TaxTMI 
TaxTMI 
2018 (10) TMI 16
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.... (i) Certain records pertaining to M/s. Weldon Closures (WC) and M/s. Emcee Crowns Pvt. Ltd. (ECPL) were found in the premises. M/s. Weldon Closures were shown to be functioning from 39/48, 12th KM, Kanakapura, Bangalore. M/s. Emcee Crowns was said to be functioning at Kunigal Industrial Area, Kunigal. (ii) Mr. Prasanth Hegde was chair person of both M/s. MCPL and M/s. ECPL and Shri K. S. Dilip was the Director, who was attending to the work of both the companies. Shri Hedge in his statement dated 4.5.1994 admitted that excisable goods were moved from one unit to another unit for further operations without following any Central Excise procedures. (iii) Enquiries revealed that M/s. ECPL were procuring tin from M/s. Tin Plate Company and the entire material were received at M/s. MCPL. However, M/s. ECPL have availed the MODVAT credit on the same. (iv) Shri Anantha Rao in his statement dated 25.7.1994 stated that M/s. WC is a small unit having their factory at 307, Murugeshpalya, Bangalore 17; they were manufacturing crown corks for supply of manufacturers of aerated waters in Bangalore and Tamil Nadu; their turnover was less than Rs. 30 lakhs; the sale b....
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....adras; M/s. Bangalore Soft Drinks, M/s. Karnataka Beverages, etc. He procured raw materials from M/s. Bharath Metal Printers, M/s. Encore Exports; payments were made by DDs; he had only used KEB power and rented generators from local people during February to June; he utilised the services of M/s. MCPL's employees; the records left over by him in the company were seized by the Central Excise. (x) Tin sheets allegedly belonging to M/s. ECPL were also found. These materials were received at M/s. MCPL premises under subsidiary gate passes/endorsed gate passes to M/s. ECPL and the consignments were addressed directly to M/s. MCPL and latter, diverted to Kunigal. M/s. ECPL had availed MODVAT credits and the diversion of such goods was not disclosed to the Department either by M/s. MCPL or M/s. ECPL. (xi) Shri Mahesh Hegde, Account Assistant has been handling the Central Excise records; he signed differently while handling correspondences of M/s. MCPL and M/s. WC, which was confirmed by the Government Examiner of Questioned Documents. 3. On completion of investigation, a show-cause notice was issued seeking - (i) Central Excise duty of Rs. 21,72,955.80 on th....
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....s. WC. There is no evidence produced by the department that M/s. WC was not in existence. 4.1 The Proprietor of M/s. WC Shri Anantha Rao clearly stated that he had the facility to manufacture crown corks and that he had punching machine, dye setting machine and tools necessary for manufacture of crown corks. He had supplied crown corks to M/s. Kali Aerated Water Works; M/s. Bangalore Soft Drinks and M/s. Karnataka Beverages. The buyers have confirmed that they have received goods from M/s. WC only. He submitted that as held by Tribunal in LD Industries: 2003 (59) RLT 154 clearance of limited companies cannot be clubbed with other firms. It is now well settled law that in the absence of common funding, mutuality of interest and financial flow back clearances of an independent unit cannot be clubbed. They relied upon the following cases: (i) Assistant Collector vs. Shri J. C. Shah: 1978 (2) ELT 317 (SC) (ii) Satyanarayan Textiles vs. Collector: 1989 (43) ELT 729 (T) (iii) CD Industrial Engineers vs. Collector: 1983 (14) ELT 1944-CEGAT (iv) Prima Control (P) Ltd. vs. Collector : 1994 (72) ELT 62 (T) (v) Padma Packages (P) Ltd. vs. ....
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....icating M/s. MCPL. 4.4 Merely on the basis of records being found with another unit, clearances cannot be clubbed in view of the ratio of the case in Geeta Valves and Engg. Pvt. Ltd.: 1996 (87) ELT 672 (Tri.). There was no evidence shown that the money was transferred to MCPL accounts, therefore, in view of the following clearances cannot be clubbed. (i) Ambica SCDE Manufacturing Works: 1996 (86) ELT 229 (T) (ii) Renu Tandon: 1993 (66) ELT 375 (Raj.) (iii) Sprint Fresh Drinks: 199 (54) ELT 333 (iv) International Dye Stuff Manufacturing Co.: 1991 (53) ELT 85 4.5. It was alleged that goods supplied to M/s. Brooke Bond were manufactured in the name of M/s. WC, on the basis of a dairy maintained by Shri Armstrong. As a matter of fact, they were manufactured by M/s. WC and were sold to M/s. ECPL and eventually supplied to M/s. Brooke Bond. This was clear by the statement of Shri Dineshan the Assistant Manager of Brooke Bond. 4.6 The learned Commissioner erred in not considering the settled legal position that the goods lying in the factory cannot be confiscated when no attempt has been made to clear the same without payment of duty. He has re....
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....oner has imposed penalty under Rule 173Q whereas the Department has not proved with any evidence that M/s. MCPL has manufactured and cleared crown corks. When manufacture and clearance; and consequent duty evasion is not established, penalty cannot be imposed upon. They have relied upon Tamil Nadu Housing Board Ltd.: 1994 (74) ELT 9 (SC). 4.10 The allegation that 2036 Nos. of PP caps were removed without payment of duty on the reason that a shortage was found is arbitrary as the same has not been physically determined and ever proved to be cleared. 4.11. Hon'ble Tribunal vide its Final Order dated 5.3.2003 observed that all the submissions made by the appellants be considered, however, the Commissioner has ignored all the valid submissions. 4.12 A case was booked in 1987 by the Department on similar lines of clubbing clearances of M/s. MCPL and M/s. WC. It was ultimately dropped by CEGAT. 4.13 Lastly, the counsel submitted that, in case, the Tribunal decides that duty is payable by the appellants, cum- duty price may be allowed for payment of duty as held in in Maruti Udyog: 2002 (49) RLT 1 (SC). 5. The learned Departmental Representative has submitted that the ca....
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....Hegde, brother of Shri Prasanth Hegde and was wrongly deposited in the account of M/s. WC instead of M/s. ECPL. (v) Shri Ganesh Ram, employee of M/s. MCPL on 16.6.1994 stated that on request from Shri Anantha Rao, he collected payments from M/s. Balaji Bottlers. (vi) Shri Mahesh Hegde of M/s. MCPL has accepted that he has maintained excise records of the both i.e., M/s. MCPL and M/s. WC. He confirmed that scrap was not accounted in RG-1 register. Shri Mahesh Hegde used to sign the different registers differently. On being requested by the Department, Government Examiner of Questioned Documents has confirmed the handwriting in both the registers to be of the same person. (vii) Shri K. S. Dilip, Director of M/s. MCPL in his statement dated 27.6.1994 confirmed that the crown corks were printed and cut at M/s. MCPL but punching was done in M/s. ECPL. Movement of goods was without challans and without following procedures. Material belonging to M/s. ECPL was received at M/s. MCPL but not recorded anywhere. (viii) 8411 kg of tin sheets indented by M/s. ECPL under challans K821 dated 8.6.1993 and K595 dated 27.5.199 were found entry at No.76, of the sto....
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....35) ELT 671 (Tri.) iii. Mitex Impex vs. CCE: 2017-TIOL-441-HC-AHM.-CX iv. M/s. NGA Steels (P) Ltd. vs. CCE: 2017-TIOL-440-HC-MAD.-CX 7. Heard both sides and perused the records of the case. The Department relies/alleges on the following facts ascertained during the investigation. (i) M/s. WC is a fictitious or non-existing entity. It was created only on paper. The records pertaining to M/s. WC were not only found in the premises of M/s. MCPL but were maintained by the personnel of M/s. MCPL. Goods were manufactured in M/s. MCPL only and cleared in the name of M/s. WC. (ii) The amounts pertaining to the sale proceeds of M/s. WC were deposited in the Catholic Syrian Bank but were withdrawn by the personnel of M/s. MCPL. Shri N.C. Joshi, Manager of M/s. MCPL in his statement dated 15.6.1994 has accepted that the amounts belong to Mr. Ullas Hegde, brother of Mr. Prasanth Hegde, the MD of M/s. MCPL. (iii) Shri Mahesh Hegde has maintained excise records of both M/s. MCPL and M/s. WC and he used to sign the different registers in a different fashion. This was confirmed by Government Examiner of Questioned Documents. (iv) Shri ....
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....t on job work to M/s. MCPL and mere non-maintenance of records and non-observance of procedures shall not take away the substantial right to avail credit. (vi) The Department has not issued any show-cause notice to M/s. WC, the allegedly dummy company, therefore, the entire proceedings are vitiated in view of the judgment of Chennai Bench in the case of Poly Resins: 2003 (161) ELT 136 (Tri.-Chennai). 7.2 We find that the appellants were vehemently contending on the fact that there was no facility to manufacture crown corks in the factory of M/s. MCPL. Therefore, it cannot be alleged that they have manufactured and cleared crown corks. During the cross-examination on 1.9.2005, during the de novo proceedings, on being told that mahazar dated 3.31994 contains details of machinery and records seized and on being asked as to whether M/s. Metal Closures had infrastructure to manufacture crown corks, Shri Manivannan, Superintendent of Central Excise, stated categorically that there was no facility for manufacture of crown corks in M/s. MCPL. Similarly, we find that Shri M. B. Mammoo (now name officially changed as M.B. Mahmood), during cross-examination on 9.8.2005 stated that....
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....es as submitted by the learned counsel: i. Sapna Engineering: 2006 (201) ELT 201 (Tri.-Mum.) ii. Radhika Hydraulics: 2015 (328) ELT 109 (Tri.-Ahmd.) iii. Vijay Packaging Systems Ltd.: 2010 (262) ELT 832 (Tri.-Bang.) 7.3. We find that the learned AR has mainly relied upon cases where in clandestine manufacture etc are discussed, However, these cases do not discuss the facts of the instant case in as much as absence of manufacturing facilities are concerned. Therefore, as far as the allegation of manufacture and clearance of crown corks by M/s. MCPL, in the name oif M/s WC is concerned, we find that the appellants have a point. The SCN and the order in de novo are silent on the claim that the appellants had no manufacturing activity. Whereas, the show-cause notice alleges that the crown corks have been manufactured in the premises of M/s. MCPL, the Order-in-Original talks of crown corks have been manufactured in the premises of M/s. ECPL. We find that the Department has not issued show-cause notices either to M/s. WC or to M/s. ECPL. Following the ratio of the judgment of the Tribunal in the case of Poly Resins (supra), we find that the assessee's conten....
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....ographic Limited: 2010 (257) ELT 11 (SC). 7.6. Coming to the other allegations, we find that the Department has made a strong case in their favour so far as the removal of PP caps clandestinely by M/s. MCPL, clearance of scrap clandestinely by M/s. MCPL and irregular availment of MODVAT credit by M/s. MCPL and irregular availment of MODVAT credit by M/s. ECPL. We find that the appellants have not submitted any cogent reasons on their behalf for the above allegations, as it is evident from the records like job register, productivity status register, production register and the statements of different officers of the appellants, the department's allegations are valid. The only defence taken by the appellants was that, the registers were written at the behest of Shri K. R. Sridhar, who was removed by them, cannot be relied upon. We find that such defence is not acceptable and does not answer the questions raised in the show-cause notice. As discussed above, the show-cause notice was able to bring out from various records and statement of the officers of M/s. MCPL that clandestine removal of PP caps and scrap has taken place. No entries have been made in the statutory records like R....