OFFICE OF THE DEPUTY COMMISSIONER OF CENTRAL EXCISE , , DIVISION-IV, AHMEDABAD-II -IV, -II ST 1 FLOOR, VIDYALAYA CHAMBERS, PALDI CROSS

I CROSS ROADS, , , PALDI, AHMEDABAD-380 007 , - Telephone : 079-26579622, 26576017 079-, . A FILE NO. ORDER-IN-ORIGINAL NO. B DATE C PASSED BY : DINESH SINGH DEPUTY COMMISSIONER CENTRAL EXCISE, DIVISION-IV AHMEDABAD-II V.72/15-01/OA/2011 dated 11/03/11 Issued by the Assistant Commissioner, Central Excise, Division-IV, Ahmedabad-II 24/01/2012 1. M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad. 2. Shri Rajindersing Karnailsing Jandawar, Director M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad 3. Shri Rameshchandra Vadilal Shah, Proprietor M/s. Shital Ispat, B-44, Pariseema Complex, C. G. Road, Ahmedabad. : : : V.72/15-01/OA/2011 02 /DC/D/2012 24/01/2012

ARISING OUT OF SHOW CAUSE NOTICE NO. & DATE

ORDER-IN-ORIGINAL ISSUED ON NAME AND ADDRESS OF NOTICEE/ASSESSEE

(1) This copy is granted free of charge for private use of the person(s) to whom it is sent.

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()

I (2)

() , /

Any person deeming himself aggrieved by this order may appeal against

this order in form EA-1 to the Commissioner (Appeals), Central Excise, Central Excise Bhavan, Ambawadi, Ahmedabad-380015 within sixty days from the date of its communication. The appeal should bear a court fee stamp of Rs.2.00 only. () ,

() (), , , , - ..- ( EA-1) I . ( ) I (3) The appeal should be filed in form EA-1 in duplicate. It should be signed

by the appellant in accordance with the provisions of Rule 3 of Central Excise (Appeals) Rules, 2001. It should be accompanied by the following:

(1) Copy of accompanied appeal. (2) Copy of the decision or order appealed against, one of which atleast shall be certified copy, which must bear a court fee stamp of Rs.2.00. () , ..-

I (), , I :() () I , , . . ( ) I ******

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Brief facts of the case: As per the intelligence, the officers of Central Excise (Preventive), Ahmedabad-II, visited the factory premises of M/s. Vishwakarma Steel Industries, 254, G.V.M.M., Odhav, on 18.08.2010 and carried out search in presence of two independent panchas and Shri Nareshsingh B. Dhiman, Manager of said unit, and drew a Panchnama dated 18.08.2010. It was observed that certain goods are found loaded on Truck No. GJ-4-T-7343 & GJ-4-U-9797. On preliminary inquiry it was noticed by the C. Ex. officers that said goods i.e. 11.090 MT + 9.970 MT were cleared by M/s. Kathiawar Steels, Bhavnagar under Invoices No. 180 & 181 dtd.17.08.2010 to M/s. Shital Ispat, B 44, Pariseema Complex, C. G. Road, Ahmedabad and said M/s. Shital Ispat (Registered Dealer) has subsequently sold the same to M/s. Vishwakarma Steel Industries, 254, G.V.M.M., Odhav vide Invoices No. 138 & 139 both dated 18.08.2010. On going through the invoices issued by M/s. Kathiawar Steels it was observed by the officers that the description of the said goods is mentioned as Waste & Scrap of Iron & Steel Melting Scrap (Chapter S. H. No. 72044900). Whereas on preliminary inquiry with Mr. Nareshsing B. Dhiman Manager of M/s. Vishwakarma Steel Industries, it was revealed that said goods is not melting scrap but it can be used in rolling mill. Accordingly, the said goods i.e. 11.090 MT + 9.970 MT were placed under seizure along with aforesaid trucks under the reasonable belief that same were liable for confiscation under the provisions of Central Excise Law under Panchnama dtd. 18.08.2010 drawn at the factory premises of M/s. Vishwakarma Steel Industries and said seized goods was handed over to Shri Nareshsingh Brijlal Dhiman, Manager of M/s. Vishwakarma Steel Industries, Odhav, Ahmedabad for the safe custody under supratnama dated 18.08.2010. 2. Simultaneous searches were carried out by the Central Excise

officers at godown and office premises of M/s. Shital Ispat on 19.08.2010. Simultaneous search was also carried out at residence of Shri Rameshchandra Vadilal Shah, Proprietor of M/s. Shital Ispat on 19.08.2010. During the search at godown which is situated opp. Sarvottam Hotel, Moraiya, physical stock verification was carried out and certain records found were withdrawn as per Annexure A to the Panchnama dated 19.08.2010. During the course of search at Residence which is situated at 1, Surel Bungalow, Opp. Pushpak Flat, Nr. Shakti Enclave Flat, Judges Bungalow Road, Bodakdev, Ahmedabad certain

documents, chits and diaries were recovered by the Central Excise officers and the same were withdrawn as per Annexure A to the panchnama dated 19.08.2010 under the reasonable belief that same were useful for further investigation. During the course of search at office premises which is situated at
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B 44, Pariseema Complex, C. G. Road, Ahmedabad the documents relating to sales and purchase were segregated by the Central Excise officers and withdrawn, as per Annexure A to the Panchnama dated 19.08.2010 under the reasonable belief that same were useful for further investigation. 3. Statement of Shri Rameshchandra Vadilal Shah, Proprietor of M/s.

Shital Ispat was recorded on 19.08.2010 wherein he inter alia stated that he looks after overall supervision over the work related to sales, purchase, administration, accounts etc. including work related to Central Excise; that their company is engaged in trading business of Iron & Steel products since last 10 years, particularly of old & used plates fit for rolling since last four years and of waste & scrap since last two months; that they are registered dealer and holding Central Excise Registration No. AQBPS 6617 EXD 001; that they deal in excisable as well as in non excisable products; that they are also having Service Tax registration for GTO category having No. AQBPS 6617 STD 001; that they are purchasing M.S. Angle, Channel, Plate, TMT Bars & Round Bars mainly from M/s. Sirhind Steel Ltd., Odhav; M/s. Parmeshwar Steel Pvt. Ltd., Odhav; M/s. Sulekhram Steel P. Ltd., Odhav; M/s. Victor Steel Industries, Odhav; M/s. Vinayak TMT Bars Pvt. Ltd., Dahegam etc.; that they also purchase Old & Used Plates mainly from M/s. Mahavir Inds., Bhavnagar; M/s. G. K. Steel, Bhavnagar; M/s. R. K. Inds., Bhavnagar; M/s. Kathiawar Steels, Bhavnagar etc.; that they purchase scrap mainly from M/s. Kumar Steel (India), Bhavnagar; M/s. Kiran Ship Breaking Co., Bhavnagar; M/s. Kathiawar Steels, Bhavnagar; M/s. Bansal Shipping Pvt. Ltd., Bhavnagar; M/s. Vinayak TMT Bars Pvt. Ltd., Dahegam; M/s. Victor Steel Industries, Odhav; M/s. Dhiman Steel Re-Rolling Mill, Changodar; M/s. Shital Ispat P. Ltd., Odhav etc. He has further stated that they maintained account at their office premises in respect of goods received and sold and they do not keep any account of receipt / dispatch of the goods at godown; that loading and unloading of goods are taken place at their godown; that prior to 07.04.2008 this was a partnership firm and it was registered with department according to godown address and after 07.04.2008 this firm became proprietary firm and registered with department according to their office address; that he agreed with the facts of panchnama dated 18.08.10 drawn at factory premises of M/s. Vishwakarma Steel Industries, Odhav; that he also agreed with the facts of panchnamas all dated 19.08.10 drawn at his residence, godown and office premises; that he agreed with the facts mentioned in statement dated 18.08.2010 of Shri Nareshsing B. Dhiman, Manager of M/s. Vishwakarma Steel Industries; that the goods supplied by M/s. Kathiawar Steels vide Invoice No. 180 & 181 both dated 17.08.10 is old & used metal plates (two ani) and it is not melting scrap; that the said goods is although thin but can be used in small re-rolling

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mills; that those who asked for excise bills they are supplying goods under excise bills and those who asked for commercial bills they supplied goods under commercial bills; that due to software problem they are not mentioning the RG 23 D E. No. in their sales invoices. 4. The records so withdrawn were scrutinized by the Central Excise

Officer. During the course of scrutiny of file containing Misc. Papers duly withdrawn and listed at Sr. No. 28 of Annexure A to Panchnama dated 19.08.2010 drawn at office premises of M/s. Shital Ispat, it was noticed that said file is containing the details of loading and unloading of goods at godown. On the basis of said details a worksheet was prepared and shown to Shri Rameshchandra V. Shah and his statement under Section 14 of the CEA, 1944 was recorded in this regard on 28.09.2010 wherein he inter alia stated that he agreed with the details of worksheet and confirmed that said worksheet is as per the said miscellaneous papers file listed at Sl. No. 28 of Annexure A to panchnama dated 19.08.2010 drawn at office premises of M/s. Shital Ispat; that though Shri Rajubhai Ramswaroop Gurjar, Owner of Vehicle No. GJ-7X 6751 is not their employee they took his service for some times for transportation of goods, loading & unloading of goods at their godown and on production of account on rough papers / simple papers they paid the charges to him. As regards to who has written the said details of loading and unloading taken place at godown, Shri R. V. Shah has further stated that Shri Rajubhai R. Gurjar has produced the said papers containing his account of loading and unloading charges including transportation charges but he do not know exactly who has written the said papers but it is possible that it may have been written by Shri Rajubhai R. Gurjar. According to said worksheet prepared on the basis of said Misc. Papers file, M/s. Shital Ispat has purchased goods weighing 49600 Kgs. from M/s. Satluj Steel Rolling Mills Pvt. Ltd., Changodar, this fact have been confirmed by Shri Rameshchandra V. Shah in his statement dated 28.09.10. He further admitted in the said statement that they have purchased said goods i.e. 49600 Kgs. of TMT Bars from M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad. On going through the purchase file withdrawn under panchnama dated 19.08.10 as well as purchase register, he further admitted and stated that there is no purchase bill / invoices of M/s. Satluj Steel and there is no such entry found in purchase register. Further, summon was also issued to Shri Rajubhai Ramswaroop Gurjar but the same was received back undelivered. 5. Whereas, a statement u/s 14 of the Central Excise Act, 1944 of Shri

Rajindersing Karnailsing Jandawar, Director of M/s. Satluj Steel Rolling Mills Pvt. Ltd., Changodar was recorded on 15.10.2010, in connection with aforesaid
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clearances, wherein he has stated that they are engaged in manufacture of MS TMT Bars and Round Bars and they are having C. Ex. Registration No. AACC1010PXM001. On going through the statement dated 28.09.10 of Shri Rameshchandra V. Shah, he stated that as regards the clearance of 49600 Kgs. of TMT Bars of different sizes from M/s. Satluj Steel Rolling Mills Pvt. Ltd. to M/s. Shital Ispat, he is unable to give correct details, but after verifying the sales records of his company, if he found no sales bills, then they will pay the appropriate duty on the same. 6. Another Statement of Shri Rajindersing Karnailsing Jandawar was

recorded on 21.10.10, wherein he stated that he has checked the sales records of M/s. Satluj Steel Rolling Mills Pvt. Ltd., but sales bills in respect of clearance of goods of 49.6 M.T. to M/s. Shital Ispat have not been found; that as already admitted by Shri Rameshchandra V. Shah, Proprietor of M/s. Shital Ispat in his statement dated 28.09.10, they have sold 49.6 M.T. of TMT Bars of different sizes to M/s. Shital Ispat during July2010, he admitted the same and willingly agreed to pay the duty amount on the same; that the duty amount will be worked out and payment particulars will be intimated in due course. Accordingly, M/s. Satluj Steel Rolling Mills Pvt. Ltd. vide their letter dated 22.10.10 informed that as per statement dated 21.10.10 they have paid duty of Rs.1,30,275/- for the goods of 49.600 M.T. cleared to M/s. Shital Ispat and informed that they have calculated the said duty amount as under :

Qty. (M.T.)

Rate/M.T. (Rs.)

Total Value (Rs.) CENVAT @ 10%

Total Duty

Total

49.600

25,500/-

12,64,800/-

1,26,480/-

Ed. Cess S. & H. Ed. @ 2% of Cess @ CENVAT 1% of (Rs.) CENVAT 2,530/1,265/1,30,275/-

7.

From the above it can be seen that M/s. Shital Ispat has purchased

49.600 M.T. of TMT Bars of different sizes form M/s. Satluj Steel Rolling Mills Pvt. Ltd., Changodar without invoices and without payment of duty. It is crystal clear that M/s. Satluj Steel Rolling Mills Pvt. Ltd. has cleared 49.600 M.T. of TMT Bars of different sizes to M/s. Shital Ispat and no invoice were prepared for said clearances and were not accounted for in their sales records / sales register and had not paid duty due on said clearances. Therefore, it is very much clear that said goods i.e. 49.6 M.T. of TMT Bars of different sizes were cleared with an intention to evade payment of duty by M/s. Satluj Steel Rolling Mills Pvt. Ltd.

8.

From the facts mentioned herein above, it appeared that M/s. Satluj Steel

Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad

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have contravened various provisions of C. Ex. Rules, 2002 in as much as they have failed to determine and pay the C. Ex. duty on the clearance of finished goods which were cleared illicitly without following the proper C. Ex. procedures as laid down therein.

9.

In view of above, it appeared that M/s. Satluj Steel Rolling Mills Pvt. Ltd.,

Changodar has cleared 49.600 M.T. of TMT Bars Valued Rs.12,64,800/-. The total Central Excise duty on these clearances comes to Rs.1,30,275/(126480+2530+1265) for which no proper C. Ex. documents were prepared, not accounted for in any of the records related to Central Excise were maintained by the said assessee and also had not discharged the Central Excise duty due thereon. Therefore, it appeared that M/s. Satluj Steel Rolling Mills Pvt. Ltd., Changodar has contravened the provisions of Rule 4 of CER, 2002 in as much as they have not paid the duty on aforesaid clearances; Rule 5 of CER, 2002 in as much as they have not paid duty at the prescribed rate; Rule 6 of CER, 2002 in as much as the goods cleared illicitly by them has not been assessed to duty; Rule 8 of CER, 2002 in as much as duty has not been paid according to prescribed time and manner by them; Rule 10 of CER, 2002 in as much as they have not accounted for the said productions and clearances in the records maintained by the said assessee; Rule 11 of the CER, 2002 in as much as they have not prepared the proper Invoices for said illicit clearances.

10.

All the above acts of contravention on the part of the said unit M/s. Satluj

Steel Rolling Mills Pvt. Ltd., Changodar, Ahmedabad appeared to have been committed by reasons of willful mis-statement, suppression of facts and contravention of various provisions of the said act and rules made there under with an intent to evade the payment of Central Excise duty by them as mentioned herein above. The said assessee has manufactured the finished goods and cleared the same without payment of central excise duty and without following the proper central excise procedures. All these contravention on the part of the said assessee constitute the offence of the nature as described under Clause (a), (b), and (d) of Rule 25 of Central Excise Rules 2002 and therefore the said assessee appears to be liable to penalty to the extent as permissible under Section 11AC of the Central Excise Act, 1944 read with Rule 25 of Central Excise Rules 2002.

11.

Shri Rajindersing Karnailsing Jandawar, Director of M/s. Satluj Steel

Rolling Mills Pvt. Ltd., Changodar was aware and concerned himself in manufacturing, removing, depositing, keeping and selling of excisable goods which he knew and/or had reason to believe that the said goods were liable for

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confiscation. Thus, he rendered himself liable for penalty under the provisions of Rule 26 of Central Excise Rules, 2002.

12.

Shri Rameshchandra Vadilal Shah, Proprietor of M/s. Shital Ispat,

Ahmedabad, was aware and concerned himself in transporting, removing, depositing, keeping, concealing and purchase of excisable goods which he knew and/or had reason to believe that the said goods were liable for confiscation. Thus, he has rendered himself liable for penalty under the provisions of Rule 26 of Central Excise Rules, 2002.

13.

Hence show cause notice bearing F. No.V.72/15-01/OA/2010 dated

11.03.2011 was issued to M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad asking them to show cause as to why: I. the Central Excise duty amounting to Rs. 1,30,275/- (Rs.1,26,480/+ Rs.2,530/- + Rs.1,265/-) attracted on finished goods namely TMT Bars cleared illicitly should not be demanded and recovered from them under Section 11A of the Central Excise Act, 1944. Since the Central Excise duty of Rs. 1,30,275/- has already been paid by the said assessee vide PLA dated 22.10.2010, why it should not be confirmed and adjusted against the aforesaid demand. II. an equal amount of penalty should not be imposed upon them under the provisions of Rule 25 of Central Excise Rules, 2002 read with Section 11AC of Central Excise Act, 1944. III. Interest at the prescribed rate should not be charged and recovered from them under the provisions of Section 11AB of the Central Excise Act, 1944.

14.

Shri Rajindersing Karnailsing Jandawar, Director of M/s. Satluj Steel

Rolling Mills Pvt. Ltd., Changodar was also called upon to show cause as to why penalty should not be imposed upon him under Rule 26 of Central Excise Rules, 2002 for the aforesaid contraventions. 15. Shri Rameshchandra Vadilal Shah, Proprietor of M/s. Shital Ispat

was also called upon to show cause as to why penalty should not be imposed upon him under Rule 26 of Central Excise Rules, 2002 for the aforesaid contraventions. DEFENCE REPLY: 16. M/s. Satluj Steel Rolling Mills P. Ltd. And Shri Rajindersing K

Jandawar, Director of M/s. Satluj Rolling Mills P. Ltd. vide their common letter

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dated Nil submitted reply to the show cause notice dated 11.03.2011 which is summarised as under: They submit that they wish to settle the subject show cause notice as per the provisions made in Section11A (1A) of the Central Excise Act, 1944. As pointed out by the intelligence of Central Excise (Prev), they have paid full payment of Central Excise duty Rs.1,30,275/- (Rs.1,26,480/- + Rs.2,530/- + Rs.1,265/-) vide PLA dated 22.10.2010. They further submitted that as per Section 11A (1A) of the said provisions, they have no option to voluntarily pay the amount of duty specified in the show cause notice in full or in part along with the interest as per Section11AB of the said act and penalty equal to 25% of duty specified in the notice within 30 days of the receipt of the notice. They further submitted that the subject provision or option made in the said Act was not brought to the notice of them in the SCN and they could not availed such option within30 days from the receipt of the said notice. They further submitted that if they would have given option to make payment of 25% of penalty along with interest within 30 days from the receipt of the SCN if in SCN they would have surely paid the same within time. They submitted that in the instant case, option of availing the said facility given in Section 11A (1A) has not been given or mentioned in the subject notice, it is statutory obligation and mandatory mentioned such option available under Section11/a(1A) of the said Act in the SCN. The said option is to be given to such person liable for penalty under Section 11AC and liable to pay interest under Section 11AB of the said Act in the SCN. They further submitted that at this stage, they with to avail such option available to them under Section 11A (1A) of the Central Excise Act, 1944 and they may be allowed to avail such option to pay 25% reduced penalty along with interest and they may be directed to avail such option within 30 days from the date of such communication / direction for giving such option. They further relied upon the decision in the case of CCE, Surat vs. Harish Silk Mills reported at 2010 (255) ELT 393 (Guj) wherein it has been held that option to reduce penalty should be given to assessee and period of 30 days would commence from the date of giving such option. They further submitted that they are filing this reply as reply to SCN as well as representation to avail option given in Section 11A(1A) of the Central Excise Act, 1944 and they may be give such option at this stage and they wish to pay reduced penalty of 25% along with interest.

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They stated that with regard to imposition of penalty on Noticee No.2, proceedings for imposing personal penalty is to be conclude as per the provision of Section 11A(1A)(2) as narrated below :

Provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceedings in respect of such person and other person (i.e. noticee No.2 & 3) to whom notice are served under sub-section (1) shall without prejudice to the provision of Section 9, 9A and 9AA be deemed to conclusive as to the matter stated therein. In view of the above said provisions, they requested to allow to avail the option under Section 11A (1A)(2) of CEA, 1944 and requested to conclude the proceedings against him under Rule 26(1) of Central Excise Rules, 2002.

Lastly they requested for personal hearing in the matter.

17.

Shri Rameshchandra Vadilal Shah, proprietor of M/s. Shital Ispat,

Ahmedabad vide his letter dated 12.5.2011 submitted written reply to the show cause notice dated 11.03.2011 which is summarised as under:

At the outset, they deny all averments, allegation and contentions raised in the subject show cause notice as if they are all specific and traversed save and except admitted by them herein below.

At the outset, he deny all averments contentions raised in the subject show cause notice with regards to imposition of penalty under Rule 26 of the CER, 2002 upon him.

He further stated that he was not fully concerned in purchasing, transporting, receiving of excisable goods which he knew or had reason to believe were liable to be confiscated under Central Excise Act / Rules as he has no reason to believe that alleged goods were liable to confiscation under Central Excise Act / Rules.

He stated that show cause notice which has been issued to him is without any direct evidence to establish that he knew or had reason to believe that goods were liable to be confiscation under Central Excise Act and Rules. In absence of any such evidence Rule 26 will not be applicable to him for imposition of penalty.

He further stated that Rule 26 provides for penalty on any person who is in any way concern with any excisable goods which he has knowledge or reason to believe were liable to be confiscation. In the instant case, he has not dealt with physically with any excisable goods which he had knowledge or reason to believe that they were liable to be confiscated. Decision of CEGAT in case of Standard Pencils reported in 1996 (86)

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ELT 245 may also be referred to and relied upon at this stage, wherein CEGAT has held that Rule 209A (old Rule)(now new rule 26) was attracted only in specific cases where the revenue has established that any person was concerned with such excisable goods with knowledge or reasons to believe that they were liable to confiscation. It is also held that if there was no knowledge or reason to believe that they were liable to confiscation, Rule 209A (old rule) would not be applied. In the instant case, he had not fully concerned in purchasing, transporting, receiving of excisable goods with knowledge or reason to believe that they were liable to confiscation under Central Excise Act and Rules and no evidence is adduced in support of such allegation. It is also not pointed out in show cause notice that he had engaged in particular activities and cannot be considered as engaged in all activities like purchasing, transporting, receiving of any offending goods. In the present case, no evidence as adduced in the show cause notice for involvement in any of above referred prejudicial activities with any knowledge or reasons to believe on his part that some goods were liable to confiscation and yet he dealt with the same. He further submitted that in the instant case, there is no proposal for confiscation of goods and any proposed action of confiscation of subject goods in the impugned notice. Rule 26 of CER, 2002 are not attracted against him in the absence of any such proposal for confiscation of goods and any proposed action of confiscation of goods. The view that penalty in absence of confiscation of goods not imposable is supported by the judgment of the Honble Tribunal in case of Cosmo Films Ltd. Vs. Commissioner of C.Ex., Aurangabad reported in 2006 (202)ELT 131 (Tri Mumbai) wherein it has held that penalty under Rule 209A of erstwhile Central Excise Rules, 1944 not imposable in the absence of any proposal for confiscation of goods and any finding of confiscation (para4). In the case of Star Paper Mills Ltd. Vs. Commissioner of C.Ex. Meerut 2003 (151) ELT 607 (Tri Del) wherein it has held that penalty not imposable in the absence of confiscation of goods: Penalty under Rule 173Q of the erstwhile C. Ex. Rules, 1944 is incidental to confiscation under that Rules: Impugned goods not liable to confiscation hence no penalty imposable (Para 6). In the case of Vishal Shah vs. Commissioner of C.Ex. Thane-II 2007 (210) ELT 135 (Tri Mumbai) it has held that penalty on Director: Penalty under Rule 26 of C.Ex. Rules, 2002 not imposable when no goods liable to confiscation (Para 3)
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In view of the above said decisions, penalty under Rule 26 of the CER, 2002 not imposable on him in absence of any proposal for confiscation of goods and such allegation not made in the subject notice.

He further stated that M/s. Satluj Steel Rolling Mills Pvt. Ltd. has already paid duty liability of Rs.1,30,275/- vide PLA dated 22.10.2010 which is confirmed by Para 1 of Para 13 of the subject notice, the said amount was paid even before issuance of SCN hence M/s. Satluj Steel Rolling Mills Pvt. Ltd. is eligible to opt under the provisions of Section 11A (1A) of the Central Excise Act, 1944.

He further stated that if option avail under Section 11A (1A) of the CEA, 1944 by the assessee or person on whom served under Section 11A (2) then the proceedings in respect of such person and other person to whom notice are served under sub-section (1) shall without prejudice to the provisions of Section 9, 9A and 9AA be deemed to be conclusive as to the matter stated therein.

He in view of the above submission requested to consider the above provisions and drop the entire notice in interest of justice. Lastly, he requested for personal hearing.

RECORD OF PERSONAL HEARING:

18.

Personal hearing was held on 10.01.2012. Shri Harshad G Patel,

advocate appeared for hearing on behalf of all the noticees. He reiterated the submission of their written replies. He also submitted written submission and copies of various judgments relied by him during the personal hearing.

19. under:

Shri Harshad Patel, advocate in his written submission has stated as

Noticee No.1 wish to settle the subject show cause notice as per provisions made in Section 11A (1A) of the Central Excise Act, 1944. Noticee No. has paid Total Central Excise duty amounting to Rs.1,30,275/- vide PLA dated 22.10.2010 which is confirmed in Para 1 of Para 13 of the subject show cause notice.

Noticee No.1 submit that provision of Section 11A (1A) of the C. Ex. Act, 1944 offer option to pay duty voluntary along with 25% of duty amount as penalty and interest within 30 days from the receipt of the show cause notice.

Noticee No.1 relied on Boards circular No.831/08/2006-CX issued from F.No.201/51/2004 CX 6 dated 26.07.2006 according to which noticee

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No.1 has an option to avail such an additional facility given to the Trade to settle the dispute at an early stage. Subject provision or option / facility provided under Section 11A (1A) of the CEA, 1944 was not brought to the notice of Noticee No.1 in the subject show cause notice. It is settled position of law that Noticee should given option to avail such facility given under Section 11A (1A) of CEA, 1944 at the stage of show cause notice. In the present case, Noticee No.1 has not been given such option in the SCN. Hence, noticee could not pay 25% amount of duty as penalty along with interest within 30 days from the receipt of the said notice. He further relied upon judgment in the case of CCE, Surat vs. Harish Silk Mills reported at 2010 (255) ELT 393 (Guj) Proceedings against Noticee No.2 for imposing personal penalty under Rule 26 of the CER, 2002 is to be conclude as per the provisions of Section 11A (1A)(2). Since the Noticee no.1 has preferred to avail option / facility as provided under Section 11A(1A) of the CEA, 1944, hence show cause notice stands concluded in respect of co-noticee No.3. To support the above submission, noticee No.3 relied upon the decision of Tikam P Bhojwani vs. Commr of C. Ex. Ahmedabad 2011 (272) ELT 88 (Tri. Ahmd). Noticee No.3 has been served with a show cause notice No. CCE-II/DivV/OA/08/10 dated 14.2.2011 and OIO No.MP/07/OA/2011 dated

13.07.2011 has been passed by the Deputy Commissioner, Central Excise, Division-V, Ahmedabad-II wherein penalty equal to duty amount has been imposed under Rule 25 of the CER, 2002. Simultaneously, on the same cause of action noticee No.3 has been served SCN from Division-IV Paldi Ahmedabad proposing to impose penalty under Rule 26 of CER, 2002. It is settled position of law that any proprietary concern is not different from proprietorship. Since penalty has been imposed on the proprietary concern namely M/s. Shital Ispat under Rule 25 of the CER, 2002, the question of separate penalty on the proprietor under Rule 26 of CER, 2002 does not arise. In support, he relied on V K Enterprises vs. CCE Panchkula 2011 (249) ELT462 (tri-Del); Ashish Enterprises vs. CCE 2005 (179) ELT 545 (Tri Mum).

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DISCUSSION AND FINDINGS:

20.

I have gone through the show cause notice, written submissions of all the

three noticees and submission made at the time of personal hearing.

21.

The main issue in the present case is that the noticee No. 1 i.e. M/s. Satluj

Steel Rolling Mills Pvt. Ltd. had manufactured and cleared their finished goods TMT bars clandestinely i.e. without following the procedure laid down in Central Excise Act and Rules framed there under. This was detected during the course of search at the premises of co-noticee No.3. The assessee M/s. Satluj Steel Rolling Mills Pvt. Ltd. has not disputed the facts of clandestine removal without payment of duty and has paid the Central Excise duty of Rs.1,30,275/- involved thereon through PLA on 22.10.2010.

22.

While submitting the reply to the show cause notice dated 11.03.2011, all

the three co-noticees have mainly contested on the issue of not giving them the option to pay the duty along with interest and 25% of the duty as penalty in terms of the provisions of Section 11A (1A) of the Central Excise Act, 1944 and have stated that they may be allowed to avail the option at this stage and have requested to conclude the proceedings of the show cause notice.

23.

Section 11A (1A) of CEA, 1944 reads as under: When Any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded by reason of fraud, collusion or any willful mis-statement or suppression of facts, or contravention of any of the provisions of this act or the rules made there under with intent to evade payment of duty, by such person or his agent, to whom notice is served under the proviso to sub-section (1) by the Central Excise officer, may pay duty in full or in part as may be accepted by him and the interest payable thereon, under Section 11AB and penalty equal to 25% of duty specified in the notice or the duty so accepted by such person within 30 days of the receipt of the notice.

(2) The Central Excise officer shall, after considering the representation, if any made by the person on whom notice is served under sub-section (1), determine the amount of duty of excise due from such person (not being in excess of the amount specified in the notice) and thereupon such person shall pay the amount so determined.

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provided that if such person has paid the duty in full together with interest and penalty under sub-section (1A), the proceeding in respect of such person and other persons to whom notice are served under sub-section (1) shall, without prejudice to the provisions of Section 9, 9A and 9AA be deemed to be conclusive as to the matters stated therein.

24.

From the above, it is clear that the Govt. has introduced the provision in

the Central Excise Act and has given an option to the person / noticee to settle the issue by paying the duty involved along with interest and 25% of duty amount as penalty after issuance of show cause notice.

25.

In the present case, the noticees have contended that they have not been

given the option to pay duty, interest and 25% penalty amount in the show cause notice. In this regard, I find that though the option was not given in the notice, the main noticee should have availed such option by paying the interest amount and 25% of duty amount as penalty as the assessee have already paid the duty involved during the investigation of the case. However, the main noticee has not availed the option on their own.

26.

The noticee M/s. Satluj Steel Rolling Mills Pvt. Ltd. have not disputed the

allegations made during the investigation and show cause notice and has willingly paid the amount of Rs.1,30,275/- on the clandestine removal of 49.600 MT of TMT bars. The amount so paid is adjusted against the demand made in the present show cause notice. The assessee / noticee is liable to pay interest at the applicable rate under the provisions of Section 11AB of the Central Excise Act, 1944.

27.

Since, the assessee have contravened the provisions of Central Excise

Act and Rules made there under with intent to evade the payment of duty, the assessee has rendered themselves liable for penal action under the provision of Section 11AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002.

28.

The co-noticee No.2, Shri Rajindersingh K Jandawar, Director of the

noticee company was aware of the activities of the company and was concerned in manufacturing, removing / selling of the excisable goods which he knew that the said goods were liable to excise duty. However, the company has removed the said goods without payment of duty due thereon and without preparing the Central Excise invoices and without following other required procedure. On being caught by the department, he has admitted the wrong doing and has willingly

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paid the Central Excise duty. Thus, he has rendered himself liable for penal action under the provision of Rule 26 of the Central Excise Rules, 2002.

29.

The co-noticee No.3 Shri Rameshchandra Vadilal Shah, proprietor of M/s.

Shital Ispat has contended that he was not concerned with the act of noticee No. 1 and has denied the allegation made in the notice. In this regard, l find that he was dealing with the excisable goods and for that he has taken the Central Excise registration as dealer for dealing with the excisable goods. He knew the provisions of Central Excise law. However, he has purchased the excisable goods clandestinely removed by the noticee company. The evidences were recovered from his premises. Therefore, he was concerned in dealing with the excisable goods which were liable for confiscation. However, while submitting the defence reply, he has submitted that show cause notice has already been issued to him for the offence committed by him and by M/s. Satluj Steel Rolling Mills Pvt. Ltd. and OIO No.MP/07/OA/2011 dated 13.07.2011 has already been issued and penalty of Rs.1,30,275/- has already been imposed on his proprietorship firm M/s. Shital Ispat for purchasing offended excisable goods from M/s. Satluj Steel Rolling Mills Pvt. Ltd.

30.

In this regard, I find that there is settled law that a person cannot be

punished twice for the same offence. Hence I do not propose any penalty on him. Moreover, Hon. CESTAT, Mumbai in the case of Ashish Enterprises vs. CCE, Mumbai 2005 (179) ELT 545 (Tri Mum) and CESTAT, New Delhi in the case of Kamdeep Marketing Pvt. Ltd. vs. CCE, Indore 2004 (165) ELT 206 (Tri Del) has held that personal penalty on proprietor in addition to the firm is not imposable under Rule 26 of Central Excise Rules, 2002.

31.

In view of the above discussion and finding, I pass the following order.

:: O R D E R ::

32.

I confirm the demand of Rs.1,30,275/- (Rupees One Lakh Thirty Thousand

Two Hundred Seventy Five only) against M/s. Satluj Rolling Mills Pvt. Ltd., Changodar under the provisions of Section 11A of the Central Excise Act, 1944. Since the amount of Rs.1,30,275/- has already been paid by them on 22.10.2010 through PLA, I order to adjust and appropriate the same against the demand confirmed hereinabove.

33.

I order to recover interest as applicable under the provisions of Section

11AB of the Central Excise Act, 1944.

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34.

I impose a penalty of Rs.1,30,275/- (Rupees One Lakh Thirty Thousand

Two Hundred Seventy Five only) on M/s. Satluj Steel Rolling Mills Pvt. Ltd. Changodar under the provisions of Section 11AC of the Central Excise Act, 1944. However, the said penalty stand reduced to 25% of the duty amount, if duty (already paid) and interest and penalty amount is paid within 30 days from the date of communication of this order under the proviso to Section 11AC of the Act.

35.

I impose a penalty of Rs.10,000/- (Rupees Ten Thousand Only) on Shri

Rajindersingh K Randawar, Director of M/s. Satluj Steel Rolling Mills Pvt. Ltd. under the provisions of Rule 26 of the Central Excise Rules, 2002.

36.

I drop the proceedings against Shri Rameshchandra Vadilal Shah,

proprietor of M/s. Shital Ispat initiated under the present show cause notice.

(Dinesh Singh) Deputy Commissioner Central Excise, Division-IV, Ahmedabad-II. By Hand Delivery / Registered Post A/D: F. No.:V.72/15-01/OA/2011 To, 1. M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad. 2. Shri Rajindersing Karnailsing Jandawar, Director M/s. Satluj Steel Rolling Mills Pvt. Ltd., Ashwamegh Industrial Estate, Changodar, Ahmedabad 3. Shri Rameshchandra Vadilal Shah, Proprietor M/s. Shital Ispat, B-44, Pariseema Complex, C. G. Road, Ahmedabad. Copy to: 1. 2. 3. 4. 5. The Commissioner, Central Excise, Ahmedabad - II The Joint Commissioner, Central Excise(Prev.), Ahmedabad - II The Superintendent, Central Excise, AR-IV, Division-IV, Ahmedabad II The Deputy Commissioner, C. Ex., Division V, Ahmedabad II The Superintendent, Central Excise, AR- V, Division -V, Ahmedabad II Guard File

Dated:

24.01.2012

6.

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