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2016 (4) TMI 623 - CESTAT CHENNAI

2016 (4) TMI 623 - CESTAT CHENNAI - TMI - Clandestine removals - Evasion of duty - unaccounted raw materials and finished goods causing evasion of duty - Duty demand - Held that:- The appellant in one hand admitted the fraud committed against Revenue involving duty evasion of ₹ 67,03,159/- but on the other hand pleaded adjustment of credit of ₹ 30,61,782/- against such liability committing further fraud of fabrication of spurious invoices. That was done against illicit transactions. .....

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ence to prove that the materials contained in File A (which were according to the appellant the Annexure C2 documents) giving rise to the demand of ₹ 67,03,159/- is unsustainable. That became admitted fact without controverting. The allegations of investigation and adjudication findings could not be defended. Therefore the demand on that count is to be sustained. It is ordered accordingly.

There was no argument at all made by the appellant for M/s. Vijay Aqua on other consequenc .....

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ncerned, there was no evidence led by them to prove their innocence. Investigation result revealed their active and conscious involvement in dealing with unaccounted raw materials and finished goods causing evasion of duty. Both of them colluded to defraud Revenue. Investigation substantiated its result with full proof leading incriminating evidence against all the appellants which remained uncontroverted. Therefore, penalty imposed on both the appellant is confirmed and their appeals dismissed. .....

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untouched by this order except to the extent hereinafter dealt separately. Interest if any, payable, shall be recovered.

So far as imposition of penalty on M/s. Mathura Polymers, under Rule 173Q of Central Excise Rules, 1944 is concerned, that is not desirable to be levied in view of penalty of ₹ 5,95,721/- confirmed against that appellant imposed under section 11AC of Central Excise Act, 1944.

The penalty levied on Shri V. Natarajan does not appear to be reasonable .....

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djudication order passed against M/s. Vijay Aqua and M/s. Mathura Polymers are confirmed. - E/549/2005, E/448/2005, E/614/2005, E/613/2005 & E/615/2005 - Final Order Nos. 40345-40349 / 2016 - Dated:- 29-2-2016 - Hon ble Shri D. N. Panda, Judicial Member And Hon ble Shri R. Periasami, Technical Member For the Appellants : Shri Venkatachalam, Advocate in (E/549/2005), Shri Rajendran, Advocate in (E/448/2005), Smt. Hema Muralikrishnan, Advocate, Shri L. Muralikrishnan, Advocate For the Respondent : .....

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. Ltd., (hereinafter referred to as the Mathura Polymers) which is in appeal No. E/549/2005. That was a job worker of M/s. Vijay Aqua Pipes Pvt. Ltd., (hereinafter referred to as Vijya Aqua) which is in appeal No. E/614/2005. Central Excise Authorities made a search to the premises of M/s.Vijay Aqua on 24/02/99 and found a truck bearing No. TN 72 5238 in their premises with certain goods loaded therein. Search party found connection between M/s. Vijay Aqua and M/s. Mathura Polymers for which, th .....

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ials from M/s Vijay Aqua for Job work to be done thereon as well as clear the job worked goods. He also brought out the modus operandi of M/s. Mathura Polymer and M/s. Vijay Aqua in page-3 of mahazar and his statement revealed that Shri Natarajan, MD was no way involved in the allegations made against him by the Revenue. 1.4 Learned counsel pleaded that the appellant Shri Natarajan was not at all involved in any clandestine removal alleged by Revenue. But the authorities made a false allegation .....

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ned with any despatch of the materials by M/s. Mathuura Polymers to M/s. Vijay Aqua and vice versa, there should not be any allegation against him. Penalty levied on him being without any basis, he should be exonerated from penalty and his appeal may be allowed. 2.1 Shri Venkatachalam, ld. Advocate appearing on behalf of M/s. Mathura Polymers, says that this appellant was the manufacturer and job worker of M/s. Vijay Aqua. For the purpose of job working, the goods were sent by M/s. Vijay Aqua so .....

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d categorically agreed with the statement of Shri K. Govindarajan, lorry driver of the vehicle TN 72 5238 who had deposed that two truckloads of PVC pipes containing 1000 nos. each were sent to M/s. Vijay Aqua on 24.02.99 by M/s. Mathuura Polymers without any duty paying documents for that. While the third consignment was in the process of dispatch that was intercepted by the authorities and the lorry was detained along with the goods. All such facts were recorded in mahazar dated 24.02.99 signe .....

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18 were the goods manufactured by M/s. Mathura Polymers. Such goods were cleared through the vehicle of M/s. Vijay Aqua. The goods so manufactured were by M/s. Mathura Polymers out of the raw materials supplied by M/s. Vijay Aqua. He also categorically stated that the goods sent were not accounted for in the statutory record. They also availed modvat credit without following the central excise procedures and reversal thereof was not made in respect of the goods sent to M/s. Mathura Polymers thr .....

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t was further submitted by the appellant, that M/s. Vijay Aqua was actually involved in the loss of revenue without any involvement of the appellant job worker M/S Mathura polymer. They received only job charges. When the evidences of Shri Rama Rao and Shri Govindarajan was against the appellant, the appellant company M/s. Mathura Polymers sought cross examination of their evidence. But that was not allowed by the adjudicating authority. 2.5 Ld. Counsel pleaded that decision of adjudicating auth .....

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ed by it as a job worker. The department has valued the job worked goods arbitrarily without adopting the value adopted by the principal manufacturer M/s. Vijay Aqua. To rebut the allegations, in the SCN, he relied on the decision of the Hon ble Supreme Court in the case of Pawan Biscuits (supra). 2.7 So far as the imposition of penalty is concerned, ld. Counsel submits that there was neither proposal for levy of penalty in the SCN for imposition thereof under section 11 AC of CEA, 1944 nor unde .....

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2/6/98 cannot be denied to the appellant for the reason that under Notification No. 214/86, procedures are to be followed by the principal manufacturer but not by the job worker. So far as the Notification No. 8/98 is concerned that relates to the claim of SSI exemption by the appellant. 3.1 Ld. AR on behalf of Revenue submits that there was specific intelligence with revenue that duty evasion has occurred due to no accounting of goods sent by M/s. Vijay Aqua to M/s. Mathura Polymers for Job wo .....

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for by either parties in their statutory record for which there was loss of revenue which was worked out by the Revenue in very clear terms applying the law relating to Valuation and recording violation of procedures in para 59.4 of the adjudication order. 3.2 Revenue further submitted that the Adjudicating authority in para 59.1 at page 51 of Order-in-Original recorded the plea of M/s. Mathura Polymers as to its no liability on the plea of mere receipt of job charges from M/s. Vijay Aqua. But t .....

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goods, it was rightly denied the exemption claimed under notification No. 214/86 holding that the appellant M/s. Mathura Polymers was the manufacturer of gods. They were also denied the SSI exemption on the ground that when the goods were unaccounted, there was no question of exemption benefit allowable. 3.3 Ld. AR relied on para 59.2 of Order-In-Original to say that anyone to claim the SSI exemption benefit has to exercise the option in writing. But that was not done. All that is visible form t .....

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was suppression of goods manufactured, causing loss to revenue, they were rightly levied duty with penalty. There was a clear proposition in the SCN to bring the appellant to the fold of penalty. So far as the appellant Shri Natarajan is concerned, ld. DR supporting adjudication and relying on the finding of the adjudicating authority at para 61, submitted that the authority has rightly found the statement of Shri Natarajan imputing him to penal consequence of ₹ 50,000/-. 4.1 Above two ap .....

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se on 20.01.2016 without default. They were further informed that if they fail on that date, appropriate order shall be passed on merit without issuing further notice. 5.1 On 20.01.2016, the appellants M/s. Vijay Aqua, Sri Nainar and Sri Thiyagarajan remained absent. Therefore they were granted last opportunity of hearing for 22.01.2016. Ld. Counsel Smt. Hema Muralikrishnan, along with Sri L. Muralikrishnan, Advocates, appearing on behalf of M/s. Vijay Aqua, in appeal No.E/614/2005, and Director .....

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377; 67,03,159/- which is disputed. Similarly the invoice appearing in annexure C3 did not result in clearance of goods. However, duty of ₹ 30,61,782/-paid thereon, was claimed for adjustment against the duty demand arising under annexure C2. If such relief is granted, appellant may not have further grievance. It was further submitted that penalty is not leviable for escaped accounting of goods. 5.2 Appellant relied on para-11of the impugned order which narrates the facts of clandestine re .....

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ion caused through different invoices by the appellant which is apparent form the records marked as file A & B seized in the cause of search. Relying on para-18 of the adjudication order, Ld. DR says that the observations made during investigation are as under which goes against the appellant: 18. As it appeared that VAP * Have availed modvat credit on all the inputs/raw materials purchased by them * Have cleared certain inputs to job workers under Rule 57F (4) of the Central Excise Act, 194 .....

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correct serial number of RG23 part ii) as there was no such debit entry for payment of excise duty on such clearances. * Have cleared the goods without sufficient balance either in their RG23 part II PLA with an intention to evade payment of duty, * Have manufactured and cleared clandestinely finished excisable goods., viz., Rigid PVC pipes to TWAD board divisions located at various places as per the worksheet prepared in annexure-B without payment of appropriate duty due on the said goods and w .....

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ld. DR says that the appellants having failed before the Settlement Commission were given appropriate hearing by the adjudicating authority. But they avoided appearance for which on the basis of the material on record, the adjudicating authority proceeded to complete adjudication. 6.3. Relying on para 53 of the adjudication order, Ld. DR says that the issue before the adjudicating authority was as follows:- The issue involved is that:- A) VAP have availed modvat credit on all the inputs/raw mate .....

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ords of VAP; that VAP have raised central excise invoices with fictitious debit entries regarding payment of excise duty on such clearances (incorrect serial number of RG 23 part II) as there was no such debit entry for payment of excise duty on such clearances. VAP have cleared the goods without sufficient balance either in their RG 23 part II or PLA with an intention to evade payment of duty; that VAP have manufactured and cleared clandestinely finished excisable goods, viz., Rigid PVC pipes t .....

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r a penalty equal to the duty amount so not paid under Section 1 AC of the Central Excise Act, 1944 and liable to pay interest under Section 11 AB of the Central Excise Act, 1944, and liable for a penalty under Rule 173Q of CER, 1944; B) MPPL received raw material under the private challans of VAP for conversion without following any procedures as set out in Rule 57 F (4) of the CER 1944 and have manufactured and cleared PVC pipes without accounting for the same in any of the statutory records a .....

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-section (1) of Section 11 A of the Central Excise Act, 1944 read with Rule 9 (2) of the Central Excise Rules 1944. Thereby rendering themselves liable for a penalty equal to the duty amount so not paid under Section 11 AC of the Central Excise Act, 1944, and liable to pay interest under Section 11 AB of the Central Excise Act, 1944, and liable for a penalty under Rule 173 Q of CER 1944; that MPPL are also liable to pay ₹ 26,520/- being the duty involved in the seized goods under Section 1 .....

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. 6.4 Relying on paras 54, 54.5 and 61 of OIO, ld. AR says that what was the assessee s case before the settlement Commission is depicted by learned adjudicating authority in his order. He has examined the issue independently and has drawn conclusion fairly on the basis of the materials on record testing the evidence. Duty evasion had occurred by the collusion of all the appellants and demand was quantifiable. The confessional statement recorded not being controverted, that was bound to be utili .....

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ijay Aqua submitted that while entertaining the prayer of the said appellant to exonerate them from the charge, Tribunal may be gracious to refer the matter to the Settlement Commission for settling the dispute between the parties. But learned AR says that there is no provision in law to make reference to the Settlement Commission when the matter is before Tribunal. 8. Heard both sides and perused the records. 9.1 M/s. Vijay Aqua was issuing resin to M/s. Mathura Polymers for manufacture of PVC .....

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Ramarao of M/s. Mathura Polymers Pvt. Ltd. was looking after the manufacture of the PVC pipes of that concern and the goods found in the truck by the investigation team during interception were manufactured by M/s. Mathura Polymers and that was consigned to M/s. Vijay Aqua. Many incriminating documents recovered from the premises of M/s. Mathura Polymers during search conducted included few chits demonstrating duty evasion by both parties colluding with each other. Physical inventory of goods ta .....

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ement to impute him to charge although he corroborated that the goods were cleared by M/s. Mathura polymers without payment of duty. 9.4 When aforesaid facts Came to the knowledge of investigation Shri Nainar, Director of M/s. Vijay Aqua was examined to discover truth. He fully agreed with the outcome of the investigation as recorded from the driver Shri K. Govindarajan, Shri Natarajan as well as Shri Ramarao. He also agreed that they will deposit the duty evaded amount of ₹ 5,16,161/-. 10 .....

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search. Examination thereof revealed that there were clandestine removal of PVC pipes made by Vijay Aqua without payment of duty in terms of documents borne by that file marked by investigation as file A . The extent of duty evasion arose out of documents in the file marked as A was ₹ 67,03,159/-. There was another file recovered containing certain invoices. That file was marked by investigation as file B . Documents therein revealed that spurious/fabricated invoices were prepared to give .....

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andestine removals made covering duty evasion of ₹ 67,03,159/- (outcome of contents in the file seized and marked as file A ). Shri Thiagarajan confirmed that every material in the file was testimony of the clandestinely removed goods. He did not refute the contents of the statement recorded from Shri Nainar, Director of M/s. Vijay Aqua. Investigation came to know that the clandestine clearances made to different parties were actually cleared to Tamil Nadu Water and Drainage Board. 11. The .....

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f search proceeding. Appellants came in appeal before the Tribunal against the adjudication order. 12.2 Although there were several opportunities granted, by Tribunal, M/s. Vijay Aqua did not lay any cogent and credible evidence to prove that the materials contained in File A (which were according to the appellant the Annexure C2 documents) giving rise to the demand of ₹ 67,03,159/- is unsustainable. That became admitted fact without controverting. The allegations of investigation and adju .....

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o right to claim any relief of adjustment of duty paid preparing any fabricated/spurious document showing false clearances and law is well settled that one cannot take advantage of his own wrong. Therefore, appellant does not get any relief of adjustment of ₹ 30,61,782/- against duty evasion of ₹ 67,03,159/-. 13.2 It is settled principle of law that a construction which permits one to take advantage of one s own wrong or to impair one s own objections under a statute should be disreg .....

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fraud of fabrication of spurious invoices. That was done against illicit transactions. The incriminating evidence in File A and the spurious documents in File B were termed by the appellant as Annexure C2 and C3 giving rise to the demand of ₹ 67,03,159/- and ₹ 30,61,782/- respectively. That speak the premeditated design of the appellant to defraud Revenue. Therefore, extending any set off of duty under Annexure-C3 will be bonus to evasion. 14. There was no argument at all made by the .....

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ector and ₹ 3 lakhs on Shri S. Nainar, Director of M/s. Vijay Aqua is concerned, there was no evidence led by them to prove their innocence. Investigation result revealed their active and conscious involvement in dealing with unaccounted raw materials and finished goods causing evasion of duty. Both of them colluded to defraud Revenue. Investigation substantiated its result with full proof leading incriminating evidence against all the appellants which remained uncontroverted. Therefore, p .....

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goods. So also the other consequences of law as adjudicated by the adjudication order remain untouched by this order except to the extent hereinafter dealt separately. Interest if any, payable, shall be recovered. 17. So far as imposition of penalty of ₹ 50,000/- (Rupees fifty thousand only) on M/s. Mathura Polymers, under Rule 173Q of Central Excise Rules, 1944 is concerned, that is not desirable to be levied in view of penalty of ₹ 5,95,721/- confirmed against that appellant impos .....

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