Shri S.K. Garg Vs. Cce Kanpur - Court Judgment

Excerpt:
1. this appeal has been filed by the appellant shri s.k. garg against the impugned order of the commissioner imposing penalty of rs.2.5 lakhs on him under rule 209-a of the central excise rules.2. the facts leading to the filing of the present appeal may briefly be stated as under: 3. m/s. kanpur pesticides & chemicals (p) ltd., industrial area kanpur were engaged in the manufacture of s.o.dyes and those were classifiable under sub-heading 3204.29 of the ceta. the factory premises of the company on receipt of intelligence report was raided and searched on 16.2.95 by the central excise officers. the search was also conducted on the premises of their dealers, stockists and directors/executives of the company. on scrutiny of record it (sic) that the assessable value of the goods declared by the company at the time of clearance was, much less than the actual value at which those were sold. it also revealed that the goods were cleared to the trading firm which was managed by the present appellant, shri s.k.garg. the statement of the assistant worksman and production superintendent, was recorded wherein he admitted that billing was done of inferior and cheaper quality of dyes, while actuall it was not so. shri a.k. jhunjhunwala who was running the company was also examined and he in his statement admitted that the day-to-day affairs of the company were looked after shri s.k. garg, the present appellant. he also admitted evasion of the excise duty during the period 1990-91 to 1994-95. similarly, shri s.k. garg, the appellant accepted the evasion of the central excise duty and voluntarily deposited the duty amount of rs.1,53,00,000/-. the show cause notice was accordingly issued to the above said company and shri s.k. garg, the present appellant and shri a.k. jhunjhunwala, by the commissioner of central excise on 12.11.97. the penalty was proposed to be imposed on the appellant under rule 209-a of the rules. in reply to that notice, shri s.k. garg, the appellant, however, denied his connection with the company m/s.kanpur pesticides & chemicals (p) ltd. and alleged that the day-to-day work of the factory was looked after by one of the directors and not by him. the commissioner afforded opportunity of personal hearing to all the notices including the present appellant. he through the impugned order imposed penalty of rs.20 lakhs on the company under rule 173-2 and of rs.2.5 lakhs each on shri a.k.jhunjhunwala as well as on the present appellant, s.k.garg under rule 2091-a of the rules.5. the learned counsel has contended that the appellant has no connection with the company m/s.kanpur pesticides & chemicals (p) ltd. which was enagged in the manufacture of s.o. dyes and allegedly evaded payment of excise duty thereon and as such no penalty under rule 209-a of the rules could be imposed on him. he has further submitted that no copies of the documents were supplied to the appellant and he could not file proper reply to the show cause notice. therefore, there had been violation of principles of natural justice in passing the impugned order.6. on the other hand, the learned sdr has argued that shri s.k. garg himself admitted evasion of the excise duty by the company and even deposited the duty amount before issuance of the show cause notice and that the goods manufactured by the company were traded by him through his firms / companies, floated by him under different names. therefore, he had been rightly burdened with the penalty under rule 209-a of the fules.8. the facts are not much in dispute. the factory premies of the company m/s. kanpur pesticides & chemicals (p) ltd. which was engaged in the manufacture of s.o. dyes was searched by the officers of central excise on receipt of the intelligence report that they were evading the central excise duty on large scale by resorting to undervaluation and misdescription of the goods. the company even deposited the duty amount of rs.1,53,00,000/- before the issuance of the show cause notice. there is no material on the record to suggest that the company has ever disputed the imposition of penalty of rs.20 lakhs on it by the commissioner through the impugned order.9. the present appellant has been burdened with the penalty of rs.2.5 lakhs under rule 209-a of the rules. his plea that he had nothing to do with the affairs of the company had beern not rightly accepted by the commissioner. he himself in his statement dated 22.5.95 admitted that there was evasion of excise duty by the company by indulging in undervaluation and misdescription of the goods. he also admitted that the record regarding the affairs of the company about the sale of the goods was recovered and seized from his house during the course of search by the officers of directorate of anti-evasion on 16.2.95 under panchnama. his statement itself was enough, for the commissioner to reject his plea of having no concern with the affairs of the company and evasion of excise duty on the goods cleared from the factory premies of the company. rather, it was quite evident from his own admission that it was he who was managing the affairs of the company and looking after the sale and clearance of the goods. the goods manufactured by the company were traded by him through different firms which too were floated by him. the company, as observed, deposited the duty amount by accepting its liability. the present appellant and shri a.k.jhunjhunwala both admitted the evasion of central excise duty by the company while clearing the goods and voluntarily deposited the duty amount of rs.1,53,00,000/-.10. the appellant having been found of aiding and abetting the company m/s.kanpur pesticides & chemicals (p) ltd. in the evasion of central excise duty of huge amount during the period 1990-91 to 1994-95, had been rightly held guilty under rule 209-a of the rules. there had been no violation of the rules of natural justice also as contended by the counsel, while imposing penalty on him, for want of any material to show that he was not supplied with the documents or that he was not heard. the perusal of the record rather shows that he was afforded number of opportunities of hearing by the commissioner, but he himself failed to furnish the proof of his non-concern with the company. his own statement wherein he admitted his involvementd in day-to-day affairs of the company and also the evasion of the central excise duty by the company was enough to punish him under rule 209-a of the rules.even the private record of the company was recovered from his house and he admitted this face in his statement. therefore under these circumstances, it is difficult to hold that he was not heard or afforded any opportunity to defend himself.11. in the light of the discussion made above, the impugned order of the commissioner (appeals) imposing penalty of rs.2.5 lakhs on the appellant is prefectly valid and does not suffer from any legal infirmity so as to call for any interference.12. accordingly, the appeal of the appellant is dismissed being without merit.

Judgment:
1. This appeal has been filed by the appellant Shri S.K. Garg against the impugned order of the Commissioner imposing penalty of Rs.2.5 lakhs on him under Rule 209-A of the Central Excise Rules.

2. The facts leading to the filing of the present appeal may briefly be stated as under: 3. M/s. Kanpur Pesticides & Chemicals (P) Ltd., Industrial Area Kanpur were engaged in the manufacture of S.O.Dyes and those were classifiable under sub-heading 3204.29 of the CETA. The factory premises of the company on receipt of intelligence report was raided and searched on 16.2.95 by the Central Excise Officers. The search was also conducted on the premises of their dealers, stockists and Directors/Executives of the company. On scrutiny of record it (SIC) that the assessable value of the goods declared by the company at the time of clearance was, much less than the actual value at which those were sold. It also revealed that the goods were cleared to the trading firm which was managed by the present appellant, Shri S.K.Garg. The statement of the Assistant Worksman and Production Superintendent, was recorded wherein he admitted that billing was done of inferior and cheaper quality of dyes, while actuall it was not so. Shri A.K. Jhunjhunwala who was running the company was also examined and he in his statement admitted that the day-to-day affairs of the company were looked after Shri S.K. Garg, the present appellant. He also admitted evasion of the excise duty during the period 1990-91 to 1994-95. Similarly, Shri S.K. Garg, the appellant accepted the evasion of the Central Excise duty and voluntarily deposited the duty amount of Rs.1,53,00,000/-. The show cause notice was accordingly issued to the above said company and Shri S.K. Garg, the present appellant and Shri A.K. Jhunjhunwala, by the Commissioner of Central Excise on 12.11.97. The penalty was proposed to be imposed on the appellant under Rule 209-A of the Rules. In reply to that notice, Shri S.K. Garg, the appellant, however, denied his connection with the company M/s.Kanpur Pesticides & Chemicals (P) Ltd. and alleged that the day-to-day work of the factory was looked after by one of the Directors and not by him. The Commissioner afforded opportunity of personal hearing to all the notices including the present appellant. He through the impugned order imposed penalty of Rs.20 lakhs on the company under rule 173-2 and of Rs.2.5 lakhs each on Shri A.K.Jhunjhunwala as well as on the present appellant, S.K.Garg under Rule 2091-A of the Rules.

5. The learned counsel has contended that the appellant has no connection with the company M/s.Kanpur Pesticides & Chemicals (P) Ltd. which was enagged in the manufacture of S.O. Dyes and allegedly evaded payment of excise duty thereon and as such no penalty under Rule 209-A of the Rules could be imposed on him. He has further submitted that no copies of the documents were supplied to the appellant and he could not file proper reply to the show cause notice. Therefore, there had been violation of principles of natural justice in passing the impugned order.

6. On the other hand, the learned SDR has argued that Shri S.K. Garg himself admitted evasion of the excise duty by the company and even deposited the duty amount before issuance of the show cause notice and that the goods manufactured by the company were traded by him through his firms / companies, floated by him under different names. Therefore, he had been rightly burdened with the penalty under Rule 209-A of the Fules.

8. The facts are not much in dispute. The factory premies of the company M/s. Kanpur Pesticides & Chemicals (P) Ltd. which was engaged in the manufacture of S.O. Dyes was searched by the officers of Central Excise on receipt of the intelligence report that they were evading the Central Excise duty on large scale by resorting to undervaluation and misdescription of the goods. The company even deposited the duty amount of Rs.1,53,00,000/- before the issuance of the show cause notice. There is no material on the record to suggest that the company has ever disputed the imposition of penalty of Rs.20 lakhs on it by the Commissioner through the impugned order.

9. The present appellant has been burdened with the penalty of Rs.2.5 lakhs under Rule 209-A of the Rules. His plea that he had nothing to do with the affairs of the company had beern not rightly accepted by the Commissioner. he himself in his statement dated 22.5.95 admitted that there was evasion of excise duty by the company by indulging in undervaluation and misdescription of the goods. He also admitted that the record regarding the affairs of the company about the sale of the goods was recovered and seized from his house during the course of search by the officers of Directorate of Anti-Evasion on 16.2.95 under panchnama. His statement itself was enough, for the Commissioner to reject his plea of having no concern with the affairs of the company and evasion of excise duty on the goods cleared from the factory premies of the company. Rather, it was quite evident from his own admission that it was he who was managing the affairs of the company and looking after the sale and clearance of the goods. The goods manufactured by the company were traded by him through different firms which too were floated by him. The company, as observed, deposited the duty amount by accepting its liability. The present appellant and Shri A.K.Jhunjhunwala both admitted the evasion of Central Excise duty by the company while clearing the goods and voluntarily deposited the duty amount of Rs.1,53,00,000/-.

10. The appellant having been found of aiding and abetting the company M/s.Kanpur Pesticides & Chemicals (P) Ltd. in the evasion of Central Excise duty of huge amount during the period 1990-91 to 1994-95, had been rightly held guilty under Rule 209-A of the Rules. There had been no violation of the rules of natural justice also as contended by the counsel, while imposing penalty on him, for want of any material to show that he was not supplied with the documents or that he was not heard. The perusal of the record rather shows that he was afforded number of opportunities of hearing by the Commissioner, but he himself failed to furnish the proof of his non-concern with the company. His own statement wherein he admitted his involvementd in day-to-day affairs of the company and also the evasion of the central Excise duty by the company was enough to punish him under Rule 209-A of the Rules.

Even the private record of the company was recovered from his house and he admitted this face in his statement. Therefore under these circumstances, it is difficult to hold that he was not heard or afforded any opportunity to defend himself.

11. In the light of the discussion made above, the impugned order of the Commissioner (Appeals) imposing penalty of Rs.2.5 lakhs on the appellant is prefectly valid and does not suffer from any legal infirmity so as to call for any interference.

12. Accordingly, the appeal of the appellant is dismissed being without merit.