. It was submitted that the present show cause notice proposes imposition of penalty in respect of export goods which are specified at serial No. 426 to 460 of Annexure C to the show cause notice and in respect of these very same export goods there were adjudication proceedings by order No. 17/MS(06)/ COMMR/RGD/06-07 dated 20/09/20 .....

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deals with excisable goods which he knows or has reason to believe are liable to confiscation under the Act or Rules. Thus, the primary condition is that the goods should be liable to confiscation and the person should have knowledge of the same. The mere fact that the goods were procured and exported by the appellants cannot by itself establish that the goods were liable to confiscation and appellant knew or had reason to believe that the said goods are liable to confiscation. It was further su .....

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to confiscation. It was further submitted that the goods procured from the open market are to be taken as duty paid unless shown otherwise. In support of the said contention, following case laws are quoted: (i) Commissioner of Central Excise vs. Decent Dyeing Co. 1990 (45) ELT 201 (SC); (ii) Nagpur Re-Rolling Mills vs. Commissioner of Central Excise 2001 (136) ELT 423. 5.5. It was submitted that the Commissioner has not indicated as to how and under which provision of the law goods procured from .....

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have been rendered liable to confiscation and since in the present case the goods are not liable to confiscation, penalty cannot be imposed under Rule 26. Thus, the case law does not help the case of the department. It was also submitted that the other case law quoted by the AR relating to Commissioner of Central Excise vs. Navneet Agarwal 2012 (276) ELT 515 is also not applicable to present facts of the case as the appellants have not issued any CENVATable invoices without supply of goods. It w .....

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ly of inputs. These decisions are not applicable in the facts of the present case since none of the present appellants have issued documents for passing on CENVAT credit without supply of goods. It was further submitted that, in any event, the penalty imposed is excessive, harsh and disproportionate. It was also submitted that the appellants have not received any rebate and have not gained any benefit. Considering that the appellants have not received any rebate, there is no justification for im .....

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and authorised signatory and son of Shri Murarilal Agarwal, proprietor of Daffodil Exports. It was submitted that the appellant is neither authorised signatory of Prime Exports or Daffodil Exports. Further the appellant has been penalised in his capacity as merchant exporter for purported contraventions by all the three firms on the basis of his statement that he looked after the affairs of the three firms. It was also submitted that a penalty has been imposed only on the basis that the appella .....

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es. The learned counsel submitted that the rebate claims preferred by Daffodil Exports and Prime Exports were initially allowed in revision application but the department approached the honble High Court who in turn remanded the matter to the revisionary authority. The revisionary authority remanded the matter back to the adjudicating authority who held adversely against the aforesaid firms. The appeal against the said order has been rejected by the Commissioner (Appeals) and the revision appli .....

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nd Prime Exports had been delivered to their godowns . It is thus clear that the goods were transported to godown of the firms of Muni Groups. It was further submitted that the statement of Shri Balaji Roadways of Surat is contrary to the statement of M/s. Surat-Ahmedabad Transport. IT is thus clear that the goods have been received by the three firms from Muni Group and, therefore, there is no basis for imposition of penalty on the appellants. It was submitted that they have received the goods .....

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nies but are purchased from the open market, such goods are deemed to be duty paid goods as held by the apex Court in the case of Decent Dyeing Co. 1990 (45) ELT 201 (SC) and such goods are not liable to confiscation. It was also submitted that para 98 does not invoke the provisions of Rule 25. It was also submitted that for imposition of penalty under Rule 26 knowledge or reason to believe that the subject goods are liable to confiscation is a must and therefore, penalty cannot be imposed. It w .....

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at the exporters were not required to follow any of the provisions of Central Excise law and the so-called 12B manufacturer were also not alleged for contravention of any of the provisions of Central Excise law or the rules made thereunder. It was also submitted that as per the decision of the honble Delhi High Court in the case of Commissioner of Central Excise vs. Balaji Trading Co. 2013 (290) ELT 200 the provisions of Rule 25 would be attracted only against the four category of persons menti .....

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bhai Deora (supra) quoted by learned AR is not applicable as there the case was of clandestine clearance of the goods and in the personal knowledge of the Director In the present case, the goods held liable for confiscation are exported goods and not clandestinely cleared goods and hence the said case law is distinguishable. It was also submitted that the other case laws are also not applicable as the same have been distinguished by the honble Punjab & Haryana High Court in subsequent judgm .....

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the goods involved are export goods on which no duty is liable and hence the maximum penalty that can be imposed is ₹ 10,000/-. Imposition of penalty of ₹ 50 lakhs is not sustainable in law and requires to be set aside. 5.9. The learned counsel for appellant No. 9 submitted that they are not merchant exporter and never claimed any rebate and their role is as traders selling duty paid goods. It was submitted that in para 6(h) of the show cause notice the allegation made is that he h .....

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no clear finding has been given by the Commissioner in para 93(XIV) of the impugned order. It was also submitted that if any inference is drawn by finding of the adjudicating authority that they have only supplied duty paid invoices to Muni Group and not actually supplied goods then also they are not liable to penalty under Rule 26 before 01/03/2007 as sub-rule (2) to Rule 26 came into force w.e.f. 01/03/2007. It was submitted that in view of the above position penalty under Rule 26 may be set a .....

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M-I/15-16/2008 dated 09/07/2008. The said show cause notice was adjudicated and penalty on the present appellant was imposed under Rule 26. It was submitted that a person cannot be penalized twice for the same offence. It was submitted that the appellant is a customer of Apex Corporation and no role can be attributed to the present appellant as he is neither a supplier of goods/invoices to M/s. Apex Corporation on which M/s. Apex Corporation would have availed credit nor it is a merchant exporte .....

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belongs. It was submitted that no penalty has been imposed on the bulk bill discounter, there is no reason to impose any penalty on the person providing reference. It was further submitted that penalty under Rule 26 can be imposed only on the person who has dealt with the goods and have reason to believe that the goods are liable to confiscation. It was submitted that in this the appellant is only a customer of Apex Corporation and it cannot be said to have dealt with the export goods which have .....

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in the entire dispute. 5.11. The learned counsel for other appellants also took the similar arguments as in the above cases and the same are not being repeated for sake of brevity. 6. The learned AR explained the whole modus operandi and also took us through the impugned order and submitted the followings: 6.1. In respect of appellant No. 1, learned AR submitted that the said appellant is a merchant exporter and his role is detailed in para XII at page 88 of impugned order, para 13 on page 122 a .....

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that appellant No.2 is also a merchant exporter and used the ARE-Is of Muni Group for claiming rebate claim. Learned AR took us through para XXVI of page 51 and para XXVII of page 52 of the impugned order. 6.3. In respect of appellant No. 3, it was submitted that, Vikram Industries and Deepika Overseas are merchant exporters and they obtained ARE-Is from the Muni Group of companies without getting any goods, purchased locally non duty paid goods. Export rebate was claimed against the ARE-Is .....

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oods. Para XXVIII on page 52 and para 10 on page 130, para viii on page 174 of the impugned order were referred to explain the issues. 6.5. In respect of appellant No. 5, the appellant is a merchant manufacturer and claimed rebate against ARE-Is of Muni Group without receiving any goods. Para 51 and 53 on page 29 and 30, para 53.13 on page 33, para 54.2, 54.4 on page 34, para 54.3 of page 54, para XIX of pg. 50, para V of pg. 56, para 8 on page 120,para 14 on page 143,para iii on page 173,para .....

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e appellant has availed credit on 8 invoices from Muni Group of Companies without receiving any goods. The payment made by cheque , which were discounted and received the cash back. Para IX of page 58, para (a) of pg. 59, para (g), (h), of page 129, para IX of page 174 in the impugned order were explained. 6.8. In respect of appellant No. 8, it is submitted that the appellant has admitted that he was managing not only the Namaste Exports but he was also managing M/s Daffodil Export owned by his .....

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Textile and SubhLaxmi Overseas. It was submitted that Muni Group has taken CENVAT Credit based on the invoices issued by the appellant. Thus the appellant has supplied invoices to Muni Group without supplying any goods. It was submitted that they have also taken ARE-Is from Muni Group and claimed rebate against export. Learned AR also referred to para e, f, g, h, l of page 94 and 9, para ii on page 121, para xv on page 175. 6.10. In respect of appellant No.10, it was submitted that exporters vi .....

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tting the cheques discounted and collecting the cash back. His role as discussed in Para V and para (a) on page 56, para VII (a), (b) on page 57 and 58, para 5 on pg. 92, para 8 on pg 128 of the impugned order, was explained in detail. 6.11. As far as appellant No.11 is concerned, appellant is a merchant exporter and has claimed rebate against the ARE-Is of Muni Group without actually receiving any goods. The Commissioner has given findings in para V on page 173 of the impugned order. Para 63 o .....

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page 40, para a, b c on page 41, para ii, ii(a) on page 72. 6.14. As regards appellant No. 14, it is submitted that, again, the appellant is a merchant exporter and shown exports against ARE-Is of Muni Group without receiving any goods and claimed rebate. His role is explained in Para 20 on page 50, para xiii on page 88 and 89 of the impugned order. 6.15. With regard to appellant No. 15, it is submitted that this appellant has received invoices from Muni Group of Companies without receiving an .....

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ainst those exports. Para (a), (b) on page 127 and 12, para xviii on page 167 details his role. 6.17. Learned AR further relied upon the following case laws to support his contention that the goods in the present situation are liable to confiscation and the appellants are liable to penalty under Rule 26: (i) Sanjay Vimalbhai Deora vs. CESTAT 2014 (306) ELT 533 (Guj.); (ii) CCE, Ahmedabad vs. Navneet Agarwal 2012 (276) ELT 515 (Tri.-Ahmd); (iii) Vee Kay Enterprises vs. CCE 2011 (266) ELT 436 (P&a .....

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of various appellants as also the AR. 8. One of the common contentions by various learned counsels for the appellants was that penalty under Rule 26 cannot be imposed on the appellants, many of them are merchant exporters or Rule 12B manufacturers. It was the contention of the learned counsels that as per the departments case Muni Group of Companies have only supplied duty-paying invoices and the goods have come from some other sources and these goods along with the invoices of the Muni Group .....

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er, manufacturer, registered person of a warehouse or a registered dealer, - (a) removes any excisable goods in contravention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any .....

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or [rupees two thousand], whichever is greater. (2)An order under sub-rule (1) shall be issued by the Central Excise Officer, following the principles of natural justice. RULE 26. Penalty for certain offences. Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or th .....

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or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to penalty. There is no doubt that the so called merchant exporters or Rule 12B manufacturers have dealt with the goods inasmuch as they purchased the goods from market and in order to claim the rebate/or avail CENVAT credit they approached Muni Group of Companies and purchased certain invoices from them so as to fraudulently show as if the goods were purchased from Muni Group of Companies on the i .....

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ough account payee cheques. However, immediately, thereafter, Muni Group of Companies have issued cheques in the name of some other entities. These cheques were, in turn got discounted by the merchant exporter/appellants. In some cases, the amounts were paid by crossed bearer cheques to Muni Group of Companies. However, these cheques were, in reality, not deposited in the accounts of Muni Group of Companies, but were deposited either in the name of certain dealers or got discounted from various .....

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exporter-appellants. There can be no doubt, that these goods are liable to confiscation under Rule 25(1)(d) of the Central Excise Act, 1994. In view of the above said position, there can be no doubt that penalty is imposable under Rule 26 on the merchant exporter/manufacturer under Rule 12B. 8.3. We also like to add the very fact that the appellants have procured invoices from a source other than the actual manufacturers of the goods would indicate that these goods were in reality not duty-paid .....

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d to the Government) on the goods through the invoices of Muni Group of Companies and share such booty between Muni Group of Companies and the appellants. In our considered view, there can be no doubt that penalty under Rule 26 is imposable in the facts of the case. 8.4. Even in respect of Rule 12B manufacturers, they have procured the invoices from Muni Group of Companies and the goods from some other source. Here again, goods procured from some other sources would be non-duty paid goods otherw .....

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in the scheme of the above fraud, it was fraudulently shown that the duty was paid and the appellants or Muni of Group of Companies would be able to get refund of the duty in the form of rebate which thereafter will be distributed among themselves. 8.5. The reasoning adopted by the honble Gujarat High Court in the case of Sanjay Vimalbhai Deora (supra) which in turn has been upheld by the honble Supreme Court is equally applicable. Similarly, the judgment of the Punjab and Haryana High Court i .....

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d procure the fraudulent invoices. In that situation, the appellants could have got the invoices from the seller of the goods and could have claimed the rebate. The very fact that this fraudulent exercise has been done indicates that the goods which were exported and procured from the market were non-duty paid goods. In case of some appellants, the goods were produced in their own unit and if in their own unit they would have paid duty, there was no reason for them to procure the invoices from M .....

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ty themselves, but they were treated as manufacturer under the Central Excise law and hence penalty under Rule 26 as it was existing prior to 01/03/2007 can be imposed. Even in respect of merchant exporter they were not the dealer in the normal sense i.e., who were passing on the CENVAT credit along with the invoices. In fact all such dealers are required to get themselves registered with the excise department and thereafter only they could issue cenvatable invoices. The merchant exporter were n .....

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erein he has taken a view that penalty under Rule 26 cannot be imposed. In our view this is not the correct position in law as there are goods which are purported to covered by certain invoices. One has to deal with such invoices along with the goods and a holistic view of the two has to be taken. One cannot segregate invoices from the goods for the simple reason that both are submitted together for excise purpose. The interpretation taken by the Commissioner is therefore as per his understandin .....

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bunals on these facts are as under: 9. Appeal No. E/723/2010: The appellant in the present case is a merchant exporter. From the investigation statements made by Shri Babul Jain, partner of Rainbow Silks and other details as discussed in the impugned order, it appears that the appellant is an established exporter of textiles for the last so many years and they procured certain textile material i.e., printed polyester fabric through one broker, Shri Ajay Mittal who supplied them the said goods vi .....

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it comes out that the appellant had no connection with Shri K. K. Gupta, Shri Dashrath More, Shri Deepak Jare, and also Shri M.K. Patel, Superintendent and he was dealing with Shri Ajay Mittal from whom they have bought the goods in good faith. It also appears that for getting the rebate claim, the invoices and duty-paid character got verified by the department form the Range official. Further, the appellant, as soon as he came to know about the whole episode, has returned the rebate sanctioned .....

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l No. E/665/2010: In respect of Shri Prem Rautramni Joshi of Monika Impex, from the impugned order, it is clear that Shri Prem Rautramni Joshi was controlling Monica Impex. Monica Impex, in turn, had exported the goods using the invoice and ARE-1s of Muni Group of Companies as detailed in the show cause notice. From the investigation, it is clear that the appellant was having a unit located at Adarsh Chemical Factory, Swami Narayan Mandir Road, Udhana where a crushing machine and other manufactu .....

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aram Tambe, proprietor of M/s. Setwin Shipping Agency (CHA). It is also seen that the conduct of the appellant has been totally non-cooperative and misleading. Large numbers of documents were shown to him and these documents were recovered from different set of person which includes transporter, CHA, warehousing agent in port, etc. In these documents, name and phone numbers of the appellant was mentioned. When the appellant was confronted with these documents he did not gave any reply or any sat .....

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and ARE1s of Muni Group of Companies to claim the rebate. 10.1. Learned counsel for the appellants main submission is that the appellant has not received the show cause notice which was issued to the appellant at his residential address and hence the order-in-original was passed in gross violation of natural justice. It was also submitted that in his statement, the appellant has stated that he was not concerned with Monica Impex in any way and hence no penalty is imposable on him. 10.2. We are .....

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so seen from the impugned order that the personal hearings were held on more than 10 occasions and on each occasion not only the personal hearing notice was sent through the known postal address but also got serviced through jurisdictional excise authorities. Under these circumstances, we are not impressed with the argument of the appellant. We also note that even the order-in-original was sent to his old address, even then he has filed the appeal before this Tribunal. Keeping in view his conduc .....

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usion that his explanation needs to be examined by the original authority. 10.4. From the statements of the transporters, CHA and warehouse agent, it is obvious that the appellant had the manufacturing facility in Surat wherein the export goods were manufactured and thereafter exported using the concerned transporters warehousing facility but on paper these were shown as purchased from Muni Group of Companies and fraudulent rebate were claimed. Obviously, if the appellant had paid duty on such .....

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ar Batra, is Partner/Proprietor of Vikram International & Dipika Overseas, Surat. They have exported goods and acted as merchant exporter. The goods were exported on the basis of duty paying invoices issued by Muni Group of Companies and the investigations have revealed that no goods were manufactured by Muni Group of Companies but Mr. Yudhishtir Kumar Batra procured the goods from certain sources in Surat and such goods were purported to have been manufactured by Muni Group of Companies and .....

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on-existent. Money transaction between the appellant and Muni Group of Companies clearly brings out that the appellant has issued two types of cheques viz. account payee and the other crossed bearer . In respect of account payee cheques, the cheques were deposited in the account of Muni Group of Companies. However, on the same date other cheques were issued from such banks/accounts in the name of certain textile firms which in turn were encashed or got discounted by the appellant. Similarly, in .....

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hority, the appellant has disputed any of the details that has been unearthed during the investigation. Thus, the fraudulent nature of the transactions is not disputed. The only argument advanced by the learned counsel for the appellant was that penalty cannot be imposed under Rule 26. The said issue has been discussed by us in para 8 to 8.6. We therefore, do not find any force in these argument and hence reject. We also find that the penalty imposed is not on the higher side keeping in view the .....

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Companies based upon the invoices in question and goods exported by the present appellant. In the present case the issue is relating to incorrect availment of CENVAT credit by Muni Group of Companies and the present appellant is a co-noticee in the proceedings. The two issues are different. The pleas is therefore rejected. 12. Appeal No. E/675/2010: Shri Atma Prakash Batra was acting on behalf of M/s. Guria Textiles, M/s. Batra Overseas and M/s. Batra International. During investigation Shri Atm .....

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the appellant before this Tribunal. Learned counsel for the appellant have also not made any submission about the findings of the Commissioner or about anything stated in the order-in-original. The only submission made by him is that the Commissioner has not indicated as to how and under which provisions of law the goods allegedly procured from the market and exported after processing are liable to confiscation. We have already discussed in para 8 to 8.6 how the goods in such cases will be liab .....

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a and also exported the goods as merchant exporter. In his statement, SHri Poddar has stated that he has purchased the goods from Muni Group of Companies and one Shri Ajay Mittal of Surat approached him with the offer to deliver goods at their office with transport arranged by him. Shri Poddar has produced copies of lorry receipts of transporter Sahara Roadlines, Cottongreen, Mumbai and the said transporter lateron, on investigation was found to be fake. Thus transportation of goods was fake. Si .....

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h dealers and the remaining one were got encashed/bill discounted by the appellant. The crossed bearer cheques though purported to be paid to Muni Group of Companies were actually either deposited in certain account of textile dealers of Surat or got encashed through bill discounters/shroffs. Financial transactions are similar to the case of appellant Shri Yudhistir Batra. We also note that the learned counsel for the appellant has not disputed any finding of the investigation during the argumen .....

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ide keeping in view the rebate amount involved in the transactions carried out by the appellant. In view of the said position the appeal filed by the appellant is dismissed. 14. Appeal No. E/677/2010: Shri Rajesh Rameshwar Dayal Bansal, partner of R.J. Fashions, the appellant is a Rule 12B manufacturer i.e., they purported to have received certain grey fabrics from Muni Group of Companies and availed credit on the basis of the said invoices issued by Muni Group of Industries. The grey fabrics we .....

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the goods were processed. Investigation also revealed that the payments purported to have been made to Muni Group of Companies were followed by cheques issued from Muni Group of Companies which were discounted by his partner and cash received back as per the statements of the shroffs. During the confrontation he could not explain any of these details. We also note that during the arguments before this Tribunal the appellant has not disputed the fraudulent nature of the transactions carried out b .....

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llant in his statement dated 31/01/2008 has admitted that he was the proprietor of Shree Ganesh Enterprises but claimed that he was made namesake proprietor of Shree Ganesh Enterprises by Shri Shyam Sunder Sharma. The appellant has further admitted that on eight invoices of M/s. Venkatesh Mercantile they have availed credit. Appellant has further admitted that the invoices were given to him by Shri Shyam Sunder Sharma but the goods were arranged locally. He has also admitted that the cheques iss .....

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as initially taken by Shri Manohar Mali, and then to Shri Shyam Sunder Sharma. Even though Shri Manohar Mali has claimed that all this has been done at the instance of Shri Shyam Sunder Sharma, but being the official proprietor of M/s. Shree Ganesh Enterprises he cannot absolve himself of his responsibility, particularly when he was aware of the fraud committed. 15.1. Learned counsel for the appellants only submission was that the appellant was a namesake proprietor and his name was used for di .....

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peal No: E/702/2010: Shri Ayush Murarilal Agarwal is the proprietor of Namaste Exports was also managing two more firms i.e. Daffodils Exports owned by appellants father Shri Murarilal Agarwal and Prime Exports owned by his brother Shri Manoj Murarilal Agarwal. All the three firms were operating from the same premises and all the three firms were being looked after by the appellant Shri Ayush Murarilal Agarwal. It is seen from the investigation that all the three firms were working as merchant .....

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ion was taken up regarding the financial transactions and it was found a large number of cheques purported as payment made to Muni Group of Companies were actually not deposited into their account and large number of such cheques were discounted through shroffs Shri Shrenik Varaiya and Yatidra Jain and Shri Nilesh Jain, who, after going through the cheques confirmed that these cheques were discounted and the cash was given to the present appellant only. The details of the various cheques and how .....

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up and made payments to Muni Group by account payee cheques on number of occasions and crossed bearer cheques on some occasions. It was submitted that though the discounters have said that the cash has flown back to them, but the appellant has not been confronted with the said statement in the course of investigation. The appellant submitted that there was no need to open the package and prepare packing list and the goods can be exported as such. It was also submitted that out of two transporter .....

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ree firms and the department has imposed a consolidated penalty. It was also submitted that Rule 26 cannot be invoked on Merchant Exporter. 16.2. It was also submitted that there is no doubt that the goods have been exported and were presented to the Customs authorities. Even if it is presumed that the goods have been purchased from the open market, as held by the honble Supreme Court in the case of Commissioner of Central Excise vs. Decent Dyeing Co. 1990 (45) ELT 201 (SC) the supplied goods h .....

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case was submitted before the adjudicating authority and the adjudicating authority has given no comments on the said order. Further, the department has not challenged the said order and therefore, has achieved finality. 16.4. It was also submitted that Rule 25 is attracted only in four categories of persons mentioned therein i.e. producer, manufacturer, registered person of a warehouse or a registered dealer. Since the appellant is none of them, therefore, provisions of Rule 25 is not applicab .....

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re not dutiable and the maximum penalty that can be imposed under Rule 26 is ₹ 10,000/- and the penalty of ₹ 5 lakhs is unsustainable and should be set aside. 16.5. Investigations have revealed that no goods were supplied by Muni Group of Companies and the transporter details also indicate that no goods were lifted from Bhiwandi godown. It is not understood why the appellant is not able to name any person from Muni Group of Companies with whom they were dealing in spite of the fact t .....

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-duty paid goods were purchased but were shown as if these were purchased from Muni Group of Companies against the invoices and rebate has been claimed on the basis of such documents. The various legal arguments advanced by the appellant has already been dealt with in para 8 to 8.6 and are not being repeated again. 16.6. The appellant has also contended that since there is no duty on the export goods, the maximum penalty that can be imposed is only ₹ 10,000/-. We are not in agreement with .....

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We have already held in para 8 to 8.6, that goods will be confiscable under Rule 25(1)(d). 16.8. Order dated 03/02/2009 passed by Commissioner, Mumbai - I which is said to be accepted by the department is not based upon the correct appreciation of law and is neither binding on this Tribunal or other Court or other Commissioner. 16.9. Learned counsels argument that goods purchased from market are also duty paid goods, the order of the Honble Apex Court is in different facts and circumstances. .....

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anufacturer. In the case of the present appellant, he purported to have procured grey fabrics from certain sources, got it processed from certain processors and thereafter, the appellant has issued his invoices to Muni Group of Companies in respect of the processed fabrics. The case of the Revenue is that no processed fabrics was actually supplied to Muni Group of Companies by the appellant and only invoices purportedly showing payment of duty were supplied to Muni Group of Companies and based u .....

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d in flood the appellant could have produced the secondary records particularly, relating to receipt of payments or the transportation details after getting the details from the transporter, etc. However, no such record was produced. In fact, he did not even respond to summons. It was also found that all the cheques were non-account payee cheques and credited into the accounts of Allahabad Bank, Royal Cooperative Bank, Union Bank of India, Century Cooperative Bank and these accounts were that of .....

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the appellants own claim they have supplied the goods along with invoices to Muni Group of Companies. The case of the Revenue is that only invoices were supplied and no goods were supplied. In view of this factual position, the purported goods supplied by the appellant are liable to confiscation under Rule 25 and penalty Rule 26 is correctly imposed. Penalty imposed is also not on the higher side. Appeal filed is therefore dismissed. 18. Appeal No. E/738/2010: In this case the appellant is Shri .....

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even goods were procured from some other sources but with the invoices of Muni Group of Companies. Further, it appears that, fictitious transport documents were also provided by Shri Ajay Mittal to some of the buyers. Further, in the financial transaction he seems to have major role inasmuch as the money was withdrawn and then handed over. Role Shri Ajay Mittal is discussed in para (v)(a) of page 56 of the impugned order as also in para (vii) (a), (b) of page 57 and 58. From the investigation it .....

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the learned counsel for the appellant has been on the legal side relating to applicability of Rule 26 which we have already discussed in para 8 to 8.6. In view of the said decision, the appeal filed by the appellant is dismissed. Penalty imposed is not on the higher side and is therefore upheld. 19. Appeal No: E/782/2010: The appellant in this case is one Shri Naresh J. Doshi, partner of Doshi Impex. The learned counsel has submitted that the present proceedings are in the nature of double jeop .....

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to Muni Group of Companies who have fraudulently availed CENVAT credit of more than ₹ 11 crores and the present appellant is only a co-noticee and penalty proposes in the context of helping Muni Group of Companies to utilise the fraudulent availment of CENVAT credit. In view of the said position the issue involved are very different while in the present case the main noticee is Muni Group of Companies and is for recovery of fraudulently availed cenvat credit while in the other show cause .....

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oices, bank statements in Cosmos Bank and ER1 returns filed by them for the relevant month. It was also submitted by him that the transactions was done through one Shri Amit Agarwal, a broker who had approached their Surat office and had arranged to supply the goods and invoices at their Mumbai premises and he did not know details about transporter, Apex Corporation or Shri K.K. Gupta. It was also found during investigation that the payments made by him to Apex Corporation was in reality discoun .....

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in the fraudulent availment of CENVAT credit on the bogus documents of Muni Group of Companies without receiving any goods. The appellant is, therefore, liable to penalty under Rule 26. The penalty imposed on him is not on the higher side and is upheld. The appeal filed by Shri Naresh Doshi is dismissed. 20. Appeal No: E/797/2010: The appellant in this case is one Shri Farooq Razazk Gazi, proprietor of M/s Glory Exports. In his statement, the appellant has submitted that one Shri Tejas Desai had .....

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Surat to JNPT was M/s. South Gujarat Transport Service. Investigation also revealed that the payments made by Shri Farooq R Gazi, the cheques were deposited in the IDBI, Nariman Point Branch of Muni Trade Pvt. Ltd. However, immediately after deposit of the cheques a number of cheques totaling the same amount was issued to M/s. N.K. Corporation and M/s. S.A. Corporation which are local shroffs of Surat indicating no payments to Muni Group. 20.1. From above investigation though it is clear that t .....

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n this case is one Shri Parameshwar Arjun Pareek, proprietor of Ayush Exports and is a merchant exporter. In his initial statement he submitted that he has purchased two consignments from M/s. Venkatesh Mercantile Pvt. Ltd., a Muni Group of Company and for this purpose one Shri Tejas Desai had approached him stating that he would arrange the goods on 1% brokerage basis and accordingly he has purchased the goods through Shri Tejas Desai. He has never visited the premises of M/s. Venkatesh Mercant .....

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statements of Shri Parmeshwar Pareek which are detailed on page 41 of the impugned order wherein Shri Parmeshwar Pareek described the modus operandi and admitted that they have exported cheaper quality of goods under the cover of documents obtained from M/s. Venkatesh Mercantile Pvt. Ltd. to avail higher rate of rebate and DEPB. Further investigation were taken up through the banking channels, and reasons are detailed at para 58.1(ii) of page 40, para a, b, c, on page 41, para 11, 11(a) of page .....

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Muni Group of Companies. The goods exported are purported to be covered by invoices of Muni Group of Companies which are liable to confiscation under Rule 25(1)(d) of the Central Excise Rules, 2002. Penalty is therefore imposable on the appellant and the penalty imposed is not on the higher side. The appeal filed by the appellant is therefore dismissed. 22. Appeal No. E/910/2010: The appellant in this case is Shri Sumit H. Juneja, proprietor, Keshav Impex and Raghukul Impex. The appellant is a m .....

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on-account payee cheques and in reality gone into the accounts of different parties. The beneficiaries are discounters of Surat and some of the discounters thereafter were traced out. Similarly account payee cheques were issued by M/s. Keshav Impex to M/s. Apex Corporation which were deposited in the accounts of M/s. Apex Corporation. However, immediately thereafter other cheques were issued which were discounted, this indicates that the amount was not received by Apex. This indicates that there .....

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Siddhi International, M/s. Shree Laxmi Impex and M/s. Surya Exports. Investigations have revealed that the appellant have received the invoices from Muni Group of Companies without receiving any goods and he has availed CENVAT credit on the basis of such invoices. Payments were made to Muni Group of Companies through account payee cheques and after cheque discounting got the cash back. The details of the investigation are in para VII on page 57, (a), (b), (c), para VIII on page 57 and 58,para 6 .....

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ve fraud. During investigation, the appellant was not able to explain anything about the transportation and storage of the goods and how such goods transportation has taken place between them. Investigation also indicated that the discounted amount was received back by the present appellant. From the investigation it is clear that the appellant was instrumental in fraud which lead to availment of CENVAT credit based on the invoices of Muni Group of Companies without purchase of any goods from Mu .....

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