MEHUL ROADWAYS Vs. COMMISSIONER OF CENTRAL EXCISE, BHAVNAGAR

JUDGEMENT

(1.) All the four appeals are disposed off by a common order as they arise out of the same impugned order passed by Commissioner, Central Excise, Ahmedabad, vide which he has confirmed duty of Customs and Central Excise against one M/s. Shree Saibaba Copper Private Limited (100% EOU) on the allegation and findings that the duty on the imported raw material was diverted by them in the open market instead of consuming the same for the proposed use. The said M/s. Shree Saibaba Copper Pvt. Limited is not before us. The two appellants Shri Digvijaysingh Jhala and Shri Hemendra J. Shah are against the imposition of penalties of Rs. One Crore upon them, in terms of Rule 26 of Central Excise Rules, 2002. The other two appellants M/s. Mehul Roadways and M/s. Leelam Roadways had challenged the imposition of penalty of Rs. one lakh imposed by the same impugned order of Commissioner.

(2.) ARGUING on the appeals, Ld. Advocate Shri V. Sridharan submits that both the appellants, Shri Digvijaysingh Jhala and Shri Hemendra Shah were Directors of Shree Saibaba Copper Pvt. Ltd. prior to 17 -2 -2003 and they resigned from the Directorship with effect from the said date. The factory of 100% EOU was put to search by DGCEI on 10 -6 -2003 and show cause notice issued on the alleged contravention does not propose any imposition of penalty upon them as it had come on record during the course of investigation that said two Directors resigned as Directors w.e.f. 17 -2 -2003. He further submits that after the raid, the said 100% EOU was closed and re -started in November 2003. Subsequently, Directorate of Revenue Intelligence (DRI) searched the factory premises in August 2004 and conducted various verifications and investigations. The present impugned order stand passed on the basis of investigations conducted by the DRI from August, 2004 onwards and the demand pertains to November, 2003 to March, 2004, when the said two appellants admittedly were not the Directors of the Company.

(3.) LD . Advocate has drawn our attention to the statements of Shri Digvijayasingh Jhala recorded on 28 -1 -2005 disclosing the fact that he resigned from the Directorship of the Company. Similarly, there is a statement of Shri Hemendra Shah recorded on 10 -2 -2005 indicating to the same effect. In fact, submits the Ld. Advocate that Commissioner does not dispute that the two appellants were not the Directors of the Company during the relevant period. However, he has imposed penalty upon them on the ground that at the time of executing B -17 bonds by the 100% EOU in the year 2002, when the Company came into existence, the solvency certificate given along with the said B -17 bond was incorrect, inasmuch as the same reflected the solvency status of Shri Jhala instead of showing the solvency of the Company. He submits that Shri Jhala in his statement has clarified that such solvency certificate annexed with B -17 bond was given by the Company without his consent and knowledge and he was not aware of the same. He has not appended his signatures on any of the document. He also regretted for giving false information by the Company but clarified that he was not aware of the same. In any case, submits the Ld. Advocate that the Commissioner having accepted that the appellant was not Director of the Company during the relevant period, cannot invoke the provisions of Rule 26 for giving false information at the time of execution of B -17 bond. He submits that there was no provisions in the Customs Act for imposition of penalties for the alleged providing of wrong information. Such provisions were introduced in the year 2006 by way of bringing the Section 114AA on the Statutory Book, providing penalty for wrong giving of information or wrong filing of documents.