MUKESH RAM NIVAS GUPTA AND ORS. Vs. CCE

JUDGEMENT

(1.) THIS is a case of diversion of imported indigenous raw material namely 100% polyester yarn procured by M/s. Prime Polyweave Ltd. (in short PPL), a 100% EOU. After investigation and completion of adjudication process excise and customs duty total aggregated to Rs. 16,99,92,134/ - has been demanded with interest, a penalty of Rs. 4 Crore under Central Excise Rules and penalty of Rs. 4.15 Crores under Rule 112 of Customs Act has also been imposed. Further, indigenous polyester yarn of Rs. 21,44,69,854/ - removed clandestine also had been confiscated and redemption fine of Rs. 5 Crore in lieu of confiscation have been imposed. Further non available raw material valued more than Rs. 17.7 Crores that has also been confiscated and redemption of Rs. 4 Crores has been imposed. In addition, penalties have been imposed under Rule 26 on remaining 22 parties involved in the case.

(2.) SHRI Willingdon Christian. Ld. Advocate on behalf of M/s. PPL and other appellants in the case, submitted that principles of natural justice have not been observed by the Commissioner at all. While relied upon documents have been supplied by DGCEI un -relied upon documents have not been supplied even though they had written three letters seeking permission as directed by the Commissioner but they never got a reply. He also submits that in respect of other investigating agencies also they could not get the documents. The main basis of the case is that the appellants had not at all manufactured the goods and had actually shown to have manufactured heavy weight fabrics whereas in reality they had manufactured light weight fabrics such as Sarees etc. The findings of the Commissioner is that because of mis -declaration of the type of fabrics produced was shown to show less utilization of yarn received. The appellants had shown wrong description of goods in their documents and they had also shown non -existent job workers. The Ld. Advocate submits that out of 12 receivers, only 2 had admitted having received yarn of higher denier and 3 had not admitted and 7 were not at contacted. He submits that ex parte order has been passed against the appellants. He also submits that appellant have serious financial difficulties and on the basis of balance sheet of the year 2006 -07, the appellant's net worth is negative and there was a negative balance of 2.70 Crores as per certificate issued by the Chartered Accountant on in April 2008. He also submits that the factory has been taken possession of by the Bank of Maharashtra to recover the loan of Rs. 2.87 Crores. He also submits that all the units as well as individuals have no financial resources to pay such a substantial amount demanded as duty and penalties etc and therefore, requests for full waiver of pre -deposit and penalties and hearing the appeal. Shri M.N. Saiyed, Cons. on behalf of the job worker Laxmi Textiles submits that job worker was no where involved and reality was that the factory was leased out to PPL and they were not aware of what was done by PPL. He submits that nearly 70% of goods were sent for job work to Laxmi Textiles since all the machinery was leased out, they had nothing to do with evasion of duty or activities undertaken by the appellant. Shri K.I. Vyas, Ld. Advocate on behalf of Regent Overseas Pvt. Ltd., Favorite Industries submits that they had actually received the grey fabrics as per the documents and sent them after processing. Ld. SDR on behalf of the Revenue submits that there is a clear admission by authorized signatory the diversion of raw materials and also accounted excess amount of raw material and mis -declaration. He also refers to the fact that RTO has reported that vehicles which were supposed to have transported goods were incapable of such use. Job workers and receiver and other 100% EOU have clearly admitted that either they did not receive the goods or they had received different goods as compared to the documents. He submits that detailed order has been passed after considering all the submissions made by the appellants and appellants are only giving excuses for having not received the documents. He also submits that all the relied upon documents in support have been provided to the appellants and un -relied upon documents were not received by them even though they were asked to receive them. Further, he also submitted copy of letter of Commissioner of Central Excise, Surat -II addressed to him wherein he reported that the appellant and group companies did not provide any documents for verification for the purpose of stay application on the flimsy ground such as records have been lost or damaged in flood, all the employees have been retrenched and thus no one is there to search the records and the factory is taken over by the Bank. He also points out that it is strange that the records kept in the registered office of the appellant i.e. PPL situated on the second floor lost in the flood, flood water by no way could cause damage to records on second floor.

(3.) ACCORDINGLY , we direct the following appellants to deposit amount as mentioned against each as below, within 12 weeks from the date of this order and report compliance on 3.4.09. If the pre -deposit is made and compliance reported, recovery of balance amount of duties, interest and penalties shall be stayed during the pendency of appeal: