Pintu Tyagi Vs Commissioner of Central Excise & Service Tax (CESTAT Allahabad)
Conclusion: Penalty under Rule 26 was justified on the proof that there were sufficient evidences adduced to allege clandestine removal and appellant had in his statement recorded under section 14 while giving the details of working of the unit had admitted that he was actively involved in the working of the unit.
Held: Intelligence was received that appellant (Paresh Tyagi) and his brother Pintu Tyagi (Expired on 17.06.2013) were operating a factory located at Ghaziabad and were engaged in casting/ forging (commonly known as “Dhalai”) of LPG stove valve of brass and bar of brass (Saria). Their turnover was more than Rs 10 Crores but they had neither taken registration nor were paying any central excise duty on the excisable goods manufactured and cleared by them. Two relatives of them namely Ashok Tyagi and Gajendra Tyagi residing nearby were also carrying out finishing work of the said forged brass coke valve at the first floor of their residential premises. Acting on the intelligence the factory premises of the appellant and his brother was searched on 23.01.2012. Since appellant was not maintaining any record of production of clearance of the excisable goods manufactured and cleared by them the physical stock of goods totally valued at Rs 22,23,052/- found in the factory premises was verified and seized under the provisions of Section 110 of Customs Act, 1962 as made applicable to Central Excise in terms of Section 12 of Central Excise Act, 1944. On the basis of the investigation done and examination of records resumed from the factory and residential premises, it was evident that the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi evaded central excise duty mounting to Rs 1,14,85,955/- [Rs 1,11,51,412/- BED + Rs 2,23,028/- Ed Cess + Rs 1,11,514 SHE cess] which was to be demanded from the unit of Pintu Tyagi and Pradeep Tyagi in terms of Section 11A (4) of the Central Excise Act, 1944. along with the interest at applicable rate in terms of Section 11AA/11AB of the Central Excise Act, 1944. The unit of Pintu Tyagi and Pradeep Tyagi was also liable for penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944. It was held that when appellant had in his statement recorded under section 14 while giving the details of working of the unit had admitted that he was actively involved in the working of the unit the grounds taken in the appeal which were in nature of alibi did not merit any consideration. His active involvement in the clandestine activities was an admitted fact and penalty imposed on him under Rule 26 was total justified.
FULL TEXT OF THE CESTAT ALLAHABAD ORDER
This appeal is directed against order in original No.33/Commr/C.Ex./ GZB/ 2015-16 dated 29.02.2016 of the Commissioner Central Excise, Customs and Service Tax Ghaziabad. By the impugned order following has been held:
ORDER
1. I confirm the demand of Central Excise duty amounting to Rs 1,14,85,955/- [Rs 1,11,51,412/- BED + Rs 2,23,028/- Ed Cess + Rs 1,1 1,514 SHE cess] [Rupees one crore eleven lakhs eighty five thousand nine hundred and fifty five only)] and order its recovery from Shri Pintu Tyagi and Shri Pradeep Tyagi having factory at 15, Krishna Vihar Phase – I Sevadham, Loni, Distt Ghaziabad, under the provisions of Section 11A (4) of the Central Excise Act, 1944.
2. I order to charge and recover interest at the applicable rate on the aforesaid demand of Central Excise duty amounting to Rs 1,14,85,955/- till the date of payment of the said central excise duty under Section 11AA/ 11AB of the Central Excise Act, 1944.
3. I impose penalty of Rs 1,14,85,955/- upon Shri Pintu Tyagi and Shri Pradeep Tyagi having factory at 15, Krishna Vihar Phase – I Sevadham, Loni, Distt Ghaziabad, under Rule 25 of the Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944.
4. I impose penalty of Rs 5,00,000/- upon Shri Pintu Tyagi under Rule 26 of the Central Excise Rules, 2002.
5. I impose penalty of Rs 5,00,000/- upon Shri Pradeep Tyagi under Rule 26 of the Central Excise Rules, 2002.
2.1 Intelligence was received that Appellant (Shri Paresh Tyagi) and his brother Shri Pintu Tyagi (Expired on 17.06.2013) were operating a factory located at Gali No 15, Krishna Vihar Phase – I Sevadham, Loni, Distt Ghaziabad and were engaged in casting/ forging (commonly known as “Dhalai”) of LPG stove valve of brass and bar of brass (Saria). Their turnover was more than Rs 10 Crores but they had neither taken registration nor were paying any central excise duty on the excisable goods manufactured and cleared by them. It was also gathered that they were residing at House No 873 Gali No 14 Mandoli Extension, Near National Flower School, Delhi and their! two relatives namely Shri Ashok Tyagi and Shri Gajendra Tyagi residing nearby in the same gali are also carrying out finishing work of the said forged brass coke! valve at the first floor of their residential premises.
2.2 Acting on the intelligence the factory premises of the appellant and his brother was searched on 23.01.2012. Since appellant was not maintaining any record of production of clearance of the excisable goods manufactured and cleared by them the physical stock of goods totally valued at Rs 22,23,052/- found in the factory premises was verified and seized under the provisions of Section 110 of Customs Act, 1962 as made applicable to Central Excise in terms of Section 12 of Central Excise Act, 1944. Various records found during the search were resumed. All the proceedings were undertaken in the presence of Pancha witnesses and recorded under proper panchnama. Simultaneously the residential premises of the two and the factory cum residential premises of Shri Ashok Tyagi and Shri Gajendra Tyagi also searched. Incriminating documents found there from were also resumed and proper panchnama drawn at this premises. Statements of Shri Raju Yadav Accountant of the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi, Shri Ashok Tyagi and Shri Gajendra Tyagi were also recorded on the spot under Section 14 of the Central Excise Act,1944.
2.3 On the basis of the investigation done and examination of records resumed from the factory and residential premises, it was evident that the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi evaded central excise duty mounting to Rs 1,14,85,955/- [Rs 1,11,51,412/- BED + Rs 2,23,028/- Ed Cess + Rs 1,11,514 SHE cess] which is to be demanded from the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi in terms of Section 11A (4) of the Central Excise Act, 1944. along with the interest at applicable rate in terms of Section 11AA/11AB of the Central Excise Act, 1944. The unit of Shri Pintu Tyagi and Shri Pradeep Tyagi is also liable for penalty under Rule 25 of Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944. Shri Pintu Tyagi and Shri Paresh Tyagi who were engaged in the day to day operation of the unit and were have by their act of omission and commission leading to the evasion of said duty were liable to penalty under Rule 26 of the Central Excise Rules, 2002.
2.4 A show cause notice dated 05.02.2015 was issued to-
I. the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi calling it to show cause as to why:
a) The central excise duty amounting to Rs 1,14,85,955/- [Rs 1,11,51,412/- BED + Rs 2,23,028/- Ed Cess + Rs 1,11,514 SHE cess] [Rupees one crore eleven lakhs eighty five thousand nine hundred and fifty five only)] should not be demanded and recovered from them under the provisions of Section 11A (4) of the Central Excise Act, 1944.
b) Interest on the amount as at S No (I) supra, should not be recovered till the date of payment of the said central excise duty under Section 11AA/ 11AB of Central Excise Act, 1944
c) Penalty should not be imposed upon them under Rule 25 of Central Excise Rules, 2002 read with Section 11 AC of the Central Excise Act, 1944.
II. Shri Pintu Tyagi and Shri Paresh were asked to show cause as to why the penalty be not imposed upon them under Rule 26 of the Central Excise Rules, 2002.
2.5 This show cause notice was adjudicated as per the impugned order. Aggrieved by the impugned order Shri Pintu Tyagi has filed this appeal. No appeal has been filed by the unit of Shri Pintu Tyagi and Shri Pradeep Tyagi and Shri Pradeep Tyagi.
3.1 We have heard Shri Abhas Mishra, Advocate for the Appellant and Shri Manish Raj for the revenue.
3.2 Arguing for the appellant learned counsel submits that:
> The proceedings initiated by the Show Cause Notice and adjudged by the impugned order are bad in law to the extent it pertains to his client.
> The impugned order was passed in gross violation of the principles of natural justice.
> The appellant is not at all concerned with any of the activities of factory of Lat Shri Pradeep Tyagi.
> RUD-6 which is the statement of Lt. Shri Pradeep Tyagi, clearly identifies Shri Pradeep Tyagi as the owner of the unit.
> As the appellant is not concerned with the activities of the unit, penalty imposed upon him under Section 11AC cannot be justified.
> For the same reason penalty under Rule 25 too cannot be justified.
> Since the appellant was not the manufacturer of any excisable goods in the factory of his younger brother Lt Shri Pradeep Tyagi, no submissions can be made by him regarding the sustainability of the demand of duty.
> He filed the list of dates.
3.3 Arguing for the revenue learned authorized representative reiterates the findings recorded in the adjudication order.
4.1 We have considered the impugned order along with the submissions made in appeal and during the course of arguments.
4.2 Appellant first contention is that order has been passed in the violation of principal of natural justice. Commissioner has in para 3 of the impugned order recorded as follows:
“3. CASE FOR THE NOTICEES: The Show Cause Notice No 33/ Commr/ CEX/ GZB/14-15 dated 05.02.2015 was issued by the Commissioner Central Excise Ghaziabad under C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 1019-1 021 dtd 05.02.2015 to all the three notices i.e. Factory of Shri Pintu Tyagi and Shri Pradeep Tyagi, 15 Krishna Vihar Phase I Sevadham. Loni, Distt Ghaziabad.; Shri Pintu Tyagi and Shri Pradeep Tyagi, both S/o Shri Rajbal Tyagi House No 873, Gali No 14 Mandoli Extension, Near National Flower School, Delhi. Since nobody was found present at the factory address hence the notices were sent through speed post on 16.02.2015. The show cause sent to House No 873, Gali No 14 Mandoli Extension, Near National Flower School, Delhi returned undelivered on 27.02.2015. Therefore the same were served by pasting at that address under panchnama dtd 02.03.2015. None of the notices filed any written reply to the notice. They were also granted the opportunity of personal hearing on 15.02.2016 and 26.02.2016 vide C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 552 to 554 dtd 05.02.2016 and even C No 848 to 852 dtd 17.02.2016. None of the noticee appeared on the aforesaid dates scheduled for personal hearing. Hence, I decide the case ex parte.”
4.3 From the perusal of the show cause notice it is observed that the show cause notice was issued to three persons namely:
1. Factory of Shri Pintu Tyagi and Shri Pradeep Tyagi,
Gali No 15 Krishna Vihar Phase I
Sevadham. Loni, Distt Ghaziabad.
2. Shri Pintu Tyagi (S/o Rajbal Tyagi)
House No 873, Gali No 14
Mandoli Extension, Near National Flower School, Delhi.
3. Shri Pradeep Tyagi (S/o Rajbal Tyagi)
House No 873, Gali No 14
Mandoli Extension, Near National Flower School, Delhi.
As no one was available to receive the show cause notice at the premises/ addresses indicated the show cause notice was served by pasting the same at the addresses indicated under panchnama dated 02.03.20 15.
4.4 Similarly the hearing notices were not being received and hence pasted at the residential premises of the appellant. The text of the two panchnama is reproduced below:
“PANCHNAMA DATED 09.02.2016
Drawn At Gali No 15 Krishna Vihar Phase I
Sevadham. Loni, Ghaziabad.
Panch1: Shri Ranjeet Kumar, Aged 21 Years S/o Shri Sudhir Kumar, R/o H No 137 Sector 6, Rajendra nagar, Sahibabad, Gahziabad (U P).
Panch2: Shri Satish Kumar, Aged 45 Years S/o Shri Rajendra Singh, R/o H No 38/5 Hindan Vihar, Gahziabad (UP).
“We the above named panchas having been called upon by the officers of Anti Evasion, Central Excise & Service Tax Commissionerate Ghaziabad (hereinafter referred to as ‘officers’) presented ourselves today i.e. on 9th February’ 206 at about 12.00 Hrs near Gali 15 Krishna Vihar Phase I Sevadham. Loni, Distt Ghaziabad. The officers introduced themselves by displaying their identity cards and requested us to witness the proceedings to serve a letter C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 552 dtd 05.02.2016 issued by Superintendent (Adj), Central Excise Ghaziabad to Shri Pijntu Tyagi and Shri Pradeep Tyagi at Gali No 15 Krishna Vihar Phase I Sevadham. Loni, Ghazia bad., for which we gave our consent. Thereafter, the officers and we moved towards the aforesaid address. On entering at Gali No 15 Krishna Vihar Phase I Sevadham. Loni, Ghaziabad in our presence, the officers inquired from various persons available in that gali No 15 about the aforesaid Shri Pin too Tyagi and Shri Pradeep Tyagi. But all of them show their inability to identify as such person (s) in that locality. Therefore the officers affixed the letter C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 552 dtd 05.02.2016 at a conspicuous place of main gate of at Gali No 15 Krishna Vihar Phase I Sevadham. Loni, Ghaziabad..
All the proceedings were conducted peacefully in our presence without causing any damage either to property or to persons. The proceedings were recorded by one of the officers on his laptop on our request and as dictated by us. The contents of this Panchnama were read over to us in our vernacular and we have understood the same well. The Panchnama concluded at 16.30 Hrs on the same day i.e. 09.02.2016. We are satisfied with the proceedings conducted by the officers.”
“PANCHNAMA DATED 09.02.2016
Drawn At House No 873, Gali No 14 Mandoli
Extension, Near National Flower School, Delhi
Panch1: Shri Vikram Gautam, Aged 19 Years S/o Shri Sher Singh, R/o Village Rajapur, Shastri Nagar, Gahziabad (U P).
Panch2: Shri Vijay Kumar, Aged 21 Years S/o Shri Puran Singh, R/o Baghwali Gali, Rajapur, Shastri Nagar, Gahziabad (U P).
“We the above named panchas having been called upon by the officers of Anti Evasion, Central Excise & Service Tax Commissionerate Ghaziabad (hereinafter referred to as ‘officers’) resented ourselves today i.e. on 9th February’ 206 at about 15.00 Hrs near Gali No 14, Mandoli Extension, Delhi. The officers introduced themselves by displaying their identity cards and requested us to witness the proceedings to serve a letter C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 553 dtd 05.02.2016 issued by Superintendent (Adj), Central Excise Ghaziabad to Shri Pijntu Tyagi/ Shri Pradeep Tyagi S/o Shri Rajbal Tyagi at House No 873, Gali No 14 Mandoli Extension, Delhi, for which we gave our consent. The officers informed that their earlier attempts to serve the letter were failed.
Thereafter, the officers and we moved towards the aforesaid address. On reaching the gate of the premises the officers knocked the door which was opened by a lady who refused to divulge her full name and identity. The officers gave their introduction to the lady and apprised her of the purpose of their visit and asked her about Shri Pintu Tyagi and Shri Pradeep Tyagi. The lady told that Shri Pintu Tyagi and Shri Pradeep Tyagi do not reside at this address, She informed that she has no idea about said persons & has no relation with them and refused to receive any letter on behalf of Shri Pintu Tyagi and/or Shri Pradeep Tyagi. When officers tried to convince the lady, she shut the door and went inside. Therefore the officers affixed the letter C No V(15) Adj. /Pintu Tyagi / Gzb / Comm /166/ 14/ 553 dtd 05.02.2016 at a conspicuous place of main gate of at House No 873, Gali No 14 Mandoli Extension, Delhi
All the proceedings were conducted peacefully in our presence without causing any damage either to property or to persons. The proceedings were recorded by one of the officers on his laptop on our request and as dictated by us. The contents of this Panchnama were read over to us in our vernacular and we have understood the same well. The Panchnama concluded at 16.30 Hrs on the same day i.e. 09.02.2016. We are satisfied with the proceedings conducted by the officers.”
