TaxTMI 
TaxTMI 
2007 (4) TMI 91
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....R. Balakrishnan Director Son of S. No. 1 58.00 5. R. Thiruvasagam, Director Son of S. No. 1 46.00 6. S. Leelavathi, Director Wife of S. No. 2 30.00 7. R. Rajammal, Director Wife of S. No. 1 10.00 8. B. Kalavathy, Director Wife of S. No. 3 40.00 9. B. Rajamani, Director Wife of S. No. 4 40.00 10. T. Karunambigai, Director Wife of S. No 5 40.00 S. No. Directors of Raju Rajammal Textiles Pvt. Ltd. S/Shri/Smt. Relationship Value of shares held Rs. Lakhs Remarks 1. R. Rajenddran Son of P. Raju 2.50 25% 2. R. Balakrishnan Son of P. Raju 2.50 25% 3. R. Thiruvasagam Son of P. Raju 2.50 25% 4. Smt. Leelavathi Wife of P. Subramanian (MD of Good will Textiles Ltd.) 2.50 25% 5. K. Venkatasubramanian Not related Nil These two Directors were included in the Board of Directors w.e.f. 10-2000 (sic) 6. S. Sankaralingam Not related Nil On 1-8-2001, officers of Central Excise seized 131 bags of 2/40s cones from the premises of M/s. Golden Dye House [appellants in Appeal No. E/1001/2005], a trading firm, partners of which were Directors of M/s. Goodwill & M/s. RRT. Two invoices viz. Invoice No. 236 dated 30-7-2001 and Invoice No. 240....
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....lty of Rs. 43,45,355/- on M/s. Goodwill under Section 11AC of the Act; and (vi) Imposing the following penalties under Rule 209A of the Central Excise Rules, 1944 / Rule 26 of the Central Excise Rules, 2002 on the other noticees. S. No. Name S/Shri / M/s. Appellants in Appeal No. Amount of Penalty Rs. 1. P. Subramanian, MD, GWT E/993/2005 1,00,000 2. R. Rajendran, Director, RRT & GWT E/994/2005 75,000 3. R. Balakrishnan, Director, RRT & GWT E/995/2005 75,000 4. R. Thiruvasagam, Director, RRT & GWT E/996/2005 75,000 5. K.P. Rajagopal, Administrative Officer cum Authorized Agent of GWT E/997/2005 25,000 6. RRT E/998/2005 20,000 7. Global Yarn Spinners E/999/2005 20,000 8. R. Thavasinathan, Sales Representative of RRT E/1000/2005 10,000 9. Golden Dye House E/1001 /2005 20,000 2. The appeals filed by the aggrieved parties against the decision of the original authority were dismissed by the Commissioner (Appeals). Appeal Nos. E/992 - 1001/2005 are against the appellate Commissioner's order. 3. M/s. Global Yam Spinners [M/s. Global, for short] were also engaged in the manufacture of cotton yarn during the material period. Their entire production....
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....,927/- against M/s. Global for the same period as differential duty on account of relationship found between them and M/s. RRT; (iii) demanding interest on the above duty amounts under Section 11AB of the Act; (iv) imposing penalty equal to duty on M/s. Global under Section 11AC of the Act; and (v) imposing penalties under Rule 209A/Rule 26 on M/s. RRT, M/s. Golden Dye House and a few others. In appeals filed by the aggrieved parties, learned Commissioner (Appeals) affirmed the decision of the lower authority. The order of the appellate Commissioner has been challenged before us in Appeal Nos. E/989/2005 [by M/s. Global], E/990/2005 [by M/s. RRT] and E/991/2005 [by M/s. Golden Dye House]. 4. After examining the records and hearing both sides, we note that duty of over Rs. 18.60 lakhs was demanded from M/s. Goodwill and duty of over Rs. 9.70 lakhs was demanded from M/s. Global in respect of cotton yarn on cones found to have been clandestinely removed in the guise of hank yarn by them without payment of duty during the respective periods [1-4-99 to 31-7-2001 and 11-10-99 to 31-8-2001]. Both these demands are based on evidence in the form of certain documents, statements, deposi....
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....the department was cone yarn. In the face of the documentary evidence, the Managing Director, Directors, Administrative Officer and Factory Manager of M/s. Goodwill admitted the clandestine removal in their respective statements. We, further, note that the statement of Shri S. Pandiyan, driver of M/s. Goodwill also contains crucial evidence against the company. He stated that he had transported cotton yarn from M/s. Goodwill's factory-gate directly to buyers and effected door delivery of the goods. The buyers stated that they had purchased 2/40s cone yarn from M/s. Goodwill. Most of them reiterated this statement when cross-examined. Statements of a few brokers were also to the same effect. M/s. RRT also stated that they had sold only cone yarn to their customers and this statement was corroborated by their own accounts which form part of the documentary evidence on record. The evidence adduced by M/s. RRT as sole distributor of the product of M/s. Goodwill and M/s. Global has not been rebutted by the latter. In the circumstances, we cannot find fault with the finding of clandestine removal of cone yarn by M/s. Goodwill and M/s. Global in the guise of hank yarn to M/s. RRT during t....
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....obal have conceded the 'relationship' and this duty liability. We have already noted that they admitted having clandestinely removed 131 bags of 2/40s cone yarn to their sister concern viz. M/s. Golden Dye House. They paid the duty of Rs. 60,844/- on the said quantity of yam also. There is no surviving dispute in this connection. 7. On the basis of 'relationship' found between M/s. Goodwill and M/s. RRT under Section 4(4)(c) /4(3)(b), there is a demand of duty of over Rs. 24.70 lakhs on the former for the period of dispute. Learned counsel for the appellants argued that there was no evidence of mutuality of business interest between M/s. Goodwill and M/s. RRT and therefore the latter was not to be held to be 'related' to the former in terms of Section 4(4)(c)/Section 4(3)(b). Learned SDR countered by reiterating the relevant findings of the Commissioner (Appeals). She also referred to the relevant provisions of Companies Act to show that M/s. RRT were related to M/s. Goodwill in terms of Section 4(3)(b)(ii) of the Central Excise Act. She argued that, on the facts of the case, the corporate veil required to be lifted to expose the relation between the two companies. In this connect....