Sh. Grander K. Gupta v. Commissioner Central Excise

1 Aw. / MR.JUSTICE bSk.GAIJ» /V

1. This appeal under Section'35Cfof"tH?Central Excise Act, 1944 was preferred to challenge the final order No. A/57998/2013-EX [DB] dated 14.10.2013 passed by Customs,Excise and Service Tax Appellate Tribunal (hereinafter referred to as "the CESTAT")in appeal No. E/4017/2004-EX [DB].

2. The appeal preferred before the CESTAT by the appellant had challenged the order in original No. 21-23/2004 dated 30.04.2004 of Commissioner of Central Excise, Delhi whereby, inter alia, penalty had CEAC32/2014 Page1of[8] 2015:DHC:10903-DB / been imposed against the appellant in the sum of ^50 lakhs under Rules 209A and 226 ofthe Central Excise Rules, 1944. The said proceedings had arisen out of the show cause notices dated 14.05.1999, 04.01.2000 and 31.01.2000 against the backdrop of searches carried out on 17.11.1998 by the officers of Directorate General of Anti-Evasion (Central Excise), New Delhi in the wake ofintelligence received that central excise duty was being evaded by resorting to clandestine manufacture and removal of product in the nature ofPan Masala/Gutkha ofb£mds('Tanking","Sony","Mughal", etc)in factory at premises,.N6ffiT4rGali Na^f^Samaypur Badli,Delhi of -i?"*. t\ ^ C I' M.R. Tobacco (P) Efd. C'^MRt" for shoft)rinitially. M/s M.R. Sales Corporation ("MRS"„«fQr< short)?.i>ilh^§ea|phgs were.^also^made elsewhere including the re^ide^ee of the^Wppl&htpfi'"''the premises bf M/s Pawan t- )\ Carriers, 16, KHanna Market, Delhl^lL^Ob:^#'^(transporter) and^the office of 11 lillfflilf MRT at 1/33,Gfound Floor 1,Rafeifder|Nagar,New Delhi-110060. \iha^SSvlrr'it^ci'ii\7 a r\c>rtn<=*r.in A/TTJQ T Carriers, 16, Klianna Market, Delhi|f4'M0W(transporter) andl^the office of npeifNagi

3. The appellant admittedly,w#^rigiifklya partner in Ml^S. MRS was converted into a%rivat#^lmifed'!v(lobipuh^|ly^T^'3^ 1998. \ A The appellant wasalire.cto£ofMRT duringirthe rerey|ihtTeriod.

4. The appellant is'^^'ag^el^^J^'ih'^^^&i^iil^al of his appeal by CESTAT thereby confirming tKe"'"perihlty imposed upon him by the Commissioner, Central Excise. It may be added that by his order dated 30.04.2004, the Commissioner, Central Excise had issued the following directions:- "(7) / confirm the demand of Central Excise duty totally amounting to Rs.5,37,15,230/- (Rs.4,57,23,510/- covered by SCN dt. 04.01.2000 + Rs.74,71,200/- covered by SON dt. 31.01.2000 + Rs.5,20,520/- covered by SCN dt. 14.05.99), (Rupees five crores thirty seven lacs fi fteen thousand two CEAC32/2014 Page 2of[8] hundred and thirty only)from M/s. M.R.Tobacco P. Ltd., B-11 Gall No. 7, Samaypur Badli, Delhi (formerly known as M/s. M.R. Sales Corporation) under Rule 9(2)ofthe CentralExcise Rules, 1944 by invoking the extendedperiodoflimitation under proviso to subsection (1) ofsection 11A ofthe Central Excise Act, 1944 and'the sum ofRs.43,32,425/- already deposited by them is orderedto be appropriated. (ii)1impose a penalty ofRs.5,37,15,230/-(Rupeesfive crores thirty seven lacsfifteen thousand two hundred and thirty only) on M/s. M.R.Tobacco P. Ltd.,B-ll Gali No.7,Samaypur Badli, Delhi (formerly known as^M/srd^~R-S.ales Corporation) under Section 11 AC ofthpCentrqlrExeise Act^^ read with Rule 52 A, 173 Q and^''226)g%tA'e^^CmtrS^Mxcise^^ 1944, as applicable att/ie relevanttime^^MTA C# L chargedIfrom M/s. B-11 Gaii\ No.7, !l D„J7- __ wHil O, 'i e nelev.ff \ (Hi) Interest uMer Secfim^l^^BmfMhe Central^xcise Act, 1944, as ppfffcable, at ih'^fi$^MA'time, is ordered to be Samaypur Badli, Delhi (formerlyAlmown as M/s. M.RA Sales CorporaLn). i| |

(iv) I conj^cate A ^.2^02,600/under Rules^lJf^^n^2'2^'^if^tlf0^ntPd¥E^shRiiles, 1944 for contraventimx-pffprovisjpm of^ules 9^1^f^5M, 53, 173F, 1730&226of}h^C^t^^q^^s^MM^,fis/^0^andsince the seized goods becc^se^^f^theirs:^j^^shabie nature were auctioned, thesaleproceedslf^e^fainounting to Rs.9,02,720/are appropriate in terms ofSection 11 ofthe Central Excise Act, 1944 the same shall be adjustedtowardspaymentofabove confirmed CentralExcise Duty. (v)1imposepenalty ofRs.50,00,000/-(RupeesFifty lakhs only) on Shri ChanderKumar Gupta,Director, M/s. M.R. TobaccoP. Ltd., B-11, Gali No. 7, Samaypur Badli, Delhi(formerly known as M/s. M.R. Sales Corporation) under Rule 209A and 226 of the CentralExcise Rules, 1944. CEAC32/2014 Page3of[8] J (vi)I confiscate the trucks bearing Regn. No. HR-29/C-0139, GJ-lT/T-7303 and DL-IG/A 1436 under Section 115 of the Customs Act, 1962 as made applicable to the Central Excise matters vide Notfn. No. 68/63-Ce(N.T.) dt. 04.05.63. These trucks can be redeemed by their owners after payment of redemptionfine ofRs.50,000/- each and in the absence ofthe same, as the saidseized trucks were releasedprovisionally, the conditions ofthe bondshall be invoked and the amountofcash securityshall be appropriated. (vii)1impose apenalty under Rule 209A ofthe Central Excise Rules 1944 on: Name O ^,^^^Amount(Rs.) (a)M/sPawi^ '^^'M()&:000/-

VI. Ik \^

Khanruf/Ma^t,Delhi^^^^^m \\ (b)ShriRamPrasadKedarfNgf^/MaMai, 50,000/r Proph,etorofM/sRampl^c&amS^ |l 44,2"ffloor,Chetan jl Opp:S'arangpur,Ahm^MPad^'^i^^\ k \ m wi(-B ft f/ ''t\ "'•■v V->.. T?'' (c)Shri Tripq^gnffi^arRdMPmsad f[5],4)00/- Sandhir, ^■Q&mi^:^anXlarriers„.ts^ jf BhagwanpurdfJth,f>Jltside^RajpMm0'atef\.J''' Ahmedabad. (d)Sh. Krishan GopalRamprasadSandhir, 5,000/- 16, KhannaMarket, Delhi. "

5. Besides the appellant, M/s Pawan Carriers, Sh. Krishan Gopal Ramprasad Sandhir, Shri Tripawan Kumar Ram Prasad Sandhir, Shri Ram Prasad Kedar Nath Halwai and MRT also preferred appeals before CESTAT. All the said appeals, including that of the appellant, were dismissed by common order passed on 14.10.2013. CEAC 32/2014 ^6

6. The appeal before this Court had initially soughtto assail the findings on the basis of which penalty has been imposed, on various grounds, including on the claim that no excess goods had been confiscated and that reliance on the statement of the appellant purportedly recorded under Section 14 ofCentral Excise Act, 1944 on 17.11.1998 was not correct since the same had been later retracted on account ofhaving been involuntarily made. But,atthe hearing,it wassubmitted on behalfofthe appellantthathe presses the appeal restricted to prayerfor reduction ofthe penalty amountin the light of subsequent,,ever^-,inGluding.„'deferiorated health and dire financial conditions, C

7. Sincetheco>fnseftlirough^^mgh^pealwltfile^iseemedtohave /.sjy 'Vp \ abandoned the briefimidway,giveffiMqif^^ narrated^ werequested Mr. Ajay VohrL Senior Advocke^^fl^FN.P. Sahni, Advocate to assist j.j "It u j 11 'r| y the Court as Amicus Curie. Thi/|m^r finally argued|by Mr. N.P. Sahni,Amicus Curie after having'tukemfnillj^Gtionsfrom the appellant.

8. Thoughthe|api|«|^e§^^^!^G^^^^inpugnedorder insofarasitfastenete^^^p^djiabilityon^thlC^^nS'^ountoftheposition ofDirector vis-a-vis dmrog-tl&reievant period,in order to satisfy ourselves as to the propriety"oTtfie approach ofthe forums below, we have re-visited the material before the CESTAT in the light offacts and circumstances ofthe case. We concur with the conclusions reached by the first appellate authority that the impugned activities were indulged in, inter alia, as a result of complicity on the part ofthe appellant. As noted by CESTAT in the impugned order,the appellant was the Director ofthe MKT looking after its corporate affairs including finance,sales/purchase ofplant & machinery, payment of wages, etc. to the workforce and day-to-day CEAC32/2014 Page5of[8] production/clearances from the factory. In his statement before the empowered officer ofthe Central Excise department under Section 14, the appellant had made certain crucial admissions including about receipt of material used in the clandestine production, payment of cash made thereagainst which were not reflected in the books ofaccount and clearance ofsuch products without payment ofthe excise duty. Given the factthatthe statement constituting admissions, initially made on 17.11.1998 was reiterated on 23.11.1998 and 21.04.1999, we agree with the conclusion that the subsequent ret^tiop^^>5#S'^%0w^y• pPahir^jdfterthought and, thus, inconsequential. At'fiiff.ra^ihd.fm^^offactas^t^hi^^omplicity isbased not merely on hisiaSmis^bn btii:ai^(p®|^itement%der Section 14 made by at leasttwo dthetSpersons, riarftei0Mr§i^hbesh Haryaha^fManager,and the then Accountant of vj i ' ■ ■ ■ h 'n? y

9. It is stated that the mentak/phyisiead and financial condition of the I ■ I appellant has deteriorated considdfablyfafteflhe fell ill and was admitted on %\ ■ jaf»< JKr {I 05.06.2009 in Apollo stroke. There is documentary proof%ubmitted»:-o^^ record:^#^ show^^^,^^^ the appellant underwent a surgery in^'^j^nd^fS^u^^S^^icfl Sciences(AIIMS)in the wake of which he was rend^ed^aralytic on the left side, also having suffered memory loss. As a consequence of such state of health, he was constrained to resign from the position ofDirector of MRT on 15.07.2009, his resignation was noted by the Registrar ofCompanies on 10.09.2009. On 01.08.2009,the wife ofthe appellant passed away. Later,he was diagnosed for Ulcer on the left portion of his tongue. The Ulcer in the tongue was found to be a case ofCancer by Rajiv Gandhi Cancer Memorial Hospital in November,2009. The appellantthen underwent a surgery in Tata Memorial CEAC 32/2014 Page6of[8] t Hospital, during which procedure three-fourth of his tongue had to be removed. It is stated that he has been undergoing Cancer treatment (radiation and chemo-therapy)ever since.

10. It is also his submission that against the backdrop ofthese problems on the health front, the appellant has also suffered huge financial losses adding to his miseries. By order dated 02.07.2014, the Court had called upon the appellant to disclose on affidavit the assets owned by him as well as their value, also discovering the last five Income Tax Returns and statement of bank account^-^The;.Gopies of^Hisi-ancome tax returns do substantiatethe claim^^tnatf^ibme hasreduced bve^^the yearsto negligible,

11. The appellant wai'H^^^ 09®?28lv[4] to deposit?5 lakhstowards the'pejfalty. It is statefefte said amouht^was deposited in ■■ji < ■ 1 the Court in terms of the said direMbhfeiteMted on 19.11.2014- If I'W ■ ' ■ fj