TaxTMI 
TaxTMI 
2012 (11) TMI 690
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....n'ble CEGAT appears to have not appreciated that the decision of the Hon'ble Supreme Court reported in 1997(92) ELT451 relates and restricts to liability to pay the Duty demanded. It will be appropriate to take note of the fact stated in the Reference Application itself, which are as under: M/s Xenon, Adityapur, Jamshedpur (hereinafter referred to as the said assessee) is a partnership firm and are engaged in the manufacturing of Motor Vehicles Parts falling under Chapter heading no.87.08 of the CETA'85, as per the specifications of M/s TELCO Ltd., Jamshedpur. The assessee is availing the SSI exemption in terms of the Norfn. No.175/86-CE dt. 01.03.86 (as amended). The factory of the assessee is adjacent to the M/s Samarth Engg. Co Pvt. Ltd., Adityapur, Jamshedpur (hereinafter referred to as M/s SECO) who is also availing SSI exemption under 175/86-CE dt. 01.03.86 (as amended) and manufacturing the same goods that the assessee is manufacturing. On visit of the factory premises by the officers of the Preventive unit of Central Excise Commissionerate, Jamshedpur it was found that the unit of the assessee was formed by dubiously and artificially fragmenting M/s SECO with a view t....
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....ecifically held at page no.22 that acceptable goods cleared by M/s SECO and M/s Xenon during the relevant period by wrongly availing the excise exemption under Notification of 175/86 and 1/93 and cleared the goods without payment of proper duty of excise as required under Rule 9(1) of ECR'194. In view of the above, the adjudicating authority held that both the units have contravened the provisions of Rule -9 and Rule 173F of CER'1944. After recording other findings held that the aggregate value of the clearances of M/s SECO and M/s Xenon are liable to be clubbed together in terms of the provisions of SSI Exemption Notification No.175/86-CE dated 1.3.1986 as amended and 1/93- CE dated 28.2.1993 as amended for the purpose of determining the duty liability. The adjudicating authority therefore ordered that M/s SECO to pay the deferential duty of Rs.16,27,340.74 paise. The penalty of Rs.2.5 Crores has been imposed upon M/s SECO with a separate penalty of Rs.2000/- under Rule 173Q and Rule 9(20 of the CER'1944 respectively. In addition to above, a penalty of Rs. One Crore was imposed upon M/s Xenon under Rule 173Q of CER'1944. A question arises in this Tax Case is whether in a ....
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....oddar justified the order passed by the Central Excise & Gold Control Appellate Tribunal, Kolkata, dated 3.8.2000 wherein it has been held that after having held M/s Xenon company as dubious company separate penalty could not be imposed upon the said company. We have considered the submissions of the learned counsel for the parties and perused the reasons given in the Reference in the said case as well as the reasons given in the order dated 3.8.2000 and the reasons given in the case of Gajanan Fabrics Distributors' case. So far as the contention of the learned counsel for the Revenue is concerned, that the dubious company does not mean that it was never existed is concerned, we are of the considered opinion that in the facts of this case, it may be held that the declared dubious company M/s Xenon in fact existed and obtained the Exemption Certificate under the Rules. The question is not that whether the said dubious company existed or not, but the question is that who did the transactions and incurred the liability of the duty and in case of the violation of the Rules, was liable to pay the penalty. Once it is held that one was the original company and another was the dubious c....
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....anan Fabrics Distributors clearly indicates the above position. In the Gajanan Fabrics Distributors' case, the Hon'ble Supreme Court has questioned the two findings recorded by the Collector viz -a-viz finding recorded by the tribunal. The Collector held that the seven units are only a corporate for facade, both have registered with the various authorities with a view to camouflage with the actual identity and thereby availed the exemption which, otherwise, cannot be inadmissible to them. This finding was upheld by the tribunal. This finding also clearly indicate that in this case also seven companies /firms were in existence and they obtained the exemption certificate,but, for the purpose of benefit of M/s Gajanan Fabrics Distributors, and therefore, they were declared to be fictitious company/firms. The Hon'ble Supreme Court observed that, at one place this finding is there which attained the finality and at other side, the tribunal failed to give the attention to the fact that the Collector had confirmed, in the sum of Rs.11,84,708.51 paise, the demand made in the show cause notices upon all the seven units and their partners or Directors. The Supreme Court observed that havi....