Case Law Details
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.”
4.5 From the above panchnamas it is evident that the appellant was not available to receive the hearing notice at the known address of their/ his residence or factory premises. Therefore the service of hearing notices was effected by way of pasting the same at residential and factory premises under proper panchnama. That being so appellant cannot complain about non receipt of show cause notice or the hearing notice. He chose to abstain from the proceedings by not responding to the notices given. For the above reason we are of the view that principles of natural justice have been sufficiently complied with and the appellant cannot claim any violation of the same. Justice Krishna Iyer has in landmark decision in case of Chairman, Board of Mining Examination Vs. Ramjee, AIR 1977 SC 965 observed as under:
“Natural justice is no unruly horse, no lurking land mine, nor a judicial cure-all. If fairness is shown by the decision-maker to the man proceeded against, the form, features and the fundamentals of such essential processual propriety being conditioned by the facts and circumstances of each situation, no breach of natural justice can be complained of. Unnatural expansion of natural justice without reference to the administrative realities and other factors of a given case, can be exasperating. We can neither be financial nor fanatical but should be flexible yet firm in this jurisdiction. No man shall be hit below the belt – that is the conscience of the matter.”
4.6 In case DHARAMPAL SATYAPAL LTD. [2015 (320) E.L.T. 3 (S.C.)] Hon’ble Apex Court has observed as follows:
“30) But that is not the end of the matter. While the law on the principle of audi alteram partem has progressed in the manner mentioned above, at the same time, the Courts have also repeatedly remarked that the principles of natural justice are very flexible principles. They cannot be applied in any straight-jacket formula. It all depends upon the kind of functions performed and to the extent to which a person is likely to be affected. For this reason, certain exceptions to the aforesaid principles have been invoked under certain circumstances. For example, the Courts have held that it would be sufficient to allow a person to make a representation and oral hearing may not be necessary in all cases, though in some matters, depending upon the nature of the case, not only full-fledged oral hearing but even cross-examination of witnesses is treated as necessary concomitant of the principles of natural justice. Likewise, in service matters relating to major punishment by way of disciplinary action, the requirement is very strict and full-fledged opportunity is envisaged under the statutory rules as well. On the other hand, in those cases where there is an admission of charge, even when no such formal inquiry is held, the punishment based on such admission is upheld. It is for this reason, in certain circumstances, even post-decisional hearing is held to be permissible. Further, the Courts have held that under certain circumstances principles of natural justice may even be excluded by reason of diverse factors like time, place, the apprehended danger and so on.
31. We are not concerned with these aspects in the present case as the issue relates to giving of notice before taking action. While emphasizing that the principles of natural justice cannot be applied in straight-jacket formula, the aforesaid instances are given. We have highlighted the jurisprudential basis of adhering to the principles of natural justice which are grounded on the doctrine of procedural fairness, accuracy of outcome leading to general social goals, etc. Nevertheless, there may be situations wherein for some reason – perhaps because the evidence against the individual is thought to be utterly compelling – it is felt that a fair hearing ‘would make no difference’ – meaning that a hearing would not change the ultimate conclusion reached by the decision-maker – then no legal duty to supply a hearing arises. Such an approach was endorsed by Lord Wilberforce in Malloch v. Aberdeen Corporation – (1971) 1 WLR 1578 at 1595, who said that a ‘breach of procedure.. .cannot give (rise to) a remedy in the courts, unless behind it there is something of substance which has been lost by the failure. The court dos not act in vain’. Relying on these comments, Brandon LJ opined in Cinnamond v. British Airports Authority – (1980) 1 WLR 582 at 593 that ‘no one can complain of not being given an opportunity to make representations if such an opportunity would have availed him nothing’. In such situations, fair procedures appear to serve no purpose since ‘right’ result can be secured without according such treatment to the individual. In this behalf, we need to notice one other exception which has been carved out to the aforesaid principle by the Courts. Even if it is found by the Court that there is a violation of principles of natural justice, the Courts have held that it may not be necessary to strike down the action and refer the matter back to the authorities to take fresh decision after complying with the procedural requirement in those cases where non-grant of hearing has not caused any prejudice to the person against whom the action is taken. Therefore, every violation of a facet of natural justice may not lead to the conclusion that order passed is always null and void. The validity of the order has to be decided on the touchstone of ‘prejudice’. The ultimate test is always the same, viz., the test of prejudice or the test of fair hearing.
32) In Managing Director, ECIL (supra), the majority opinion, penned down by Sawant, J., while summing up the discussion and answering the various questions posed, had to say as under qua the prejudice principle:
“30. Hence the incidental questions raised above may be answered as follows:
xx xx xx
(v) The next question to be answered is what is the effect on the order of punishment when the report of the enquiry officer is not furnished to the employee and what relief should be granted to him in such cases. The answer to this question has to be relative to the punishment awarded. When the employee is dismissed or removed from service and the inquiry is set aside because the report is not furnished to him, in some cases the non-furnishing of the report may have prejudiced him gravely while in other cases it may have made no difference to the ultimate punishment awarded to him. Hence to direct reinstatement of the employee with back-wages in all cases is to reduce the rules of justice to a mechanical ritual. The theory of reasonable opportunity and the principles of natural justice have been evolved to uphold the rule of law and to assist the individual to vindicate his just rights. They are not incantations to be invoked nor rites to be performed on all and sundry occasions. Whether in fact, prejudice has been caused to the employee or not on account of the denial to him of the report, has to be considered on the facts and circumstances of each case. Where, therefore, even after the furnishing of the report, no different consequence would have followed, it would be a perversion of justice to permit the employee to resume duty and to get all the consequential benefits. It amounts to rewarding the dishonest and the guilty and thus to stretching the concept of justice to illogical and exasperating limits. It amounts to an “unnatural expansion of natural justice” which in itself is antithetical to justice.”
Applying the above tests as laid down in the above said decisions of the Hon’ble Supreme Court we are of the view that the impugned order do not violates the principle of natural justice as sufficient notice and opportunity was given to the appellant to reply to the show cause notice and appear for personal hearing.
4.6 We have observed in para 4.3 show cause notice has been issued in the present case to three persons namely, i. Factory of Shri Pintu Tyagi and Shri Pradeep Tyagi; ii. Shri Pintu Tyagi (S/o Shri Rajbal Tyagi); iii. Shri Pradeep Tyagi (S/o Rajbal Tyagi). Notices were served on there persons separately and the matter has been adjudicated against the said three persons holding them responsible for their acts on the basis of the evidence available on record. From the facts as available on record, the factory of Shri Pintu Tyagi and Shri Pradeep Tyagi is a benaami firm, having no separate name. Both Shri Pintu Tyagi and Shri Pradeep Tyagi were operating the benaami firm to which no name was given and no registration under Central Excise Act, 1944 or under any other Act for the time being in force, was taken. Also as per the statements available on record it is evident that the appellant and his brother have not entered into any partnership deed for operating this factory. Interestingly the clandestine turnover of the factory was more than Rs 12,00,00,000/- (Rupees Twelve Crore) and all the transactions were undertaken in name of this benaami firm Pintu Tyagi and Pradeep Tyagi being the beneficiary of the transactions.
4.7 The entire chronology of the events leading to the confirmation of demand and imposition of penalty on the appellant is as follows:
| – | Appellant was engaged in the business of Trading of Brass Parts of LPG Gas |
| 01.04.2011 | Younger brother of Appellant i.e. Late Shri Pradeep Tyagi also started the same business of trading of LPG Gas stove parts and the Appellant only looked after the business in his absence and helped him in marketing |
| 23.01.2012 | Officers of Central Excise caused a search at the factory premises and residential premises of the appellant. |
| 09.02.2012 | Statement of Appellant and Shri Pradeep Tyagi were recorded |
| 19.07.2012 | Show Cause notice in respect of the seized goods was issued was received 20.07.2012. No response was filed in reply and the matter got adjudicated ex-parte. |
| 17.06.2013 | Shri Pradeep Tyagi expired. Death certificate issued by MCD on 13.02.2014 |
| 05.02.2015 | Show cause notice for present proceedings issued. |
| 09.02.2016 | Notice for hearing on 15.02.2016 was pasted on the residential premises of Shri Pintu Tyagi and Shri Pradeep Tyagi & alos on the factory of Shri Tyagi and Shri Pradeep Tyagi as all other modes of service had failed. |
| 15.02.2016 | Appellant chose not to respond to the notices by appearing before the adjudicating authority, nor sought any adjournment. |
| 19.02.2016 | Notice of Hearing o 26.02.2016 was pasted pasted on the residential premises of Shri Pintu Tyagi and Shri Pradeep Tyagi & alos on the factory of Shri Tyagi and Shri Pradeep Tyagi as all other modes of service had failed. |
| 26.02.2016 | Appellant chose not to respond to the notices by appearing before the adjudicating authority, nor sought any adjournment. |
| 28.02.2016 | Impugned Order passed |
4.8 The claim made by the appellant that he is not concerned with the factory which was owned by his younger brother who has expired is without any basis and is contrary to his own statement recorded on 09.02.2012. In this statement inter-alia Appellant has stated as follows:
> His work is of casting of brass and his factory is situated at 15, Krishna Vihar Phase – I Sevadham, Loni.
> They procure raw material i.e. Brass powder (burada), scrap, purja and zinc and after melting the same, they cast brass rods. Some of the brass rods are sold by them and remaining are used by them in their factory for forging of brass valve and brass cocks, which are sold by them.
> His brother Shri Pradeep Tyagi is working with him in the There is no written partnership deed between himself and his brother.
> The factory along with some machines installed in the factory were taken on rent of Rs 75000/- from Shri Gajendra Tyagi (Mama) from September 2010. Some machines have also been fabricated by them in the factory. No rent has been paid for the reason of some disputes. No written rent agreement has been made except the agreement made on plain paper.
> For melting raw material they have two furnaces. One furnace is used for heating raw material and other is used for brass rods. Three forgings machines are installed in the Out of three forging machines only two are in use.
> They have electricity connection and the electricity the forging and casting machines are electricity operated. They also have generator back up. Electricity connection is in the name of brother of Shri Gajendra Tyagi and electricity bills are paid by them.
> For melting in their furnace they use coal and gas cylinders for heating the material. Coal is purchased from Shri Anil and Shri Pramod having their godown in Sevadham. Gas cylinder is purchased from local vendors.
> They employ about 35 laborers depending on the work Laborers are deputed to look after the work at furnace.
> Main raw material is brass powder (burada), brass scrap and brass parts (purja). Other raw materials are zinc, soda suhaga etc. Brass scrap is melted first. During melting zinc, soda, suhaga etc. is added and out of it brass rods are manufactured. These brass rods are then forged into brass valves and brass cocks. No finishing is done.
> They are working for small workers namely Shri Ashok Tyagi, Shri Shravan Tyagi, Shri Adesh Tyagi, Shri Rameshji, Shri Rajesh Sharma, Shri Dhanprakash Tyagi, Shri Manoj Tyagi, Shri Masterji, Shri Sachinji, Shri Amit Tyagi, Shri Bobby, Shri Naresh and Shri Kuldeep Tyagi from whom they procure the raw material and sell the finished goods. He is not aware of the addresses of these persons who use to deliver the raw material at their factory premises and collect the finished products from there itself.
> They were only working for the person who provided the raw material and procured te finished goods from them.
> The records were maintained in small copies for receipt of raw material and supply of finished goods. Record was maintained for each person separately.
> Material was received by them without any bill and they used to supply material on kachhi slips without any invoice or bill. On the slip the raw material received was also mentioned. These slips were used to maintain the accounts with these persons. On seeing the slips he put his signature on them as token of seeing them and admitted that these slips are the slips against which they use to receive the raw material and supply the finished goods.
> The value of the raw material was adjusted against the value of the finished goods supplied. They use to receive the differential labor charges. Some of parties would pay by cheque which were not crossed/ account payee and were en-cashed by them.
> They have bank account in Bank of Baroda Mandoli Branch, but no transaction of the units was undertaken through this account. No cash book was maintained and all the cash entries were made in the register maintained for receiving raw material and sending finished goods.
> All registers were maintained by Shri Raju Yadav S/o Shri Ramvrat Yadav.
> They have never purchased or sold any material to Shri Vinod Tyagi and Shri Gajendra Tyagi. Some tarnscations have been done with Shri Ashok Tyagi and details are available in registers.
> 1400 to 1500 Kgs of material valued about Rs 4,00,000/- is cast daily. They were getting about Rs 25-30/- per kg. Raw material would be valued around Rs 290-300/- per kg and finished good was valued around Rs 315-325/- per kg.
> They are not registered with sales tax department or any other department.
> The unit has been not named by them as they were not aware that for undertaking said works they had to form company or get registered with the government department.
4.9 In his statement record on the date of search, the Accountant/ Foreman of the unit Shri Raju Yadav stated that:
> He is working as foreman in the unit and maintains all the records of production and clearance of the goods in the The unit is engaged in manufacture of castings and forgings of LPG brass coke & valve and bar of brass, for last one year and three months and employs thirty five laborers.
> There are three furnaces and they cast about 1400 kg to 1500 kg scrap at one time in each furnace.
> They do not maintain any bill! invoice book for removal! sale of the goods from their factory. Goods are removed on the basis kacchi slips after receiving directions from Shri Pintu Tyagi on phone.
> The record of removals is maintained in kachha register resumed by the officer during search. The receipt of raw material i.e. brass scrap is also on kachhi slip without any bill! invoice.
> He has seen the various records – small note books & stock book and signed them. These books are maintained for removal of the finished goods and contain the details of items & their quantity. The register contains the detail of receipt of raw material and removal of finished goods and stock balance.
> Unit is owned by Shri Pintu Tyagi and Shri Pradeep Tyagi residing in Mandoli Delhi. Shri Ashok Tyagi and Shri Gajendra Tyagi are their relatives.
> This factory premises are taken on rent (@ Rs 30,000!- per month) from Shri Gajendra Tyagi.
> Rate of finished goods is Rs 300!- per kg and coal is used in the furnace.
4.10 Shri Pradeep Tyagi in his statement recorded on the date of search while agreeing with the contents of the statement of Raju Yadav also stated that
4.11 Shri Pradeep Tyagi in his statement recorded on 09.02.2012 stated that:
4.12 Shri Ashok Tyagi in his statement recorded on 27.02.2012 stated that:
> He is working for last two years and is engaged in machining and finishing of casted/ forged (Dhalai) valves.
> They do not purchase Dhalai material but instead do machining and finsihing on job work basis. They used to take Dhalai material for job work from the factory of Shri Pintu Tyagi situated at Sevadham Loni and machined and finished them. For last 6-7 months he had taken Dhalai from Shri Manoj Tyagi, Shri Pankaj and Shri Biloo.
> The finished material is sent various shopkeepers in Sadar Bazar Delhi. The Dhalai material is received by him from various persons of shop keepers and after machining is returned back to same person after receiving job charges. The scrap generated is also returned to the same person.
> The rate of Dhalai received by them varies and for some time it is between Rs 300-330/- per kg. Similarly the rate of scrap was Rs 280-300/- per kg.
> The record of materials received by them in a copy and after job is completed the same is handed over to the party after receiving the job charges. Besides the record in copy no other bill! invoice is not prepared by them. The job charges are fixed with parties on per piece basis or per kg basis.
> Their business is very small and they do not purchase or sell any material hence are not registered with any authority.
The reply as recorded in the statement to question 3 is reproduced below:
4.13 From the facts as admitted by the appellant and other in their statement recorded under Section 14 of the Central Excise Act, 1944 it is quite evident that factory at Gali No 15 Krishna Vihar Phase 1, Sevadham, Loni Gaziabad, is a factory jointly owned by the Appellant and his younger brother, without entering into any formal partnership. The factory has not been given any name nor has been registered with any of the government departments either centre or state. The entire activities undertaken in the factory were done clandestinely and no formal records were maintained about the operation. Then factory was having sufficient machines! furnaces & equipments to produce 1400-1500 kgs of finished goods i.e. Brass Rods and Brass Forgings for gas stoves in a day. All the receipt of raw material and dispatch of finished goods was done on kachha slips. Sufficient evidences have been adduced to allege clandestine removal and demand duty on these removals in the show cause notice and impugned order. When the officers visited the factory it was running and had stock of finished goods and raw material which has been seized by the officers. These goods have been confiscated by the Additional Commissioner in separate proceedings without any appeal being filed against the order. Commissioner has also relied upon the decision in case of D Bhoormal [1983 (13) ELT 1546 (SC)] holding as follows:
“30. It cannot be disputed that in proceedings for imposing penalties under clause (8) of Section 167, to which Section 178A does not apply, the burden of proving that the goods are smuggled goods, is on the Department. This is a fundamental rule relating to proof in all criminal or quasi-criminal proceedings, where there is no statutory provision to the contrary. But in appreciating its scope and the nature of the onus cast by it, we must pay due regard to other kindred principles, no less fundamental, or universal application. One of them is that the prosecution or the Department is not required to prove its case with mathematical precision to a demonstrable degree; for, in all human affairs absolute certainty is a myth, and as Prof. Brett felicitously puts it-“all exactness is a fake”. El Dorado of absolute Proof being unattainable, the law, accepts for it, probability as a working substitute in this work-a-day world. The law does not require the prosecution to prove the impossible. All that it requires is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. Thus legal proof is not necessarily perfect proof often it is nothing more than a prudent man’s estimate as to the probabilities of the case.
31. The other cardinal principle having an important bearing on the incidence of burden of proof is that sufficiency and weight of the evidence is to be considered to use the words of Lord Mansfield in Blatch v. Archar (1774) 1 Cowp. 63 at p. 65 “According to the Proof which it was in the power of one side to prove and in the power of the other to have contradicted”. Since it is exceedingly difficult, if not absolutely impossible for the prosecution to prove facts which are especially within the knowledge of the opponent or the accused, it is not obliged to prove them as part of its primary burden.
32. Smuggling is clandestine conveying of goods to avoid legal duties. Secrecy and stealth being its covering guards, it is impossible for the Preventive Department to unravel every link of the process. Many facts relating to this illicit business remain in the special or peculiar knowledge of the person concerned in it. On the principle underlying Section 106, Evidence Act, the burden to establish those facts is cast on the person concerned : and if he fails to establish or explain those facts, an adverse inference of facts may arise against him, which coupled with the presumptive evidence adduced by the prosecution or the Department would rebut the initial presumption of innocence in favour of that person, and in the result prove him guilty. As pointed out by Best in `Law if Evidence’ (12th Edn. Article 320, page 291), the “presumption of innocence is, no doubt, presumptio juris : but every day’s practice shows that it may be successfully encountered by the presumption of guilt arising from the recent (unexplained) possession of stolen property,” though the latter is only a presumption of fact. Thus the burden on the prosecution or the Department may be considerably lightened even by such presumption of fact arising in their favour. However, this does not mean that the special or peculiar knowledge of the person proceeded against will relieve the prosecution or the Department altogether of the burden of producing some evidence in respect of that fact in issue. It will only alleviate that burden to discharge which very slight evidence may suffice.
33. Another point to be noted is that the incidence, extent and nature of the burden of proof for proceedings for confiscation under the first part of the entry in the 3rd column of clause (8) of Section 167 may not be the same as in proceedings when the imposition of the other kind of penalty under the second part of the entry is contemplated. We have already alluded to this aspect of the matter. It will be sufficient to reiterate that the penalty of confiscation is a penalty in rem which is enforced against the goods and the second kind of penalty is one in personam which is enforced against the person concerned in the smuggling of the goods. In the case of the former, therefore, it is not necessary for the Customs authorities to prove that any particular person is concerned with their illicit importation or exportation. It is enough if the Department furnishes prima facie proof of the goods being smuggled stocks. In the case of the latter penalty, the Department has to prove further that the person proceeded against was concerned in the smuggling.”
4.14 Commissioner has also relied upon the following decisions to hold against the appellant:
> Shah Guman Mal [1983 (13) ELT 1631 (SC)]
> Lalchand Dhanpat Sing Jain [(1975) 2 SCR 907]
> Balumal Jamnadas Batra [(1976) 1 SCR 539]
> Gulabchand Silk Mills [2005 (184) ELT 263 (T-Bang)]
> Carpenter Classic Exim Pvt Ltd. [2006 (200) ELT 593 (T-Bang)]
> International Cylinders Pvt Ltd. [2010 (255) ELT 68 (HP)]
> A G Incorporation [2013 (287) ELT 357 (T-Del)]
> Mohan Lal [2009 (237) ELT 435 (SC)]
> Indian Cork Mills Ltd [1984 (017) ELT 0513 (T)]
> Shreeji Aluminium Pvt Ltd. [2012 (282) ELT 234 (T)]
> Shalu dyeing & Printing Mills [2003 (152) ELT 352 (T)]
> Gopal Industries Ltd [2007 (214) ELT 19 (T-LB)]
4.15 in case of Gopal Industries referred by the Commissioner in the impugned order, following has been held:
“17. It is not in dispute that the show cause notice dated 10-8-2001 was sent not only in the name of the partnership firm, but to all the partners of the firm. The learned Commissioner has for valid reasons, recorded in paragraph 25 of the impugned order, held that the show cause notice was to be treated as properly served. It is evident from the record that when the service of the show cause notice was questioned before the Hon ’ble High Court of Madhya Pradesh, the Hon’ble High Court, while disposing of the writ petition of the partners ordered the noticees to file their reply on 24-3-2 003 and participate in the proceedings. Accordingly, the partners have participated in the proceedings and, in fact, the present appeal has been filed in the firm name by one of the partners for challenging the impugned order.
18. It is not in dispute that two note books being private record, namely, “daily report tin factory” and “Daily production report” were seized from the factory premises of the appellant on 1-8-1998 under a panchnama in the presence of the authorized signatory of the appellant and two panch witnesses. The authenticity of these two notebooks is not disputed, but a contention is canvassed that reliance cannot be placed on such private record in the absence of corroborative evidence to show clandestine removal of the excisable goods.
18.1 The “Daily report tin factory” note-book contained details of production and issue of tin containers by the appellant, which did not reflect in the statutory record. The details of production and clearance of tin containers were also shown in the note-book ‘Daily production report’ separately in respect of the appellant firm which tallied with the figures shown in the ‘Daily report tin factory’ which contained figures both for the ‘new’ tin factory as well in the name of the appellant. In this context, it will be noticed that the managing partner Shri Yogesh Garg confirmed in his statement recorded on 29-9-1998 that the documents recovered under the panchnama on 1-9-1998 were pertaining to production and clearance of tin containers by their factory. He stated that these documents consisted of daily production reports written in note-books, delivery challans, stock record of tins etc. The documents recovered pertained to production and clearance of tin containers. He also stated that amongst other supervisors, even Awadesh Kumar Saxena, Electronics Engineer looked after the production and clearance of the goods of the factory. The authorized signatory of the appellant Girijesh Kumar Rai, confirmed in his statement recorded on 28-9-1998 that the records shown to him were withdrawn from the factory of the appellant in his presence and that he had put his signatures on the said documents at the time of withdrawal on 1-9-1998. The Electronics Engineer, Shri Awadesh Kumar Saxena in his statement dated 28-9-1998 admitted that the portion of daily production reports notebook pertaining to the appellants was prepared by him and that challans and daily production reports which bear his signatures, were prepared by him and they were of the appellant firm. According to him, the daily production report depicted the number of tin containers produced/ manufactured on a specific day. Whenever, he prepared the daily production report/challan he submitted the original copy to the Managing Director. The facts revealed by the Managing Director, Shri Yogesh Garg, the authorized signatory, Shri Girijesh Rai and Shri Awadesh Kumar Saxena make it clear that the said private documents recovered from the appellant premises on 1-9- 1998 were maintained by the appellant and that the record, namely, the daily production reports, challans etc. were pertaining to the clandestine production and removal of tin containers without payment of duty. We have perused copies of these two note-books containing the private record and we find that there were signatures of Awadesh Kumar Saxena, Electronics Engineer at various places. The daily report showed particulars of the opening stock, production and the closing stock of the said excisable goods. Admittedly, the production of the tin containers, which was recorded in these daily record books and which were removed, did not appear in the statutory record i.e. RG. 1 register of the appellant. This not a case where mere private record without anything more is relied upon. The private record was recovered from the factory of the appellant, and it is established beyond doubt and not even disputed that it was so recovered and that it belonged to the appellant. The nature of particulars contained in this private record clearly go to show their intrinsic authenticity about the clandestine production and removal of the excisable goods by the appellants who had obtained the excise registration for the manufacture of such goods in the firm name. There cannot be more authentic evidence than recovery of the said private record from the appellant’s factory which admittedly was prepared and bears the signatures of the supervisors of the appellant, and which is proved to have been maintained in the factory, from the statements of the partner Shri Yogesh Garg, the Electronics Engineer, Shri Awadesh Kumar Saxena who has made several daily reports in the said book, and the authorized signatory, Shri Girijesh Rai in whose presence the note-books were recovered under a panchnama. In answer to question No. 18, Shri Awadesh Kumar Saxena who was shown the Daily production reports, stated in his statement dated 29-9- 1998 that all these pertained to the appellants who manufactured the tin containers and that these contained information regarding production and clearance. He also stated in reply to question No. 19 that all challans were prepared by Shri Rajeev Agarwal and others whose signatures he recognized. The authenticity of the recovered documents was admitted by the partner Yogesh Garg [noticee No. (2)] and noticee No. (6) (Girijesh Rai) who also admitted that the record pertained to unaccounted for production and clearance of the tin containers by the appellant. Any subsequent retraction by Shri Awadesh Kumar Saxena has been rightly held to be an afterthought to protect the noticees. This is not a case where any defence was taken up about less consumption of electricity that would have impelled the Revenue Officers to examine consumption of electricity. When production and removal of excisable goods in a clandestine manner is established by such positive documentary evidence and the oral evidence of the managing partner and the supervisor, it cannot be said that the Commissioner committed any error in holding that the appellant had manufactured and cleared tin containers in a clandestine manner. The quantum of liability which is worked out, has not been disputed before us. We find ourselves in complete agreement with the reasoning and findings of the learned Commissioner in holding that the charge of clandestine removal of tin containers by the appellants was established beyond doubt. No further corroboration was required in view of the clinching nature of the oral and documentary evidence establishing clandestine production and removal of tin containers by the appellant. It is evident that Shri Yogesh Garg, noticee No. (2), partner of the appellant, was in charge of the unit and was having overall control of the affairs of the unit. It was, therefore, rightly held that he was aware that the goods clandestinely manufactured and removed in the name of his partnership firm were liable to be confiscated.”
4.16 Appellant has not challenged any of the findings recorded by the Commissioner in the impugned order. When the appellant has in his statement recorded under section 14 while giving the details of working of the unit have admitted that he was actively involved in the working of the unit the grounds taken in the appeal which are in nature of alibi do not merit any consideration. Hon’ble Supreme Court has in case of Kamal Prasad & Ors [order dated 10th October 2023 in Criminal Appeal No.1578 Of 2012] rejecting such pleas held as follows:
19. The principles regarding the plea of alibi, as can be appreciated from the various decisions [Dhananjoy Chatterjee v. State of W.B., (1994) 2 SCC 220; Binay Kumar Singh (supra) Jitender Kumar v. State of Haryana (2012) 6 SCC 204; Vijay Pal v. State (Govt. of NCT of Delhi) (2015) 4 SCC 749; Darshan Singh v. State of Punjab (2016) 3 SCC 37; Mukesh v. State (NCT of Delhi) (2016) 6 SCC 1; Pappu Tiwari v. State of Jharkhand 2022 SCC OnLine SC 109.] of this Court, are:
19.1 It is not part of the General Exceptions under the IPC and is instead a rule of evidence under Section 11 of the Indian Evidence Act, 1872.
19.2 This plea being taken does not lessen the burden of the prosecution to prove that the accused was present at the scene of the crime and had participated therein.
19.3 Such plea is only to be considered subsequent to the prosecution having discharged, satisfactorily, its burden.
19.4 The burden to establish the plea is on the person taking such a plea. The same must be achieved by leading cogent and satisfactory evidence.
19.5 It is required to be proved with certainty so as to completely exclude the possibility of the presence of the accused at the spot of the crime. In other words, a standard of ‘strict scrutiny’ is required when such a plea is taken.
22. We find that for the plea of alibi to be established, something other than a mere ocular statement ought to have been present. After all, the prosecution has relied on the statement of eyewitnesses to establish its case against the convict-appellants leading to the unrefuted conclusion that convict-appellants were present on the spot of the crime and ….”
4.17 His active involvement in the clandestine activities is an admitted fact and penalty imposed on him under Rule 26 is total justified.
4.18 In view of the discussions as above we do not find any merits in this appeal.
5.1 Appeal is dismissed.
(Pronounced in open court on-19/10/2023)
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