Commissioner Of Central Excise, ... vs Ahmednagar Alloys Pvt. Ltd

(Arising out of Order-in-Appeal No. AGS(244)03/2009 dated 1.12.2009 passed by Commissioner of Central Excise (Appeals), Aurangabad)

For approval and signature:

Honble Mr. Ramesh Nair, Member (Judicial) ======================================================

1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :

CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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Commissioner of Central Excise, Aurangabad Appellant Vs. Ahmednagar Alloys Pvt. Ltd. Respondent Subhash Gangadhar Zine Kamal Sing Dassani Salasar Ispat Pvt. Ltd.

Appearance: Shri Sanjay Hasija, Superintendent (AR), for appellant None for respondent

CORAM: Honble Mr. Ramesh Nair, Member (Judicial)

Date of Hearing: 17.4.2015 Date of Decision: 17.4.2015

ORDER NO

These four appeals are filed by the Revenue against order-in-appeal No. AGS(244)03/2009 dated 1.12.2009 passed by Commissioner of Central Excise (Appeals), Aurangabad.

2. The fact of the case is that the respondent, M/s. Ahmednagar Alloys Pvt. Ltd., is engaged in the manufacture of MS ingots falling under Chapter 72 of the First Schedule to the Central Excise Tariff Act, 1985. On intelligence, the DGCEI officers, on seizure of certain documents on record from the factory and office premises of M/s. Salasar Ispat Pvt. Ltd., came to know that Ahmednagar Alloys Pvt. Ltd. manufactured 504.145 MT of MS ingots and cleared the same clandestinely without payment of central excise duty. Therefore, a show cause notice dated 26.11.2008 was issued to Ahmednagar Alloys Pvt. Ltd., Shri Subhash Gangadhar Zine (Director of Ahmednagar Alloys Pvt. Ltd.), Shri Kamal Sing Dassani and Salasar Ispat Pvt. Ltd. In adjudication, the following order was passed:-

ORDER

1. I confirm the demand of Central Excise duty for Rs 16,68,518/ -(Sixteen lakhs Sixty eight thousand five hundred eighteen ) demanded under Section 11A(1) of Central Excise Act, 1944 vide show cause Notice Sr. No. DGCEI/MZU/I & IS 'CV 2(4)57/2007/8485 dtd.26.11.2008. However the amount paid by assessee stands appropriated.

2. I order recovery of interest of Rs, 3,35,000/- from the assessee under Section 11AB of Central Excise Act, 1944. However the amount of Rs. 3,35,000/- paid by the assessee vide TR6 challan No. 10 dt. 3.1.2009 stands appropriated.

3. Proceedings for penalty under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC and under Rule 26 of Central Excise Rules, 2002 stand concluded in terms of the first proviso to sub-section (2) of Section 11A of Central Excise Act, 1944, as penalty to the extent of 25% is deposited within 30 days from the date of receipt of the show cause notice.

2.1 However, in respect of other three respondents, the proceedings were dropped on the ground that the main company, Ahmednagar Alloys Pvt. Ltd., has deposited the entire duty amount, interest and 25% penalty before issuance of show cause notice invoking proviso to sub-section (2) of Section 11A. Aggrieved by the aforesaid original order, the Revenue preferred appeals before the Commissioner (Appeals). The learned Commissioner (Appeals) though held that under the first proviso to sub-section (2) of Section 11A, the proceedings of the co-respondents cannot be concluded as the show cause notice was not issued to these co-respondents under Section 11A(1), however, found that all the co-respondents do not have any role in evasion of excise duty committed by Ahmednagar Alloys Pvt. Ltd. Aggrieved by the impugned order, the Revenue filed these four appeals before this Tribunal.

3. When the matter was called, I found that there is adjournment request from Shri Subhash Gangadhar Zine on the ground that Shri S.B. Awate, consultant, is undergoing medical treatment due to an accident and the respondent, Ahmednagar Alloys Pvt. Ltd. The other respondent, Salasar Ispat Pvt. Ltd., also filed adjournment request on the ground that their counsel is engaged in some other matter before the Honble High Court of Bombay.

4. From the records of the appeal, I find that these appeals were earlier listed on 29.6.2011, 3.8.2011 and 17.3.2011. Since the matter has come up number of times, I am taking up the appeals for disposal on merits.

5. Shri Sanjay Hasija, learned Superintendent (AR) appearing on behalf of the Revenue, has taken me to the statements of all the co-respondents. In the statement of Pravesh Roshanlal Gautam, Director of Salasar Ispat Pvt. Ltd., he accepted the admission of various persons who gave their statements  Shri Naresh Oza, dated 11.1.2007, Shri Kamal Sing Dassani, dated 9.1.2007, Shri Vijay Kumar Mittal, dated 10.1.2007, Shri Ajay Kumar G. Bhaiti, dated 22.1.2007, Shri Ramesh Chandok, dated 10.1.2007, Shri Harish Kumar Gandhi, dated 9.1.2007, and Shri Rajeswar, dated 16.1.2007. Shri Pravesh R. Gautam further stated that he fully agreed with the statements given by the above persons. Shri Hasija, learned AR, submitted that in view of the above statement of Shri Pravesh R. Gautam, the penalty is liable to be imposed on Salasar Ispat Pvt. Ltd.

5.1 As regards Shri Kamal Sing Dassani, he stated in his statement recorded on 9.1.2007, that the goods manufactured by Ahmednagar Alloys Pvt. Ltd. has been sold through him to Salasar Ispat Pvt. Ltd., Nashik. He also stated in a question that regarding the transaction made through him that approximately 400 to 520 MT ingots of Ahmednagar Alloys Pvt. Ltd. were sold to Salasar Ispat Pvt. Ltd. and after the transaction, accounts were destroyed. He further stated that regarding these transactions, he used to talk to Shri Subhash Zine of Ahmednagar Alloys Pvt. Ltd. and also to Shri Pravesh Gautam of Salasar Ispat Pvt. Ltd. In his statement, he also stated that Pravesh Gautam wanted the goods without bill and for which Subhash Zine also agreed to supply without bill. Shri Kamal Sing Dassani in his statement dated 10.1.2007, again reiterates the acceptance of supply of goods of Ahmednagar Alloys Pvt. Ltd. to Salasar Ispat Pvt. Ltd. without issuance of invoices.

5.2 Shri Subhash Zine in his statement dated 13.7.2007, has fully agreed that the entire deposition made by Shri Kamal Sing Dassani regarding supply of 504.145 MT of MS ingots to Salasar Ispat Pvt. Ltd. without payment of duty.

6. Shri Sanjay Hasija, learned AR, submits that as regards the clandestine removal of 504.145 MT of MS ingots, Ahmednagar Alloys Pvt. Ltd., without disputing the said clearances, admittedly paid the duty, interest and 25% penalty and on such admission, only the immunity from balance amount of penalty was granted. In such situation, all the persons i.e. Salasar Ispat Pvt. Ltd., Subhash Zine and Kamal Sing Dassani who were directly and actively involved in the admitted transaction of clandestine removal of MS ingots, are liable to penalty. The learned AR submits that as regards the Commissioner (Appeal)s finding that the benefit of proviso to sub-section (2) of Section 11A shall not be available to the other person (in the present case, the respondents Shri Subhash Zine, Shri Kamal Sing Dassani and Salasar Ispat Pvt. Ltd.), the present respondents have not challenged the said finding. Therefore, the same attained finality. Now the penalty has to be decided on the basis of clear role of the respondents appearing on record. Therefore, he prays that all the respondents should be imposed with heavy penalty. On query from the Bench that since the respondent, Ahmednagar Alloys Pvt. Ltd., paid the entire duty, interest and 25% penalty availing the provisions of first proviso to sub-section (2) of Section 11A, the proceedings against the said respondent stood concluded even at the stage of the original adjudication. Therefore, the said appeal does not survive. The learned AR clearly concedes the same.

7. I have carefully considered the submissions made by the learned AR and perused the records. The Revenue has filed these four appeals. As regards the appeal of M/s. Ahmednagar Alloys Pvt. Ltd., I find that their case has been concluded by the original authority on the basis of payment of the entire duty amount, interest and 25% penalty. Therefore, their case stood concluded in terms of first proviso to sub-section (2) of Section 11A. Therefore, the Revenue should not have any grievance as regards conclusion of the proceedings in respect of appeal No. E/315/10 of Ahmednagar Alloys Pvt. Ltd. Therefore, I dismiss appeal No. E/315/10.

8. As regards the other three appeals, I have carefully gone through the statements of these persons recorded under Section 14 and find that all the three respondents were actively involved in the transaction of clandestine removal of MS ingots from Ahmednagar Alloys Pvt. Ltd. to Salasar Ispat Pvt. Ltd. Moreover, as regards the fact of clandestine removal of goods is not under dispute and these three respondents were instrumental in clandestine removal of the goods. Therefore, there is a serious infirmity in the order of the learned Commissioner (Appeals) that despite their active role in the clandestine removal, they have been exonerated from any penalty by the learned Commissioner (Appeals). I have also observed that the original adjudicating authority has not dealt regarding the role of these three respondents in context with imposition of penalty. However, he dropped the proceedings only invoking proviso to sub-section (2) of Section 11A. Therefore, in view of this position, I am of the considered view that the matter should go back to the original adjudicating authority to consider afresh the issue of imposition of penalty on these three respondents. I, therefore, remand the matter to the original adjudicating authority to decide the penalty on these three respondents i.e. Subhash Gangadhar Zine (appeal No. E/1516/11), Kamal Sing Dassani (appeal No. E/1517/11) and Salasar Ispat Pvt. Ltd. (appeal No. E/1518/11). Needless to say that all the respondents shall be given sufficient opportunity of personal hearing. The adjudicating authority is expected to dispose of the matter within two months from the receipt of this order. The appeals are disposed of by way of remand.

(Operative part pronounced in Court)

(Ramesh Nair) Member (Judicial)

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