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V.K. Tulsian, Chartered Accountant Versus CCE-Lucknow

Evasion of duty - unaccounted manufacture - clandestine clearances of Gutka - Confiscation of goods - Held that:- Appellant has not dealt with any excisable goods inasmuch as he has neither acquired possession of any excisable goods nor he is in any way concerned in transporting, removing, keeping, depositing, concealing, selling, or in any other manner dealing with excisable goods which he knew or had reason to believe are liable for confiscation. The Appellant’s alleged activity would at the m .....

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se Rules and in the present case, the department has not spelled out as to which the provision of Central Excise Rules has been contravened by the appellant.

There was allegation of clearance of finished goods without payment of duty as well as availing CENVAT Credit fraudulently on the basis of bogus invoices procured from Registered Central Excise without physically receiving any raw material against these company and in this case, Shri Sanjay Vimal Bhai Deora was sought to be penal .....

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umar, Member (Technical) And Shri S.K. Mohanty, Member (Judicial) For the Petitioner : Shri Prashant Shukla, Advocate For the Respondent : Shri Govind Dixit, DR ORDER Per: Rakesh Kumar The facts leading to filing of this appeal are, in brief, as under: 1.1 M/s. Shyam Traders, Kundri, Rakabganj, Lucknow (UP) is a proprietary concern of Shri Sanjeev Mishra and is engaged in manufacture of Shyam Bahar brand Gutka chargeable to Central Excise duty. On receipt of intelligence that M/s. Shyam Traders .....

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f that the same is sale proceeds of unaccounted sales of Gutka cleared without payment of duty and hence, the same would be liable for confiscation. Subsequently, Shri Sanjeev Mishra came forward with an explanation about the cash recovered from his residential premises that he had promoted a company called M/s. Shyam Vanaspati Oil Limited (SVOL) for manufacture of vanaspati of which he himself and his brother Shri Pratyush Mishra are the Directors. In this regard, Shri Sanjeev Mishra on the bas .....

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his brother Virender Jain are behind these three companies, i.e., M/s. Betsy Growth Finance Ltd., M/s. Sunshine Capital Ltd. and M/s. Stellar Investment Ltd. In this regard, Shri Surender Jain in his statement dated 11/5/2004 and Shri Virender Jain in his statement dated 13/5/2004 stated that bogus/fictitious entries have been made in the books of account of M/s. Betsy Growth Finance Ltd., M/s. Sunshine Capital Ltd. and M/s. Stellar Investment Ltd. to show investment in cash towards share applic .....

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M/s. Shyam Traders. In the show cause notice, besides the duty demand of ₹ 7,17,16,530/- from M/s. Shyam Traders in respect of the alleged clandestine clearances of Gutka during period from 1/1/2001 to 19/10/2003 along with interest thereon under section 11AB and imposition of penalty on them under section 11AC, there was also proposal for imposition of penalty under Rule 26 of the Central Excise Rules, 2002 on Shri V.K. Tulsian, who was alleged to have given the false certificate that th .....

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cise Rule, 2002 on other notices including Shri V.K. Tulsian and penalty imposed on Shri V.K. Tulsian is ₹ 50 lakhs. 1.4. Against this order of the Commissioner, this appeal has been field. 2. Heard both the sides. 3. Shri Prashant Shukla, Advocate, ld. Counsel for the appellant, pleaded that the appellant Shri V.K. Tulsian is a Chartered Accountant; that no certificate had been issued by him; that Shri Sanjeev Mishra had been appointed as Auditor of SVOL, but he had not accepted that appo .....

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ent, transportation, etc of any excisable goods which he knew or had reason to believe were liable for confiscation; that a finding in this regard has already been made in para 5 of the Tribunal s order dated 12/8/2011 in case of Shyam Traders Vs. CCE-Lucknow reported in 2012 (228) ELT 468 wherein the Tribunal had set aside the penalty under Rule 26 of the Central Excise Rules, 2002 on SVOL and its Directors Shri Pratyush Mishra and Shri Sanjeev Mishra observing that the allegation against SVOL .....

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respect of SVOL and its Directors would also apply in the case of the appellant, even if the department s allegation that the appellant had issue the certificate, is accepted; and that in view of this, the imposition of penalty of ₹ 50 lakhs on the appellant is not sustainable. 4. Shri Govind Dixit, ld. DR for the respondent, defended the impugned order by reiterating the findings of the Commissioner in the impugned order and pleaded that while in para 5 of the Tribunal s order dated 12/8/ .....

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re is a mistake apparent from records in the Tribunal s order, which could be rectified only on the basis of an application for rectification filed under section 35C (2) of Central Excise Act during the period prescribed for the same and since no such rectification application has been filed, the Tribunal, at this stage, cannot deal with the issue of imposition of penalty on the appellant. Shri Dixit also cited the judgment of Hon ble Gujarat High Court in the case of Sanjay Vimal Bhai Deora Vs. .....

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rs and hence, penalty under Rule 26 of the Central Excise Rules would be attracted in his case. 5. We have considered the submissions from both the sides and perused the records. 6. The Role of Shri V.K. Tulsian is discussed in para 17 of the impugned order and the allegations against him, as mentioned in this paragraph is that Shri V.K. Tulsian, Chartered Accountant, an Auditor of SVOL of his act of omission and Commission, committed criminal conspiracy and in connivance with others executed sc .....

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Auditor for SVOL, he had not accepted that appointment and that as such he has nothing to do with SVOL. However, even if the departments allegation against the appellant is accepted, it looks down to money laundering, i.e., fabricating documents to legalize the unaccounted income of M/s. Shyam Traders. For this alleged activity, penalty is sought to be imposed on the appellant under Rule 26 & 27 of the Central Excise Rules. 7. Rule 26 of the Central Excise Rules, 2002 as the same stood duri .....

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words appearing before this expression and therefore, penalty under this Rule is imposable on a person who has dealt with any excisable goods in the manners specified in this Rule while knowing or having reason to believe that the goods dealt with are liable for confiscation. Abetment of duty evasion or of the activities enumerated in this rules is not covered. In the present case, the appellant has not dealt with any excisable goods inasmuch as he has neither acquired possession of any excisab .....

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