TaxTMI 
TaxTMI 
2006 (10) TMI 369
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....ii) C.No. IV/16/260/2002 dated 2-8-2002 Dy. Commissioner of Central Excise, Erode Divn. Erode (iv) C.No. IV/16/130/2003-Pol.Adjudication dated 2-5-2003 Dy. Commissioner of Central Excise, Erode Division, Erode 2. The total amount of duty demanded from them is Rs. 7,00,42,408/-. They have admitted a liability of Rs. 2,08,86,126/- (without the availability of deemed credit) and Rs. 1,04,43,063/- (with the availability of deemed credit) Along with the applicants, (1) Shri K. Vinayagam, Partner, M/s. SCM Textile Processing Mills, Erode, (2) Shri Chendhil Murugan Printing Works, 290, Marapalam Road, Erode 638 003, (3) M/s. Majestic Dyers & Printers, 29C, Marapalam Road, Erode-638 003, (4) M/s. Saran Garments, 4/52, Kamatchi Complex, Palladam Road, Veerapandi (PO), Tirupur-5, (5) M/s. Jamuna Impex, No.6, Amarjoti Garden, Mangalam Road, Tirupur-4, (6) M/s. Nithya Exports, No. 10, Amarjoti Garden, Railway Feeder Road, Tirupur-1, (7) M/s. Knit Wear Exports, No. 11, Asha Nagar, SAP Theatre Back Side, Tirupur-3, (8) M/s. Ramraj Handlooms, 13, Thulasi Rao Street, Tirupur, (9) M/s. Ramraj Cotton Mills, 13, Thulasi Rao Street, Tirupur, (10) M/s. Ramraj Khadi Trade, 13, Thulasi Rao Str....
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....ect of Khadi : (a) MDP, 67,72,175/- 50,14,282/- 1,17,86,457/- (b) SCMPW 36,54,410/- 26,72,414/- 63,26,829/- 3 Demand of duty on woven fabrics removed without accounting, based on folding charges :- (a) based on folding expenditure vouchers 55,24,604/- 31,37,755/- 86,62,359/- (b) Based on general ledgers. 56,17,964/- 56,17,964/- 1,12,35,928/- 4 Demand of duty on woven fabrics cleared to co-operative societies 7,30,563/- 5,33,065/- 12,63,628/- 5 Demand of duty on woven fabrics cleared to exporters 3,42,225/- 3,41,056/- 6,83,281/- 6 Demand of duty on woven fabrics cleared to Raghavendra Khadi 12,45,146/- 8,48,555/- 20,93,701/- 7 Demand of duty on quantity cleared to Ramaraj Group 59,28,396/- 44,73,616/- 1,04,02,012/- Total 3,71,74,782/- 2,79,61,997/- 6,51,36,779/- 5. According to the Applicants, Rs. 1,26,82,589/- relate to denial of the benefit under Notification 8/96-C.E. in respect of Polyvastra. The Show Cause Notice alleged that the applicants were not approved by the Khadi & Village Industries Commission (KVIC for short) for processing Polyvastra as required under the Notification.....
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....sed on folding charges and on the basis of vouchers. According to the department, these folding charges relate to woven fabrics and not knitted fabrics processed by the applicants using power and machines. The applicants submitted that 80 to 90% of their turnover related only to hosiery fabrics which were not liable to duty. They submitted an affidavit from their folding contractor to establish that hosiery fabrics were also folded in the factory before their clearance. Further, they questioned the assumption that the vouchers were issued in respect of woven fabrics which were subjected to machine processing and not hand processing. The applicants submitted that the Show Cause Notice has ignored the hand processing done at the factory of the applicants. However, they stated that in the absence of any evidence on their part, they accepted the entire duty liability. They submitted that they were entitled to the benefit of correct rate of duty, the elongation factor and the abatement element of duty by considering the normal value as cum duty. 8. According to them, the folding charges have been incorrectly worked out by the department at 7 paise per meter, whereas, actually it w....
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....Printing Works existed in paper only with no machinery and the goods cleared by MDP and CMPW were processed by the applicant company. The Polyester and Khadi fabrics were not received by the applicant, but by MDP and Chendhil Murugan Printing Works, though they were processed by the applicant company and the question of availing benefit of Notification No. 8/96 by the applicants does not arise as they were received by MDP and CMPW. Recognition by KVIC is only for MDP and CMPW. M/s. MDP and CMPW existed only in paper and did not have any plant and machinery. The argument that the activities of MDP were activities of the applicant company did not meet the requirement of the KVIC approval nor the conditions laid down under the Notification No. 8/96-C.E. The applicant company was not recognized by KVIC for Polyvastra. This has been confirmed by the Director, KVIC in a letter dated 6-7-2001. The records recovered from the applicant company revealed that the goods were processed in the premises of the applicant but, in the name of MDP and CMPW. The certificate issued by the KVIC and the letter dated 6-7-2001 of the Director, KVIC clearly indicated that the applicant company was not recog....
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....n Order No. 8/2005-C.Excisable goods (sic) dated 3-3-2005. Subsequently, the Commissioner (Investigation) was directed to carry out certain investigation in to the claims by the applicant. The Commissioner (Inv) submitted his investigation report dated 26-5-2006. 17. The final hearing of the applicants and the Revenue was held on 12-9-2006, wherein S/Shri Lakshmi Kumaran, G. Shivadas, Senthil Advocates and Shri M. Saravanan, Consultant represented the applicant. The Revenue was represented by Shri K.P.H. Paul Mohamed, Assistant Commissioner, Shri R. Kuppuswamy and Shri T.M. Raghunath, Inspectors, Commissionerate of Central Excise, Erode Division. 18. During the hearing, the Advocate for the applicant admitted the liability at S. Nos. 3 to 7 of the table given in Para 4 supra. However, this is subject to the application of the correct rate of duty, benefit of elongation factor and cum duty benefit. He, however, did not accept any liability in respect of S. Nos. 1 and 2 of the table. In respect of S. No. 1, he reiterated the contention that M/s. Majestic Dyers and Printers were a unit recognized by KVIC for the purpose of processing Polyvastra and as MDP is a branch of th....
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....e branch has done is as good as the main company doing it, therefore, as the branch office has carried out the processing, it should be taken that it has been done by the main company, namely, M/s. SCM Textile Processing Mills. They have also filed certificates issued by the Commercial Tax Officer showing that MDP are the branch office of the SCM Textile Processing Mills. 21. We have examined this contention. We find the plea that MDP is a branch of the main company is difficult to accept. In this case, the main company is, M/s. SCM Textile Processing Mills is operating from their premises at Erode. It is not known why they should have branch in the same premises with a different name. M/s. MDP is claimed to be a branch of SCM Textile Processing Mills. But as MDP is a separate organization with a separate name and identity and, therefore, it cannot be recognized as a branch of M/s. SCM. Even if for legal purposes it is treated as a branch of SCM Textile Processing Mills, the fact that it has a separate identity as an organization cannot be denied. In fact, it is only because it has a separate identity that the partners or owners of the firm decided to get MDP approved by the ....
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....ants have already admitted the total amount. However, they have claimed the benefit of elongation factor and also the correct rate of duty. However, we find that under Sr. No. 3 the Revenue has demanded duty based on the folding charges at the rate of seven paise per metre. According to the applicant, though they admit duty liability in respect of clearances under this Sr. No., they submit that the actual folding charges would be fifteen paise per metre and on this basis, the amount of duty will come down substantially. 24. We have examined this contention. We find that the Revenue has gone by the vouchers issued by the folding contractor. The additional expenses said to have been issued in this connection are not clear and not supported by any documents. Therefore, we are unable to accept the contention and hold that the applicant company is liable to pay the total amount demanded subject to the factors agreed to by the Revenue. The department has also accepted that they are entitled to the benefit of elongation factor. The applicants pointed out that there are mistakes in the rates of duty applied for working out the duty due on these counts. After taking these factors into....
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.... to pay simple interest of 10% per annum on this amount for the period. However, they have pleaded that no interest is leviable on the AED portion. We agree with this. They are eligible for immunity from interest in excess of 10% per annum on the basic duty portion of the liability only. We also grant them immunity from penalty and prosecution under the Central Excise Act, 1944. Since the main applicants have been granted immunity from penalty and prosecution, the co-applicants also deserve similar immunity. 29. In the light of the foregoing, the application is finally settled under Section 32F(7) of the Central Excise Act, 1944 on the following terms and conditions :- (i) The duty amount is settled at Rs. 4,64,72,058/-. Since the applicant has already paid Rs. 1,04,43,068/- they have to pay the balance amount of Rs. 3,60,28,995/- within 30 days from the date of receipt of this order and report compliance. (ii) The applicants shall pay a simple interest @ 10% per annum from the date the duty liability arose till the date of final payment. Interest is payable on the basic Central Excise Duty only. The Revenue shall calculate th....