2017 (11) TMI 1327

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.... six premises alongwith the combined office of JSW and other group companies. Other connected premises including the residential premises of the Partners / Prop. of group units were also searched. The records seized were scrutinised and statements were recorded of various persons. After completion of investigation show cause notice dated 01.06.2007 was issued proposing to club the value of other five group companies into the turnover of JSW which came to be decided vide the impugned order. 2. With the above background, we heard Sh. R. Krishnan, ld. Advocate representing the buyer M/s Hindustan Sanitaryware (HSW) and other appellants represented by Sh. B. K. Singh, ld. Advocate. Revenue was represented by Sh. R. K. Mishra, ld. AR. 3. For a proper appreciation of the case, the brief details of investigation conducted and the conclusions of the department are given below: 3.1 a. Sh. R. N. Jindal, prop. of M/s JSW is managing/ regulating the purchases of the raw material for all the group units including the diversion of the same within the group units without any formal documentation. Department found that the supply of twelve MT Resins on the invoice of M/s Haldia mean....

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....exemption. 3.4 It has also been concluded that all the units were manufacturing the goods of "Hind Ware" and "Rassi" brand owned by HSW. The invoices hear the brand name as "Tiffany", "Java", "IRIS", "Prestige etc. which are models of HSW. The bath tubs also bear similar brand names, the sale invoices also mention name of the model. The department also did not accept the statement of Sh. Ghosal that the units were putting only the model name. 3.5 In the show cause notice it has also been alleged that during 2005-06 goods worth Rs. 3,74,755/- and during 2006-07, goods worth Rs. 2,97,978/- were clandestinely removed by M/s Sunshine and JSW. 3.6 In respect of M/s Ganesh Udyog, in para 14.3 of the show cause notice a total value of clandestine clearance to unit of JSW/Sunshine was Rs. 1,01,49,780/- The department has alleged clandestine clearance of excisable goods from various premises of M/s JSW to the tune of Rs. 1,75,24,763/- during the year 2006-07. They also came to the conclusion that at the various units a stock of Rs. 41,93,900/- was lying unaccounted and stock of Rs. 50,52,251/- was seized at various other premises. 3.7 At internal page 75 of the show cause notice....

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.... (b) Reading of some of the findings of the adjudicating authority gives the impression that he has just copied the allegations made in the show cause notice and extracted it as his findings. (c) It is submitted that for clubbing of clearances of all units or to hold that several units are manufacturing on behalf of one unit, it has to be shown that those units were dummy units. It is submitted that for this purpose, at least two basic facts have to be proved. These are that: (i) None of the units has capacity to manufacture goods. (ii) There is financial flow back from the parent unit to the dummy unit. (d) There are several case laws on this issue. A few of such cases are as below: (a) Renu Tandon vs. UoI - 1993 (66) ELT 375 (Raj.) - Appellant would rely on para 36 of the said judgment of the Hon'ble High Court. (b) Jagijiwandas & Co. vs. CCE, Thane- 1985 (19) ELT 441- Appellant would rely on observation of the Tribunal in para 6 of the judgment. (c) Techno Device vs. CCE, Chennai - 2009 (243) ELT 79. The appellant would rely on para 11 of the judgment. (d) DPK Engineers vs. CCE, Bangalore - 2003 (157)....

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....n that the appellant had suppressed the facts in this case is only assumption. It may be seen that the unit of JSW and other manufacturer was searched by DGCEI itself in the year 2002. The mode of operation of JSW was known to the department from the very beginning in fact show cause notice for the year 2002-03 is pending for final decision for this Hon'ble Tribunal. Therefore, no allegation for suppression of fact against the appellant cannot be made if show cause notice was issued on the same issue prior to the impugned show cause notice. The appellant relies on the following decisions- (a) Nizam Sugar Factory vs. CCE - 2006 (197) ELT 465 (SC) (b) CCE vs. Chemphar Drugs - 1989 (40) ELT 276 (SC) (j) The allegation that the appellant was manufacturing the branded goods of HSW is also not substantiated even by the statement of Sh. Ghosal an official of HSW. Sh. Ghosal has confirmed the statement of the appellant that they were not marking the finished goods supplied to HSW with the brand name "Hindware" or "Rassi". They were only mentioning model name of the products manufactured for supply to Hindware. Such supplies are not considered as manufacture of th....

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....ed out by the ld. Counsel for the appellant. As per Rule 22 of the CESTAT Procedure Rules, the appeal filed by GU abates alongwith the penalty imposed on Sh., Raj Kumar Jindal. This view is also supported by Apex Court decision in the case of Shabina Abraham vs. CCE - 2015 (322) ELT 372 (SC). 9. Case of the department is that JSW has evaded duty by exceeding the exemption limit under Notification No. 8/2000 (SSI exemption) by showing the clearances of goods under the group companies i.e.- Sl. No. Name & Address of the Group Units Name of the Prop. / Partner Relationship with Sh. R. N. Jindal Products 1 M/s Sun Shine Industries (SS) T-5/241, Mangolpuri Indl. Area, Phase-I, Delhi Sh. Ajay Kumar Jindal, Propiretor Younger Brother Bath Tubs, Cistern Seat covers etc. 2 Ganesh Udyog (GU) T-2/201, Mangolpuri Indl. Area, Phase-I, Delhi Sh Raj Kumar Jindal, Proprietor Elder Brother Cistern and other platic accessories, Corner Mirror frames, Seat covers 3 M/s Century Poly Tech (CPT) 262, Swarn Park, Udyog Nagar, Mundaka, Delhi Sh. Anil Kumar Goyal, Proprietor Brother-in-law Acrylic Bath Tubs Kitchen Sinks 4 M/s Super Plast ....

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.... have been reflected in the books of accounts separately in each company. 12. The investigation undertaken has clearly brought out that finished goods i.e. bath tub, PVC cistern and seat covers were being manufactured in SS and JSW whereas the invoices were being issued from GP and payment was received as reflected in the books of accounts. 13. After appreciation of overall evidences - both documentary as well as oral - picture that emerges is that none of the companies had the full infrastructure to manufacture the goods they were shown to make. The final assembly of goods said to be manufactured in different units. For moving the goods from one unit to another unit, some times, kachhi parchies were used. There is no clear evidence of flow back of funds among the units. All these evidences lead to an escapable conclusion that all the units were having separate existence in record by taking separate registrations under sales tax/ income tax etc. They were also filing separate declarations every year to Central Excise authorities claiming that their turnover was below the SSI limit. However, the investigation has established that all units though were shown to have separate de....