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2016 (10) TMI 614
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....DDSC was a partnership firm. Further, detailed inquiries were conducted by verification of various documents, price list, annual balance sheet and by recording statement of various Directors, employees and partners of these 3 entities. On completion of investigation, the Department entertained a view that all of the above 3 entities were interconnected, controlled by a common group of people who are family/ extended family members. Accordingly, proceedings were initiated against the main appellant KEPL to reject the value adopted by them to pay Central Excise duty and to fix the transaction value in terms of Central Excise Valuation Rules, 2000. The said proceedings concluded in the impugned order. The Commissioner held that the sale transaction of KEPL is to a related person and the value has to be refixed in terms of Valuation Rules, 2000. A differential duty of Rs. 1,33,00,542/- for the period March, 2002 to May, 2006 was confirmed. Penalty of equivalent amount was also imposed on the main appellant. Penalties of Rs. 25 Lakhs each was imposed on the other 2 appellants in terms of Rule 26 of Central Excise Rules, 2001/2002. The present appeals are directed against this order. ....
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....were discharging various important work in other companies and vice versa. The salary payment of some key personnel indicates that they are discharging work in company which does not pay salary to them. For example, Sh. Vipin Kumar, Director of KEPL never received any salary/ dividend or any monetary compensation from KEPL. However, he worked as a marketing consultant in DDSC where he was paid consideration for his work. The Ld. AR brought out many such instances to emphasis that there is overwhelming evidence to show that KEPL is only a fagade created in order to show suppressed value for Central Excise purposes. He further submitted that once MRP based assessment was introduced for the subject goods, the whole arrangement was dismantled with a single entity undertaking the whole work. Regarding the appellants plea against demand with extended period, the Ld. AR submitted that the declaration under Rule 173C did not reveal the full facts. In fact some of the declarations like under para (C) never disclosed the possible control of the appellant on the buyers or wholesale dealers as can be seen in the present case that the control is by DDIL as a brand owner on the manufacturer (app....
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.... were Directors in the company. (i) Shri Surinder Kumar alias Surinder Gambhir S/o Lt. Sh. Daulat Ram (ii) Sh. Sanjay Gambhir S/o Sh. Surinder Gambhir (iii) Sh. Rajiv Gambhir S/o Sh. Surinder Gambhir Similarly the following persons were partners in M/s. DD Sales Corp. (a) Smt. Uma Kumari Gambhir W/o Sh. Surinder Kumar (b) Sh. Rajiv Gambhir S/o Sh. --------do---------- (c) Smt. Kavita Gambhir W/o Sh. Sanjay Gambhir And the Directors in M/s. KEPL were as follows for the year 2002 & 2003 (a) Shri Anil Kumar S/o Sh. Satpal Kumar (b) Shri Vipin Kumar S/o Sh. Satpal Kumar (c) Shri Tarun Kumar S/o Sh. Ashok Kumar In the year 2004 Shri Tarun Kumar ceased to be the director and only S/Shri Anil Kumar & Vipin Kumar were the directors. 13.3 In the year 2005 Shri Tushar Kumar was functioning as the third director of the said firm M/s. KEPL in addition to S/Shri Anil Kumar & Vipin Kumar. 13.4 Further in the year 2006, Shri Anil Kumar ceased to be a director and only S/Shri....
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....D.D. Motors Dehradun, that as Business Head he looked after entire dealership operations and supervisory work of DD Motors Dehradun; that he had been working at DD Motors Dehradun since July, 2004; (It would be pertinent to add here that DD Motors is one of the Division of DDIL); that he had visited KEPL B-145, Mayapuri Phase-I only once and he had never received any remuneration/salary/ dividened/profit share or any other amount from M/s. KEPL. 13.5 From the foregoing it is clear that all the Directors of M/s. KEPL were dummy Directors having close relation with Shri Surinder Gambhir and as such with S/Sh. Sanjay Gambhir and Rajeev Gambhir. Rather three of the Directors of M/s. KEPL were employees of the other two group company/firm. Shri Anil Kumar was the Chief Executive Officer of M/s. D.D. Sales Corporation and was related to Shri Surinder Gambhir. He was in fact son of brother of Smt. Uma Kumari wife of Shri Surinder Gambhir. Similarly Shri Tushar Kumar was working as Business Head at DD Motors Dehradun a division of M/s. DD Ind. Ltd. Shri Vipin Kumar another Director of M/s. KEPL was working with DD Sales Corporation since 2002-03. In any event none of them rec....
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....urthly, Sh. G.C. Verma Production Incharge of M/s. KEPL in his statement tendered under Section 14 ibid on 30-6-2006, inter alia, stated that he had been working as Production Incharge in KEPL since 1987 and he looked after production of motor vehicle parts of different models; that Shri D.K. Jain, Sales Manager DDIL used to direct him for day to day production of different models of vehicles parts; that he (Shri G.C. Verma) arranged the production of goods as per Shri D.K. Jain directions; that the raw material of KEPL were ordered by M/s. DDIL; that they received raw material with bill in their company's name. 13.10 Last but not the least, with the introduction of excise duty on the basis of MRP (Maximum Retail Price) w.e.f. 1-6-2006, both the companies to M/s. KEPL and M/s. DDSC ceased their operations. This clearly points to the fact that the two firms were created only to facilitate evasion of excise duty on the goods manufactured by M/s. KEPL and sold to DD Sales Corporation through M/s. DDIL. Furthermore as per the Annexure B of the balance sheet of M/s. DDIL it is admitted position that DD Sales Corporation was one of the enterprises over which the key managem....
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....to benefit the family members having interest in all the 3 entities. DDIL and KEPL and DDSC are having interest in each other as all are entirely owned or controlled by the Gambhir family in view of the facts recorded in the impugned order. It is an admitted fact that DDIL is the owner of the brand and 100% of the product manufactured by the KEPL are supplied only to them. DDIL in turn sells the product through various customers through a partnership firm DDSC. The status of the 3 partners and their connection with the DDIL has already been explained. One partner was the director of DDIL, the other two partners were wives of 2 directors of DDIL. All the shares of KEPL were held directly or indirectly by shareholders and directors of DDIL. There are sufficient indications emerging out of facts narrated about to the effect that the directors of KEPL were only acted as dummies. DDIL exercised control over KEPL and DDSC. 10. On careful consideration of the facts and findings recorded by the original authority, we find no reason to come to a different conclusion than the one arrived at by the original authority. We find no merit in appellant s plea that there is no financial flow bac....