TaxTMI 
TaxTMI 
TaxTMI 
2004 (4) TMI 412
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....enty three lakhs twenty six thousand four hundred and fifty one) (Rs. 2023001/- : BED and Rs. 303450/- AED (T) relating to the period 1998-99 from Sri. V. Madhu alias C.V. Maathesh, proprietor of M/s. Komalagoure Textile, Ganapathy, Coimbatore 6, under proviso to Section 11A(1) of the Central Excise Act, 1944. 2. I confirm and demand duty of Rs. 4192460/- (Rupees forty one lakhs ninety two thousand four hundred and sixty only) (Rs. 3645617/- : BED and. Rs. 546843/- : AED (T) ) relating to the period 1999-2000 from Shri V. Madhu @ C.V. Mathesh and M/s. Selvaganapathy Textiles, under proviso to Section 11A(1) of the Central Excise Act, 1944. 3. I demand interest at appropriate rates for the above duty amounts under Section 11AB of the Central Excise Act, 1944. 4. I impose a penalty of Rs. 23,26,451/- (Rupees twenty three lakhs twenty six thousand four hundred and fifty one) on M/s. Komalagoure Textiles (Proprietor Shri V. Madhu @ C.V. Maathesh) under Rule 173Q of erstwhile Central Excise Rules, 1944 enforceable under Sect....
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....ed from 1 to 50. The bags containing the goods viz. cotton valued at Rs. 2,08,800/- and also the vehicle valued at Rs. 2 lakhs were seized for further action on a reasonable belief that the goods were removed/transported without payment of Duty in contravention of the provisions of the Central Excise Act, 1944, the Act for short and the rules made thereunder. The officers thereafter interrogated one Shri V. Madhu, Technical Advisor of M/s. Selvaganapathy Textiles and statement was obtained from him on 3-2-2000 and on various other dates. Further investigation was also taken up and as a follow up action statements were recorded from various persons such as V. Madhu alias C.V. Maathesh of Komalagoure Textiles/M/s. Selvaganatphy Textiles, P. Dinesh of M/s. Sree Vignesh Textiles under Section 14 of the Act and also from various other persons including one C. Devaraj. It was in these circumstances that proceedings were initiated against the appellants by issue of show cause notice dated 25-7-2000 on an allegation that M/s. C.V. Maathesh Properietor of M/s. Komalagoure Textiles, and M/s. Selvaganapathy Textiles, lessee of M/s. Komalagoure Textiles had contravened the provisions of Rules ....
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....e also made specific plea for cum-duty price which plea was also not considered. As regards the merits of the case, he has submitted that there are documentary evidence such as SSI certificate, Registration Certificate issued by the Sales Tax Authorities, assessment order under the Tamil Nadu, General Sales Tax, Registration Certificate under the Central Excise Act, communication of the appellants addressed to the Central Excise Department for cancellation of the Registration Certificate, documentary evidence showing the purchase of machinery, agreement for payment of rentals for land and building, income tax return, Sale deed etc. to show that both the units were independent and separate entities. He has further submitted that in fact Para 3(c) of the show cause notice itself admits that M/s. Selvaganapathy Textiles is the lessee of M/s. Komalagoure Textiles during the year 1999-2000. He submitted that the department has demanded duty of Rs. 42,73,996 - jointly from both the units for the said period apart from a separate duty demand of Rs. 23,26,451/- from M/s. Komalagoure Textiles for the year 98-99. He has also invited our attention to Para 57 of the impugned order, by which th....
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....pecific finding that when M/s. Komalagoure was not in existence, it had spent an amount of Rs. 49,32,483/- in the their account during the year 1999-2000 towards purchase of cotton, HDPE, polythene Bags, paper cones, machinery etc. and made payment towards electricity charges. Therefore, the Commissioner has reached a reasoned finding that even though M/s. Komalagoure had surrendered the Central Excise, licence and leased their unit to M/s. Selvaganapathy they financially helped, M/s. Selvaganapathy in running the unit. Therefore, the demand for the period 1999-2000 has been correctly made on M/s. Selvaganapathy Textiles. She has also invited our attention to Para 56 of the impugned order wherein the Commissioner has referred to the statements given by various persons wherein they had admitted that the unaccounted cotton yarn on cones had been cleared directly from M/s. Komalagoure Textiles and M/s. Selvaganapathy Textiles but the invoices were raised by the dummy units. Sree Vignesh Textiles and Sree Ganapathy Textiles, as second sales so as to make it appear that the yarn had been sold by these dummy units. She therefore, prayed that the appellants are required to be put to terms....
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....the appellants have specifically sought for cross-examination of persons on whose statements reliance has been placed against the appellants. When specific request has been made by the appellants to cross-examine the persons on whose statement reliance has been placed by adjudicating authority against the appellants and when their request has not been granted, there is force in the contention of the learned Counsel that there was clear violations of the principles of natural justice and on this score alone, the impugned order is liable to be set aside for granting effective opportunity of hearing to the defence. 8. Coming to the next plea viz. invocation of the longer period of limitation, we observe that it was not the case of the Revenue that the appellants have not filed the RT 12 returns regularly and which have been assessed. Further, there was periodical inspection by the Audit Branch of the Department. Prima facie, it cannot be said that the appellants have held back information from the department about their activity. Further, on going through the records, such as SSI certificate, Registration certificate both under the Central Excise and Sales Tax Departments, Cance....