Full Judgment
2. M/s. R.K. Taneja Fashion Fabrics (hereafter called RKT) processed fabrics received from merchant manufactures. During the period August 1993 to August 1995. Shri Naresh Kumar. R, Taneja, Shri Ramesh Kumar.
P. Taneja, Shri Kaushal B. Pal, Shri Krishnakumar B. Taneja and Shri Bodhraj S. Pal were Directors therein. Thereafter the activities were taken over by a company styled as M/s. Paul Tex (P) Ltd. of which the Directors were Shri Bodhraj Pal and Kaushal Pal. As a result of simultaneous searches of the office as well as residential premises in December 1996 unrecorded excess goods were found and seized. Shri Kaushal Pal before the panchas admitted the non-entry and also the fact that the goods were mentioned in the non-statutory invoices. Search of his residential premises resulted in recovery of incriminating documents. One M.P. Sharma was the folding contractor. From this house documents were seized indicated production, removal of fabrics processed and cleared without payment of duty. The examination of the private documents showed production and clearance at considerably higher level than was shown in the Central Excise Documents. Statements of Merchant manufacturers who sent their grey fabrics of processing were also recorded. In several of there (sic) the admissions were made that the goods received by them from M/s. R.K. Taneja and M/s. Paul Tex in certain cases had not discharged the burden of duty. Shri Rameshkumar P. Taneja and Bodhraj Pal in their statements admitted to having cleared dutiable goods clandestinely. The veracity of the private documents was also certified by V.P. Taneja, who was the Director of R.K. Taneja Fashion Fabrics Pvt. Ltd. Certain traders like the lacuna deposed that the clearances shown to them, in the private registers were collected and part of the processing charges was being paid in cash. On completion of investigation, Show Cause Notices were issued. The Commissioner after hearing the case passed the order now impugned before us. He confirmed the duty amounting to Rs. 1,11,32,599.65 from M/s. R.K. Taneja and imposed equal amount of penalty on them. He confirmed duty amount to Rs. 1,28,12,120 against M/s. Paul Tex and imposed an equivalent penalty upon them, their Directors and a number of manufacturers who had given their fabrics to them for processing. These applications are for waiver and stay of recovery of their duties and penalties.
3. M/s. R.K. Taneja Fashion Fabrics and M/s. Paul Tex Pvt. Ltd. were not represented at the time of hearing today and on the last three occasions also of M/s. R.K. Taneja on an earlier occasion requests were made in March 1999, for adjournment of the ground that these two assessees/appellants and their Five Directors had filed applications under the KVSS Rules, 1998. But in reply to subsequent notices there has been no response and no communication as to whether these two applicant companies had achieved satisfaction. Their cases are therefore taken up for disposal ex parte.
4. In the appeal memorandum of these two companies arguments have been made on merits. It has been pleaded that the companies were not in a position to physically manufacture quantities of fabrics allegedly manufactured and cleared by them. It has been claimed that for satisfying their charges, the department has not led evidence to show excess consumption of inputs like water. It is claimed that the utilisation of water by the unit M/s. Paul Tex was much less than what was required for production of such quantities. It is claimed that the inculpatory statements were retracted. It is specifically claimed that in the case of R.K. Taneja, the penal provisions of Section 11 AC did not apply, since at the time of committing the contravention, the provisions were not in existence. It was claimed that the statements relied upon of the traders were not furnished to the applicant, assessees, companies; thus resulting in denial of natural justice. Both units have claimed that their financial condition is not sound and that they had not recovered the duty from their buyers. The grounds of financial hardships are however, not substantiated by production of any financial statements or any other data.
5. We have carefully considered the submissions of the assessee units.
We find that the assessee units have failed to make a prima facie strong case on merits. We observe that the penalty imposed by the Commissioners is a composite one, both under the rules and the Act. We find that neither assessees company has placed any evidence on record about the plea of financial hardship. Under these circumstances, we direct both M/s. R.K. Taneja Fashion Fabrics and M/s. Paul Tex to deposit Rs. 50 lakhs each towards the duties demanded and confirmed from them. On these sums being paid, the condition to deposit the remainder as also the penalties imposed upon them shall be waived and their recovery stayed. The assessees are given time of 10 weeks from the receipt of the order to make the deposit.
6. Shri Nareshkumar R. Taneja and Shri Rameshkumar R. Taneja were the Directors of M/s. R.K. Taneja Fashion Fabrics. In the stay applications it is pleaded that the orders of imposition of duty and penalty on the assessee unit were not sustainable and therefore on this ground, penalties could not be imposed upon them under Rule 209A. It is also pleaded that they were not Directors of M/s. Paul Tex and therefore not responsible for their alleged evasion of duty. It has been claimed that the quantum of penalty is excessive. On the basis of financial hardship both have filed affidavit on behalf of both applicants it is cleared that neither has any income nor any properties. It is claimed that both of them have filed insolvency petitions in the City Civil Court at Ahmedabad and that neither applicant would be in a position to pay any amount prescribed by the Tribunal in their decision on the stay application.
7. Although these two applicants have not made strong prima facie case on merits, on perusal of the insolvency application we grant them unconditional waiver of the deposit of penalties imposed upon them, we however, do not stay the recovery thereof by any legal means at the disposal of the department.
8. Shri Bodhraj S. Pal and Shri Kaushal B. Pal were the Directors in M/s. Paul Tex (P) Ltd. Shri B.R. Pal were also the Director in the officer unit. In their stay application the same plea have been made, as were made in the applications from Shri Nareshkumar R. Taneja and Rameshkumar Taneja. The financial hardship have been pleaded but nothing is placed in evidence to sustain the plea. We have also recorded that an earlier application for adjournment was made on the ground that these applicants were also seeking recourse to Kar Vivad Samadhsan Scheme Rules, 1998. But thereafter there was no communication from these two applicants inspite of due intimations for personal hearing.
9. We direct Shri Kaushal B. Pal and Bodhraj S. Pal each to deposit Rs. 5lakhs towards the penalties imposed within 10 weeks from the receipt of this order. On this deposit being made the deposit of the remainder the penalty shall be waived and its recovery stayed.
10. The following are merchant manufactures on whom penalties have been imposed to the extent indicated.
The last named applicant was not present nor was there any application for adjournment. In ail the applications the claim made is that the penalties imposed are harsh and are made on presumption and surmises, It is claimed that there was no mala fide intention on part of the traders or any knowledge on their part that the goods removed by the assessee units were without payment of duty. These arguments were strongly advanced on behalf of the first four applicants by their Counsel Shri N.K. Oza.
11. We find that in another bunch of applications for stay made by the Traders placed in a similar position in the same proceedings was decided in the Tribunals None for the Appellant Order No. CI-897/905WZB dated 7.5.99. In this order the Tribunal had directed the applicants before them to deposit about 30% of the penalty imposed. Following the ratio of this order, we direct these persons to deposit the following sums towards the penalties imposed upon them. On such deposit being made the deposit of the remainder penalty shall be waived and its recovery stayed. The applicants are given 10 weeks from the receipt of the order to make the payment. We direct the applicants Shri Maruti Folding House to deposit a sum of Rs. 30,000, Shri D.A. Maherchandani to deposit a sum of Rs. 24,000, Shri D.M. Surana to deposit a sum of Rs. 25,000, Shri P.K. Shah to deposit a sum of Rs. 5,000 and Shri G.A.Agarwal to deposit a sum of Rs. 15,000.
12. Shri Krishnakumar B. Taneja was Director in R.K. Taneja. Grounds raised by him are akin those raised by Shri Nareshkumar R. Taneja and Shri Rameshkumar R. Taneja. Although he has claimed financial hardship, nothing is stated in evidence to sustain the plea. Inspite of repeated notices he has not appeared nor was he represented. The penalty to Rs. 5 lakhs has been imposed upon him in the impugned order. We direct them to deposit a sum of Rs. 50,000 as a pre-condition to hearing of his appeals. The applicant are granted a period within 10 weeks from the receipt of this order to make the deposit. On payment of this sum the deposit of the remainder shall stand waived and its recovery stayed.
13. In all these cases the compliance is to be reported on 9th December, 1999.