RAJASTHAN EXPLOSIVES AND Vs. CCE

JUDGEMENT

(1.) The appellants, M/s Rajasthan Explosives and Chemicals Ltd. Dholpur (hereinafter refers to as M/s RECL) manufacture explosives falling under sub -heading No. 3602.00. Their factory premises were visited by the officers of the Central Excise Division, Alwar on 8.11.97, On scrutiny of the documents resumed from their premises, it was observed that they were maintaining more than one set of invoices of identical serial numbers. Under these duplicate invoices, they had cleared a total quantity of 10,927.25 M.Ts of different varieties of explosives (slurry) totally valued at Rs. 16,75,44,038 during the period from 1.9.95 to 31.3.98 without payment of duty amounting to Rs. 3,21,30,295. The explosives were sent to different collieries of M/s Coal India Ltd., (hereinafter refers to M/s CIL). It was observed that the party had received full payment for the value of these explosives including the Central Excise duty but the duty was never deposited with the Central Excise department. Accordingly, the proceedings were initiated against them and they were issued a show cause notice on 3.10.2000 by the Commissioner of Central Excise, Jaipur in which it was alleged that the party operated a current account in SBBJ, Dholpur where they enjoyed on overdraft facility of Rs. 140 lakhs upto 26.12.96. This facility was increased to 200 lakhs on their production of invoices, transportation receipts (GRs) and delivery challans vouching for the receipt of the material by the customers. The Bank immediately on receipt of the requisite documents from the party credited 90% of the particular bill amount (inclusive of excise duty and other element) in their account. Accordingly, the appellants were submitting the copies of the invoices and other documents to the bank. On scrutiny of these documents, it was observed that the assessee was maintaining two sets of invoices but the duty was paid only on one set of invoices. The increased overdraft limit was availed from the bank on these ciearance documents. Shri Rakesh Kumar Arora, Manager of SBBJ, Dholpur in his statement dated 30.5.98 deposed inter alia that M/s. RECL had received 90% of the amount against the despatch documents and the central excise invoices, that M/s RECL after receiving the payment from various collieries either used to deposit it through DD or deposited it in their collection account being operated at the bank situated near the concerned colliery and that the amount so deposited was adjusted against the bills for which M/s RECL used to inform the bank. He confirmed that the payment in the context of these bills was being settled regularly.

(2.) Shri Vinod Kumar Garg, Manager (Finance) of M/s RECL in his statement dated 5.6.98 deposed that he used to present central excise invoices, delivery orders and material receipts etc. received from their marketing department to the bank for drawing upto 90% of the amount against such documents; that he used to present the DDs/TTs alongwith covering letters to the bank and got reconciled the bills as directed by the marketing department of RECL; that in the covering letters, the description of the invoices/bills viz., number and date of bills was being given against which such DDs/TTs were to be adjusted. He deposed that due to financial crisis, Shri Rajesh Jain, M.D. of RECL had given him the direction to prepare two sets of invoices for the clearance of the goods, out of which only one set was declared to the Central Excise department. He also admitted that the parallel sets of invoices were being used for clearance of the goods. On examination of the documents submitted to the bank, it was averred that the clearances effected under these were not entered in any statutory records. Shri O.P. Gupta, Manager (Distribution and Excise) of RECL in his statement dt. 3.6.98 deposed that whenever the fake sets of invoices were required to be used by them for clearances, the same were serially numbered with the numbering machine by using the same serial numbers and PLA/RG 23A Pt. II entry numbers which were mentioned on the statutory invoices; that the practice of issuance of fake invoices was is vogue in RECL since 1995 -96 and that some times, he also used to authenticate the fake invoices at the direction of Shri B.D. Agarwal (V.P.) and Shri Rajesh Jain (M.D.) of RECL

(3.) It is therefore alleged in the show cause notice that some of the invoices submitted to the bank by RECL belonged to other sets of invoices which were used to clear the goods to subsidiaries of M/s CIL without payment of duty; that the assesses had resorted to clandestine removal of goods (explosives) by using the parallel invoices and that though the assessee had received full payment including the Central Excise duty from CIL, but the amount of Central Excise duty was never paid to the excise department. It is alleged that the total number of parallel invoices were found to be 1184 through which material was supplied to various collieries of CIL. M/s RECL, Dholpur are therefore called upon to show cause why the duty amounting to Rs. 3,21,30,295 should not be recovered from them by applying extended period of demand under Section 11A(1) of Central Excise Act, 1944 and why a penalty should not be imposed on them under Section 11AC and Rule 173Q of Central Excise Rules, 1944. They are called upon to show cause why interest should not be charged from them under Section 11AB. Shri Rajesh Jain, M.D., Shri B.D. Agrawal, VP. (Commercial), Shri A.K. Jain, V.P. (Production), Shri Vinod Kumar Garg, Manager (Finance), and Shri O.P. Gupta, In -charge of Excise and M/s Garuda Shakti Transport Co., Dholpur who had transported the offending goods are called upon to show cause why penalty should not be imposed on each one of them under Rule 209A of Central Excise Rules, 1944.