TaxTMI 
TaxTMI 
2018 (10) TMI 635
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....le to the scaffoldings / propping equipments manufactured on job work basis and supplied to construction companies and the appellants are liable to pay central excise duty, as the value exceeded the limit of SSI exemption. Based on the documents recovered, investigations conducted with the purchasers of scaffoldings / propping equipments and also statement of A. Ganesan (appellant herein), show cause notice was issued proposing to demand central excise duty to the tune of Rs. 1,32,04,174/- along with interest and also proposing to impose penalties under section 11AC of the Central Excise Act, 1944 and Rule 25 of Central Excise Rules, 2002. After due process of law, the adjudicating authority confirmed the demand of Rs. 1,32,05,174/- and imposed equal penalty under secdtion11AC of the Act ibid. Aggrieved, the appellant is now before the Tribunal. 2. On behalf of the appellant, ld. counsel Shri S. Jaikumar appeared and argued the matter. His submissions can be broadly summarized as under:- 2.1 That the manufacturing of scaffolding/shuttering etc., was carried out through independent job workers after procuring purchase orders for such items from the customers. 2.2 The app....
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....e has failed to record the fact as to whether the appellant had sufficient manpower/ purchase and consumption of raw materials/ basic infrastructure/machineries to manufacture such goods; 2.9 The affidavits submitted by the job workers would also support the contention of the appellant. 2.10 The respondent has brushed aside the depositions of the job workers on the grounds that those were subject to doubt, which is totally illogical. 2.11 The respondent failed to accept the fact that the items were manufactured by the independent job workers on job work basis and not by the appellants. The job workers have their own machinery and work force to do the operations. The appellants had no control over the job workers in the matters such as production, finance and administration. The transactions are on principal to principal basis. Job workers would raise labour charge bills on the appellant and the appellant would pay the labour charge to the job workers. Hence, the appellants are not liable to pay excise duty for the goods manufactured by job workers. 2.12 Extended period of limitation cannot be invoked in this case, since the appellant is not involved in any manufacture a....
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....that in the statement dated 8.12.2006, he has admitted that they were manufacturing and supplying scaffoldings / propping equipments on job work basis. In fact, the construction companies had given order to the appellant for manufacturing the goods which is very much clear from the statements recorded at the time of inspection. The contention of the appellant that they have supplied the raw materials to job workers who had in fact manufactured the finished goods has been proved to be false by the very fact that many of the job workers given in the list provided by the appellant did not exist at all. On investigation conducted by the investigative team, as per the directions of the adjudicating authority, it was brought out that the persons in some of the addresses given by the appellant did not exist. The appellant had given details of 16 persons of so called job workers. Out of these, only 6 persons admitted that they are job workers. The other 5 persons have given evasive answers with regard to the transactions done with the appellant. The others did not exist at all. He stressed that the transactions by the appellant with the so called job workers was only by cash and there were....
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....ne, drilling machine, grinding machine, welding machines etc. are needed to carry out these activities / operations. Though the operations may be less complicated but it is essential for a manufacturer to have certain machines to carry out these operations. Mere fact that there were no machines in the premises at the time of inspection would lead to the strong inference that the appellant has not carried out any manufacturing activity in both the premises. 5.1 The argument of the ld. AR is that since the appellant has sold such goods to various construction companies, the only inference that can be made is that the appellant has manufactured such goods. We are not able to agree with this argument. The appellant has given list of 16persons who had done the manufacturing activity as job workers. The adjudicating authority formed an investigation team to carry out inquiry with regard to these 16 persons. Statements were recorded from some of these persons. Six out of them admitted to have done the job work and supplied goods to appellant but denied to have issued / signed the delivery challans which were produced by the appellant. These persons were subjected to cross-examination. ....
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...., they have admitted to have manufactured the goods and supplied to the appellant. Therefore any infirmity in the affidavit, in our view, has been rectified by the statement of these persons who have deposed before the adjudicating authority. In para 17, the adjudicating authority has noted that there are no records to show that verification of either stock or activities carried out in the premises was conducted. It is also admitted that the statement given by Shri A. Ganesan is cryptic and does not give clear details as to whether he engaged in manufacture of impugned goods. From such statement, not supported by any document, the adjudicating authority has vaguely presumed that Shri A. Ganesan has manufactured the impugned goods. In our view, the statement given by Shri A. Ganesan does not put forth any evidence that he has manufactured such goods. In para 22, the adjudicating authority has noted as under:- "No doubt there are certain lacuna in the investigation as to the establishment of presence of machinery, manufacturing activities etc. in the premises of the noticee. It is settled law that defence case cannot be advanced by pin pointing loop holes / deficiencies in t....