TaxTMI 
TaxTMI 
2018 (5) TMI 1300
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....sent appeals are that, the assessee-Appellants and its franchisees were engaged in the manufacture and sale of cigarettes. A search was conducted on 08.06.1993 at the factory and office premises of M/s M.P. Tobacco Ltd. (MPTL); M/s Tamilnadu Tobacco Co. Ltd. (TTCL); M/s Kanpur Cigarettes Ltd. (KCL); M/s Tirupati Cigarettes Ltd. (TCL); M/s Chinar Cigarettes (P) Ltd. (CCPL) and other franchisee units of GTC, but no search was conducted at the business and residential premises of GTC. However, the accounts of GTC were examined by the Revenue authorities. 4. All the franchisee units were manufacturing cigarettes in the brand names owned by GTC which were sold to GTC directly or their distributors/other franchise units on the directions of GTC. The franchise units of GTC paid royalty to GTC. However, on verification of the said records, it was found that there were duplicate invoices and somewhere duplicate entries were also made in the books. In some cases, for the invoices bearing same serial number, the bill amounts were different. In the case of two invoices of the identical serial number, first original invoice was supported by the original gate pass and the other original invoice....
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....earned Chartered Accountant that the records seized from the premises of the assessee-Appellants or its franchise units did not show iota of evidence to prove clandestine removal of the cigarettes. No reference to any such evidence has been made in the show cause notice or the order-in-original. The quantification of clandestine removal of cigarettes has been made only on the basis of bill acceptance register maintained by GTC to manage the timely payment of bills discounted from the banks including the accommodation bills which was also not seized but was produced by GTC on demand by the Excise Officers after the searches in the premises of the manufacturing franchisee units. No purchases on the basis of these duplicate bills were ever recorded in the financial books of account of GTC as has been alleged in the show cause notice, whereas factually only one purchase on the basis of the original bill was recorded in the books of account. The amounts received from the banks by the franchisee units on the original bills discounted were utilized by them against their purchases/expenses etc. However, the amounts received by them on discounting of the duplicate bills were transferred to ....
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....y nature whatsoever has been taken against the Excise Officers in all the cigarettes supplying manufacturing units located all over the country, so allegation of clandestine removal cannot be sustained. He also submits that duplicate bills were merely an accommodation bills and there was no actual physical movement of the goods. All the transactions were duly recorded in the books of accounts of both the parties. He also informed that ITAT has deleted the additions made on this ground under the Income Tax Act for the assessment year 1992-93, so similar treatment may be given in the present case. 12. As per the statement of learned Chartered Accountant, penalty under Section 209A cannot be imposed on corporate body and, therefore, GTC is not liable for the said penalty. In an alternative plea, he submits that if the Excise Officers and management of GTC were in any manner involved or engaged in clandestine removal of cigarettes as has been mentioned in the show cause notice, yet no benefit of such removal came into the coffers of the company and any benefit by way of profit on account of sale or purchase were taken away by them to the entire exclusion of the Company GTC. At the mos....
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....e of the show cause notice and is contrary to the evidence of the officers of the Bank who were concerned with discounting of bills. It is also seen that the statements of the Bank Officers that they were not concerned with physical verification of movement of goods have been mis-interpreted by the noticees to give the impression that discounting could be done without the movement of goods in spite of endorsement on the documents by GTC of receipt of cigarettes. During the course of arguments, the learned DR read out para 97 of the impugned order wherein it is stated that manufacture of cigarettes is subject to physical control and the Department has also prescribed a detailed Cigarette Manual which regulates every activity in connection with the manufacture of cigarettes. It was also contended that demands on the basis of clandestine removal cannot be made and established in cases where there is physical control except through unimpeachable evidence of clandestine clearance. According to him, the assessee-Appellants purchased tobacco from GTC through supplies made by M/s Deccan Tobacco Processors Pvt. Ltd., Hyderabad (DTPL). Thus, bills were discounted with the banks for their tra....
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....ss consumption of raw material/electricity has been proved. 21. In these circumstances, it appears that the duplicate bills were generated merely an accommodation bill and there was no actual physical movement of the goods. As per the procedure, when the goods are discounted and despatched by the franchisee unit to GTC without original invoices, the bill signed by the seller is raised, the excise duty is paid thereupon and original excise gate pass, is self-supporting evidence for despatch of the goods. The buyer acknowledges the receipt of the goods on the bill confirming that the goods have been received. But in case of duplicate/accommodation bills, the goods were not received but only for the purpose of discounting, the receipt is acknowledge with no corresponding evidence of actual movement of the goods. These documents in original along with a Hundi accepted by buyer and were presented to their bank by the franchisee units for bill discounting. The amount of the bill after deducting charges and interest for the period of bill (normal 90 days) is credited in the bank account of the franchisee units at the time of discounting the bill by the bank. The same is paid by the buyer....