TaxTMI 
TaxTMI 
2000 (9) TMI 650
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....ri, Proprietor of M/s. West Roadways. 3. The facts of the case in brief are that Central Excise Officers visited the factory premises of the appellants and conducted physical verification of their stock of excisable goods. Shri Sunil Kumar, authorised signatory of the assessee was available in the factory. Inspection of the factory revealed that deep freezers having capacity of 1000/800 litre and two centrifugals were installed in the area marked as 'working hall'. It was also observed that in the rear wall of the working hall there was a big open gate within the walled boundary of the factory premises. Certain constructions were raised and in one such room eight fractional distillation columns were found installed and working at the time of visit of the officers. Shri Sunil Kumar, authorised signatory informed that mentha oil is being purchased from the farmers located in the vicinity of Moradabad and Rampur and that the same is being used as principal raw material. On demand they could not produce any raw-material register. RG-1 in respect of DMO, Mentha Oil, Terpene etc. had not been entered since 1-4-95. Investigations revealed that the unit was registered as SSI Unit and....
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....e Bombay firms did not appear to be appealing to mind inasmuch as these products were being sold to these Bombay based firms by M/s. Quality Exports and Chemicals. Thus, the purchases from the Bombay firms by these two trading units appeared to be manipulations in-as-much as the receipt of these items and their purchase by two trading units was neither economically viable nor a prudent business transaction. 5. In his statement recorded on 3-8-95 Shri Mukul Kumar Gupta, partner of M/s. Quality Exports & Chemicals admitted that their factory had a common premises, common entries/exit gates with the two trading units. About the non-recording of production from 1-4-95 Shri Gupta submitted that Shri Sunil Kumar came late on 12-7-95, therefore, he could not enter production in RG-1 Register; that his fractional distillation plant has been sent to Narayana, Delhi; that there was no intimation about transfer of plant given to the excise authorities. Shri Gupta also stated that Shri Sunil Kumar was not an authorised signatory. 6. Shri Ajay Kumar authorised as an agent of Smt. Veena Gupta, Proprietor of M/s. Quality Flavour Exports stated that M/s. Quality Flavour Exports was eng....
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....s having their factories at Rampur, purporting as if these excisable items have been despatched by them. It was alleged that M/s. Quality Exports and Chemicals had resorted to falsification of documents by putting names of other units in respect of consignments despatched from their factory and manufactured in their factory. Accordingly, a SCN was issued to the appellants asking them to explain as to why the seized goods should not be confiscated, why duty amounting to Rs. 86,78,584/- should not be demanded from them and why a penalty should not be imposed. In reply to the SCN, it was submitted that Quality Exports & Chemicals is a partnership firm; Quality Chemicals is a sole proprietory firm located adjacent to and behind M/s. Quality Exports and Chemicals and that Quality Flavour is sole proprietory concern located behind the premises of Quality Chemicals; that there were two entrances. It was pleaded that for security purposes, the boundary wall of the passage runs from M/s. Quality Flavours to the main road. In support of this contention that the three firms were separate independent entities, a copy of the ground plan was enclosed in addition to other contentions. 10. I....
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....Quality Exports and Chemicals was not correct as the goods were owned by the two trading units; that the allegation that M/s. Quality Flavours and M/s. Quality Chemicals had actually been dealing in goods manufactured and clandestinely removed from the premises of M/s. Quality Exports & Chemicals was not correct in-as-much as from 1-4-95, there was no production in the premises of M/s. Quality Exports & Chemicals as the plant had already gone for repairs; that some of the goods lying in stock of M/s. Quality Exports & Chemicals were being indicated in R.T. 12 returns month after month. 13. On the question that Shri Sunil Kumar in his statement stated that the goods found in the premises belonged to M/s. Quality Exports & Chemicals, it was submitted that Shri Sunil Kumar subsequently submitted an affidavit in which he stated that M/s. Quality Exports and Quality Flavours were two independent trading units; trading goods in their own name and purchasing not only from M/s. Quality Exports & Chemicals but also from a number of local manufacturers. 14. Shri A.P. Mathur, the ld. Counsel for the appellants submitted that M/s. Quality Chemicals & M/s. Quality Flavours actually ....
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....f any duty being demanded from them and since no duty was liable to be paid by the appellants, therefore, there was no question of imposition of penalty. 19. Ld. Counsel submits that there was no suppression and therefore, the entire demand was time barred as it was beyond a period of six months. He submits that since there was no suppression or mis-statement and therefore, the demand is hit by limitation. 20. Shri Sanjeev Srivastava, ld. DR appearing for the respondent Commissioner submits that on a visit of the officers, eight fractional distillation columns were found working. He submits that though these columns were found working in a construction in the working hall which has been claimed as owned by the other trading unit working on trial basis. This contention of the appellant was not supported by the facts on the ground inasmuch as there were 10 deep freezers with a capacity of 1000/800 litres each and two centrifugals. He submits that this clearly showed that M/s. Quality Exports and Chemicals continued manufacturing menthol and other products which were not recorded in the statutory records and were cleared without payment of duty. He submits that this conten....
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....ly. 22. On the question of common premises, common products etc. ld. DR submitted that the fact in the instant case is that the so called two trading units were selling mostly such goods as were being produced by M/s. Quality Exports & Chemicals. They were not dealing in different goods. They did not have separate premises and when these things are examined in the light of the statement of Shri Sunil Kumar and proprietor of M/s. West Roadways, the things become clear that these goods are manufactured by M/s. Quality Exports & Chemicals. Ld. DR, therefore, submits that in so far as duplication of demand is concerned, benefit has already been given by the adjudicating authority. Insofar as physical verification of stock is concerned, he submits that stock verification was done in the presence of Shri Sunil Kumar who was satisfied with the manner of taking the stock and therefore, the contention of the Counsel for the appellants that physical verification was not correctly done is not acceptable. He submits that demand is not time barred as there was suppression of facts and misstatement with the intention to evade payment of duty. Summing up his arguments ld. DR reiterated the ....
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....re working belonged to one of the trading units and that they were working on trial basis is not supported by any evidence. On the contrary there is evidence to show that these fractional distillation columns were working for M/s. Quality Exports & Chemicals inasmuch as at the time of visit of officers there was none from the trading firms and that even deep freezers and centrifugals were there. However, we note that there were no specific marking of places. We further note that there was no employee of any trading unit present at the time of visit of the officers. We also note that not only fractional distillation columns were working but there were deep freezer and centrifugals also. All this lead us to believe that there was regular production and this was not production on trial basis. Moreover, if excisable goods were being produced, an intimation should have been sent to the Central Excise Authorities. In this case the trading unit which is being claimed by the appellants to have installed these items for manufacture of the finished goods had not given any intimation. Further, the contention of the appellant that the fractional distillation plant of M/s. Quality Exports & Che....
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.... that only M/s. Quality Exports and Chemicals was the manufacturing unit whereas M/s. Quality Chemicals and M/s. Quality Flavours were trading units. Shri Ajay Kumar Saxena of Quality Flavour in his statement stated that M/s. Quality Flavour was registered with Trade Tax Authorities and was a separate entity for purpose of Sales Tax, Income Tax and were having separate accounts. The allegations here are not that M/s. Quality Chemicals and Quality Flavours were not trading unit. The allegation is that these units were only on paper inasmuch as the goods were being manufactured by M/s. Quality Exports & Chemicals and they were not being cleared on payment of duty and were being sold to different parties in the name of these two trading units i.e. Quality Chemicals and Quality Flavours. We hold that the goods have been manufactured by M/s. Quality Exports & Chemicals and removed by them without payment of duty. 29. The point on limitation also was raised by the ld. Counsel. Though limitation was not raised before the authorities below, however, having regard to the facts that it was a legal point and could be raised at any stage of the appeal. We considered this also. We note th....