TaxTMI 
TaxTMI 
2018 (4) TMI 1307
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....r heading 64 of the Central Excise Tariff Act. They were issued show cause notices on the ground that they were showing as if the goods were procured from different Co-operative Society but from the investigations and statements of various persons of co-operative society it revealed that the footwears were actually got manufactured by the Respondent themselves though shown as procured from various societies. These societies neither purchased any raw material nor manufactured any footwear but the bills were issued for certain monetary consideration. The Respondents used these societies as conduits for taking inadmissible benefit of exemption under notification No. 198/98-CE dt.28.08.97 as amended. It was therefore proposed to demand duty and to impose penalty upon the Respondents alleging that they have manufactured and cleared footwear clandestinely. The adjudicating authority after considering the facts dropped the proposed demands holding that the goods were manufactured by the individual cobblers/ karigars and cleared through societies and that there is no evidence to show that the Respondents manufactured the goods themselves or got the same manufactured on their behalf. Hence ....
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....obblers and whole sale dealers. However they purchase bills from various co-operative societies. Cheques were issued in the name of concerned society for the amount shown in purchase bills. The said cheques were encashed by the Society and then the money was paid to cobblers who manufactured the goods. The authorised person of Societies in their statements has stated that Society did not produce footwears and the sales bill were prepared as per requirement of Joy Shoes and the amount received through cheques was paid back after deducting commission. That majority of the members of society were fictitious. That based upon investigation it appeared to the department that the Respondent was manufacturer of the footwear and that they had got the goods manufactured from the individual cobblers on their own. In case of M/s Metro Shoes Ltd., he submits that the chairman of Jai Bharat in his statement has stated that the society did not have any manufacturing unit and the machines/ equipments existing in the premises did not belong to it. That the society was taken over by Shri Rafique Malik of MSL through Smt. M.Z. Kerawalla and entire activity of society was controlled by Shri Malik. All....
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....alim Virani used to come along with the goods of Jaibharat. They used to put labels of "Metro" on footwear. Payment for packing was received from Jai Hind & Jaibharat by cheques signed by Smt. M.Z Kerawala. The Id. Special Counsel submits that the statements shows that the Societies did not manufacture any footwear or any leather goods nor did they supply any such goods to shoe shops. They only raised bills for commission and hence the statements are admissible as evidence. In case of Cheemo Leather Boutique (CLB), he submits that as found out from investigations and statements, the Society and their members w ere bogus and the Society did not have any manufacturing activity. He submits that same operandi was undertaken in case of M/s Dawood Shoes Pvt. Ltd., M/s Dawood & Co. and M/s Samurai Footwear P. Ltd. He submits that the adjudicating authority ought to have given credence to the statements and ought to have held that the assessee got the goods manufactured from undisclosed sources and hence they were liable to discharge duty liability. He also submitted that in her statement dt.27.05.97, Smt. M.Z. Kerawala the office bearer of Society had stated that "the footwear which was m....
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....ed as there were some genuine members in societies. The goods were manufactured by karigars and supplied through societies who were raising bills in the name of Respondents. The Respondents issued cheques in the name of society. The Footwears were received by the Respondents from other parties/ suppliers but the bills were raised and payments were received by societies. He also submits that affidavits of 12 individuals of Karigars/local small cobblers were relied upon in impugned order wherein it was submitted by the individuals "that they were small cobblers working from their residential premises with help from family members or 4-5 other karigars. They made samples and showed the samples to "Dawood companies" for approval and after getting order, purchased leather and other material and manufactured footwear and supplied the same to Jeevan Vikas Society/ Samta Society who gave it to Dawood companies. They received payment from societies. They were never given any raw material by the society or Dawood Companies." He submits that the Respondents had whole records showing entry of transactions with the societies viz Purchase registers, audited balance sheets which indicate that the....
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.... as manufactured by the Respondent ; the excise duty is recoverable from the Respondent as they have got the goods manufactured "on their behalf" by some persons.; that the goods has been clandestinely produced and cleared by the Respondents. The two basis adopted by the revenue are contradictory as on one basis proceeds on the premise that manufacture is done by the Respondent and the other basis proceeds under the premise that manufacture has been undertaken on behalf of Respondent. All the three basis are factually incorrect as the facts on records speak otherwise. The SCN itself admitted that the manufacture was carried out by the parties other than the Respondents by advertising the statement of Shri Amar Dhus, proprietor of R. K. Enterpris dt.27.01.1997, Ashok Jauni, Proprietor of Ashok Footwear dt.30.01.1997 and M.Z. Ker awala dt.09.01.1997 who was earlier manufacturing footwear in the name of M/s Sheeba International and thereafter was carrying out the manufacturing at a unit in the premises of Jaihind Society. Al l of them are independent entities supplying footwear to the Respondents. In statement dt.10.10.96 of Shri Jaluddin Kamdar, Chief Executive of M/s Metro shoes, de....
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....posed in the show cause notices on the ground that the Respondents are the manufacturers of footwears and that they had got the goods manufactured from unknown sources and the goods were shown to have been manufactured by societies which as per the department were bogus. The transactions were only on paper without any actual supplies made by the Societies. In case of M/s Empire shoes the fact which emerges from the statement of office bearers of the societies i.e Shri Shankar Shinde, Chairman of Bhartiya Charmkala Gramoudhyog Co-op Society dt.07.05.97, statement dt.11.06.97 of Shri Prakash V. Karande, Chairman Secretary of M/s Sahyadri Charmodyog Sahkari Mandal Ltd, Shri N.D. Shinde, Chairman of M/s Maharshtra Charmudyog Utpadak Sahkari Sanstha Ltd and Shri Amar P. Dhas, Chairman of M/s Navyug Footwear Industrial Co-operative Society Ltd. that the footwear was manufactured by the individual cobblers, certain number of cobblers were genuine members, the orders were placed directly on the cobblers or through society and the goods were manufactured by the cobblers. The footwear after manufactured were cleared to the Respondent through societies and in some cases the cobbler directly s....
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....t the societies were existing. The adjudicating authority has taken all such statements and inference into consideration. We find that though the revenue has alleged that the societies were only façade and not the real manufacturers but there is no enquiry as to who the real manufacturer is. We find that before demanding duty from the Respondents, it has to be shown that the Respondents have manufactured the goods and are covered by the charging provisions under Central Excise. No manufacturing activity has been shown to have been undertaken by the Respondents either by themselves or through any other person. Even if assuming that the statements of the office bearers of the society shows that they did not undertake any manufacturing activity but it does not make the Respondent liable for duty under the category of manufacturer. We find that none of the statements of the office bearers of the society show that the Respondent has manufactured the goods. On the contrary it is clearly evident from the statements that the shoes were manufactured by the cobblers/ karigars or entities and sold to Respondents through societies. Infact none of the statement shows that the Respondent ....
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....ars, individual cobblers and entities who supplied goods to the Respondent are the actual manufacturers. In order to show that the Respondents manufactured footwear there should be at least some evidences in the form that the materials and raw materials were brought by them or on their account, manpower or machines were deployed by them for such manufacture, availability of utilities and had some premises where the manufacturing activity took place. No such evidences is on record. No financial transactions has been brought on record to show that the Respondents were directly or indirectly engaged in manufacture of footwear. Therefore by no stretch of imagination the Respondents can be held as engaged in any clandestine manufacture and clearances of footwears. Our views are also based upon the Hon'ble High Court's judgment in case of Continental Cement Company Vs. UOI 2014 (309) ELT 411 (ALL.) wherein the Hon'ble High Court held as under: 12. Further, unless there is clinching evidence of the nature of purchase of raw materials, use of electricity, sale of final products, clandestine removals, the mode and flow back of funds, demands cannot be confirmed solely on the basis ....
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.... case of CCE Vs. Air Carrying Corp. (I) Pvt. Ltd. 2009 (248) ELT 175 (BOM), the Hon'ble Court held as under: 7. Rule No. 173-E of the Central Excise Rules deals with the determination of normal production and reads thus: - Rule 173-E. Determination of normal production. Any Officer duly empowered by the Collector in this behalf may fix the quantum and period of time when the production in the assessee's factory was considered normal by such officer having regard to the installed capacity of the factory, raw material utilisation, labour employed, power consumed and such other relevant factors as he may deem appropriate. The normal quantum of production during a given time so determined by such officer, shall form the norm. The assessee shall, if so required by the said officer, be called up on to explain any shortfall in production during any time as compared to the norm. If the shortfall is not accounted for to the satisfaction of the said officer, he may assess the duty due thereon to the best of his judgment, after giving the assessee a reasonable opportunity of being heard." When there is an allegation that the manufacturer has produced more goods and ....
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....il. Extensive repairs were carried out to the furnace during the years 2002-2003 and 2003-2004. About Rs. 44 lakhs were spent on the repairs to the furnace and the expenditure was accounted for in the books. Payment was made to the Chartered Engineer by cheque on 17th January 2003 i.e. prior to the commencement of the investigation in the present case. The certificate of the Chartered Engineer regarding the repairs carried out was produced before the Commissioner. The material on record showed that the roof of the furnace had developed a large hole resulting into a huge heat loss. Though statements of the Directors of the respondent no. 1 and some other persons were recorded, the statement of the Chartered Engineer who had certified the repair work was not recorded. If his certificate was to be disbelieved the Revenue could have and ought to have recorded his statement and/or called him for cross-examination. The Tribunal has held that the respondent 1 had explained the higher consumption of furnace oil and therefore the ratio of the case of Triveni Rubber (Supra) was not applicable to the present case. We find that on facts the Tribunal has properly distinguished the decision of t....