TMI Blog2019 (7) TMI 1171X X X X Extracts X X X X X X X X Extracts X X X X ..... y evidence to prove the role of the appellant, Nikita Plast, freezing of the account and adjusting the amount therein towards the duty liability is wholly unjust, illegal and improper and therefore I order for defreezing of the account of the Nikita Plast and also hold that the appropriation from the said account is without any authority of law - the order of demand against the Fancy Bag Industries and also the imposition of penalty on Manoj Mehta is upheld - the penalty imposed on Nikita Plast under Rule 26 of Central Excise Rules, 2002 and also order for defreezing of the account of Nikita Plast with immediate effect is dropped. Appeal allowed in part. - E/457/2009-SM, E/565/2009-SM, E/566/2009-SM - Final Order Nos. 20570 – 20572/2019 - Dated:- 19-7-2019 - SHRI S.S GARG, JUDICIAL MEMBER Shri. M.S. Srinivasa, Advocate For the Appellants Shri. Raghavendra, Advocate, Shri. Kanipakam Murali, Superintendent (AR) For the Respondent ORDER Per: S.S GARG The appellants have filed these three appeals against the common impugned order dated 28.12.2008 passed by the Commissioner (Appeals) where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nikita Plast, Daman which was frozen by the Department was to be adjusted towards the duty and penalty. The appellants are challenging the demand and confirmation of central excise duty as well as the penalties and interest and freezing of the accounts. First, I take up the appeal filed by M/s. Fancy Bag Industries, Bangalore. The appellant Fancy Bag Industries is a proprietorship concern and Shri. Bhupatrai Mehta is the proprietor of the said firm. Shri. Manoj Mehta is the in-charge of the said concern and is looking after the day-to-day operation of the concern. The said concern is engaged in the manufacture of poly bag and their turnover during the year 2001-04 did not exceed the exemption limit contained in the Notification No. 175/86 and 8/2003 as amended from time to time and this fact has not been appreciated by both the authorities, that the allegation of clandestine clearance was incorrect inasmuch as the appellant company had supplied from their unit against the order of M/s. Nikita Plast as they happened to be their commission agent also and since their own turnover was well within the exemption limit, there was no question of collecting any duty and question of demandin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting into the account of M/s. Nikita Plast can at the most be treated as procedural lapse. He further submits that the demand has been raised on the basis of incomplete investigation without considering any of the pleas raised by the appellant. appellant since from beginning has pleaded that in order to cater the urgent need of their Bangalore based customers, they have supplied the goods manufactured by them in the name of M/s. Nikita Plast and on subsequent receipt of the goods from M/s. Nikita Plast have accounted the same in their account. Further the entire consideration received in respect of clearance made in the name of Nikita Plast has been credited into their account. He further submits that Section 11D is not applicable to the facts of the present case as the appellant has not collected the excess duty from the customers and the collected duty amount has already been paid by M/s. Nikita Plast. It is his further submission that duty demand should have been raised on M/s. Nikita Plast as the entire consideration received along with duty has been credited into the account of M/s. Nikita Plast as admitted in the impugned order. He further submits that for the period prior to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 2007 (217) E.L.T. 506 (Tri.-LB) wherein the Tribunal interpreting the provisions of erstwhile Rule 209A of Central Excise Rule, 1944 which is similar to Rule 26 of Central Excise Rules, 2002 has held that the said provision has been introduced in the statute, in order to punish the guilty acting behind the veil of corporation/company. He also relied upon the decision of this Tribunal in the case of Homag India Pvt. Ltd. Vs. CCE, ST Cus., Bangalore II reported in 2017 (357) E.L.T. 1194 (Tri.-Bang.) wherein it has been held that to impose penalty under Rule 26 of Central Excise Rules, 2002 there must be a confiscation of any goods and in the instant case there is not even a proposal to confiscate any goods in the show-cause notice and in fact there is no confiscation but still the penalty was imposed. Further submissions of the learned counsel appearing for the Nikita Plast regarding the freezing of bank accounts the learned counsel submits that they have orally authorized Manoj Mehta only to act as their commission agent in the Bangalore and to collect and remit the sale proceeds in respect of the goods sold by them whereas Shri. Manoj Mehta in-charge of M/s. Fancy Bag I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon ble High Court considering Section 121 of the Customs Act, 1962 held that the person from whom the department wants to confiscate the sale proceeds should have sold the clandestinely removed goods having knowledge or reason to believe that the said goods are clandestinely removed goods. 4. On the other hand the learned AR defended the impugned order and submitted that it is undisputed fact that Shri. Manoj Mehta of Fancy Bag Industries with the help of his employees generated invoices in the name of Nikita Plast, Daman and clandestinely removed the goods by forging the invoices of Nikita Plast and also using the rubber stamps of Nikita Plast. Further Shri. Manoj Mehta has admitted the goods manufactured by M/s. Fancy Bag Industries, Bangalore and supplied to various customers in Bangalore under the invoices of Nikita Plast, Daman and collected the sale proceeds including excise duty from the customers and deposited in Nikita Plast, Daman bank account. He further submitted that no evidence has been produced by the appellants that Nikita Plast, Daman has discharged duty on the impugned goods and further no evidence produced to say that impugned goods were transport ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t there was a collusion between them and therefore penalty has rightly been imposed and bank accounts have been rightly freezed. 5. After considering the submissions of both the parties and perusal of the material on record, I find that as far as the submission of the learned counsel appearing for the Fancy Bag Industries and Manoj Mehta, the only defense of Manoj Mehta is that he was the Manager of Fancy Bag Industries which is a proprietary concern and in the show-cause notice proposal is made to recover the duty from him whereas the demand has been confirmed against the proprietorship concern which is not tenable in law. This argument of the learned counsel is not tenable in view of reply of Manoj Mehta to the show-cause notice wherein he has admitted that he is in-charge of Fancy Bag Industries which is a proprietorship concern and is also looking after the day-to-day affairs. Further I find that in the present case, the Manoj Mehta is the mastermind in committing the illegal activities. The goods have been manufactured by Fancy Bag Industries and have been supplied to various customers in Bangalore under the invoice of Nikita Plast, Daman without their authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even put on notice before seizing the accounts. Further no verification whatsoever is done including to find out whether credits and the balances related to sale proceeds of the alleged clandestinely cleared goods. Further there is not even corroborative evidence and the entire case is merely based on co-noticee s statement without any evidence. The appellant s complicity in the alleged offence is not at all proved. On the other hand the evidences vindicate that the appellant Nikita Plast had no role whatsoever in the entire act. Therefore, in the absence of any evidence to prove the role of the appellant, Nikita Plast, freezing of the account and adjusting the amount therein towards the duty liability is wholly unjust, illegal and improper and therefore I order for defreezing of the account of the Nikita Plast and also hold that the appropriation from the said account is without any authority of law. In view of my discussion above, I upheld the order of demand against the Fancy Bag Industries and also upheld the imposition of penalty on Manoj Mehta but dropped the penalty imposed on Nikita Plast under Rule 26 of Central Excise Rules, 2002 and also order for defreezing of the accou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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