2007 (11) TMI 146

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...., the Adjudicating authority has demanded duty amount of Rs. 46,51,762/-. He has imposed equal penalty under Section 11AC and also a penalty of Rs. 20,00,000/- under Rule 173Q of the Central Excise Rules, 1944. A penalty of Rs. 5,00,000/- has been imposed on the Company's Whole time Director. Further a penalty of Rs. 10,00,000/- each has been imposed on six other appellants who are the grinding units. The appellants are highly aggrieved over the impugned order. Therefore they have come before this Tribunal for relief. 3.   Shri B.N. Gururaj, learned Advocate appeared on behalf of the appellants and M/s. Sudha Koka, learned SDR appeared for the Revenue. 4. We heard both the sides. The main appellant, M/s. Sri Chakra Cements L....

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....as its own facilities and independent existence. It has its own registration, Labour, etc.,. The grinding units only purchased clinker from the main appellant, manufactured the cement under the brand name "Charka" and sold the same to the main unit. He said that this is legally permissible and there is nothing wrong in that. He emphasized the point that the appellant was only supplier of raw material an he cannot be saddled with duty liability. He placed reliance on the decision of the Supreme Court in the case of Britannia Biscuit Co. Ltd. v. Collector of Central Excise, Madras [1997] (89)E.L.T.22(SC). He stated that in the present case, the six grinding units have independent existence and are actually manufacturers of cement and duty can....

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....s no justification for penalty under Section 11AC and Rule 173Q of the Act. 4.   On the other hand, the learned SDR submitted that the six grinding units are actually a clever device for evasion of duty. The appellant supplied clinker and the day to day manufacture of the cement in the grinding units and terms of the operations were supervised by the main appellants. Moreover even though it is said that the grinding sold the cement to the main appellant, actually reduction there is only financial adjustment between them. The amount to be paid to the appellant was adjusted with the price of the clinker received by these units. In other words, they did not pay directly for the clinker received by them from the main appellant. The....