TaxTMI 
TaxTMI 
2019 (3) TMI 1476
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....re 31.03.2019. The learned counsel on either side are at liberty to make a mention before the roster Judge thereafter." 2.1 The facts of that matter are that ADR plastics, (the appellants herein and referred to as ADRP), ADR Agencies (hereinafter referred to as ADRA), Raj Plastics, (hereinafter referred to as Raj) were units engaged in the manufacture of 'ADR' brand household articles of plastic like buckets, tubs, mugs, cups etc. One Shri D. Gunasingh @ Pitchai is a Partner of ADRP and Raj and Managing Person of ADRA. Consequent to investigation by the Directorate General of Central Excise Intelligence (DGCEI) and searches of the factory and other premises of these three entities, including the statements recorded from Shri A. DuraiRaj, Partner of ADRP, D. Azir, partner of Raj, D.Gunasingh, Partner of ADRP and various dealers two show cause notices were issued to ADRA and Raj. Vide SCN No.162/2012 dt. 31.12.2012, it was alleged that these three entities should be treated as single financial entity constituting one single manufacturer, the manufacturer being ADRP represented by D. Gunasingh; that the said D.Gunasingh started ADRA and Raj camouflaging the true nature of their act....
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....Raj and ADRA are totally justified in this case. (viii) ADRP represented by D.Gunasingh is the real manufacturer and duty is to be demanded from ADRP. (ix) The computation of aggregate clearances arrived at by clubbing the value of both accounted and unaccounted clearances from the group units is correct which works out to Rs. 1,74,97,316/- as detailed in worksheet to SCN. (x) ADRA, Raj and Gunasingh have indulged in suppression of actual production and clandestine removal of plastic articles manufactured by them without accounting raising invoices. The proposal for confiscation of unaccounted goods and raw materials seized from the premises of ADRA and Raj, are liable for confiscation under Rule 25 of the Central Excise Rules, 2002. 2.4 Based on these findings and conclusions, the adjudicating authority inter alia, ordered as under : (i) ADRP, ADRA and Raj should be treated as single financial entity constituting one single manufacturer, the manufacturer being M/s.ADR Plastics represented by Shri D. Gunasingh. (ii) The value of clearances of three units should be clubbed together to decide eligibility of small scale exemption under Notification No.8/2003 dt....
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....tween them. v) Each unit has its own plant & machinery and there is no interdependence between the units. vi) There is no intermingling of goods manufactured, because each unit manufactures different products. vii) Each unit has separate Electricity Service Connection, Diesel Generator for generation of power. viii) Each unit is housed in different, distinct and independently identifiable geographical location storing the raw material, production & processing of materials and finished products of each unit separately for clearance. 3.3 Further the appellants wish to submit that the capital of each of the firms are separate and there is no transfer or use of funds between the three units. Each firm has its own banking account and they generate funds by means of loans and credit facilities from Banks independently. There is no flow back of fund from one firm to the other and entire operations of the firms are done independently. Thus, the most vital element of 'financial participation' for establishing common units, is absent in the present case. As such the allegation that the appellant has pervasive financial control over the other two unit is....
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....r in terms of Section 9D, the doubling of accounted value of clearances based on statements recorded from them is not sustainable at all. Moreover, on the basis of such statements recorded in May 2010, the value of accounted clearances made during the year 2010-11 and 2011-12 also has been doubled without any other evidence, which is also arbitrary and not tenable at all in the absence of any other evidence. 3.6 During the year 2010-11, the appellant has got registered with the department and thereafter made clearances on payment of appropriate duty. The details of such payment of duty is tabulated in Annexure E14. However, the SCN had not adjusted payment of duty of Rs. 22 lacs made by the appellant during the years 2010-11 and 2012-13, and instead has demanded duty even on such value of duty paid clearances which is not at all sustainable. 3.7 Statement of Shri R Venkatesh, Supervisor of Raj Plastics was recorded on 21.7.2010 and on 28.8.2010. In the latter statement, it has been recorded from him that estimate quotations contained the actual details of supplies made to various dealers and these sheets were prepared by him using the computer available in ADR plastics as dir....
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....Section 36B has not been complied with. As such, the pen drive and the print out taken from such pen drives are not admissible as evidence. In this regard, the following decisions are relied upon : (a) Indroyal Furniture Co Pvt Ltd - 2019 (1) TMI 770 CESTAT Chennai (b) Agni Steeels Pvt. Ltd. - 2019 (2) TMI 934 CESTAT Chennai (c) Popoular Paints & Chemicals - 2018 (8) TMI CESTAT New Delhi 3.10 Entire proceedings of alleged clandestine manufacture and clearance as well as clubbing of clearance has been made mainly based on evidences recovered from third parties such as raw material suppliers, job workers, buyers, etc and statements recorded from such third parties and based on the contents of pen drives seized from the opposite unit and statements recorded from Shri D Gunasingh and other partners/employees of the above three concerns. 3.11 The appellant wish to place reliance on the following decisions : a) SreeNirmal Spinners - 2014 (300) ELT 469 CESTAT Chennai b) Balsara Hygeine Products Ltd - 2012 (278) ELT 526 - Revenue appeal was dismissed by Hon'ble Apex Court as reported in 2015 (321) ELT A146. c) Electro Mechanical Engg Corporation - 2008 (229) ELT 321....
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.... As regards the discrepancy between the sales details in the computer print outs and the Sales Bills of ADR Plastics, she admits the discrepancy and the above print outs containing the Sales Ledger Accounts are the ones taken from the two pen drives maintained by her and seized by the officers from ADR Plastics on 09.03.2010. She has made entries in the said two pen drives on the basis of the details given to her by Shri D.Gunasingh. She has also prepared the sale bills only on the basis of the details given to her by Shri.D.Gunasingh". 4.4 Shri D.Gunasingh in his further statement dated 26.09.2012 (Marked as Sl.No.32 of annexure-C to the SCN No.162/2012 dated 31.12.2012 - Pages 50 to 52 of the SCN), he had accepted that "the sales details contained in the pen drives I & J seized related to sales made from all their units, i.e., ADR Plastics, ADR Agencies and Raj Plastics. But they have not maintained any accounts to show how much cleared from each unit". 4.5 Shri D.Gunasingh in his statement dated 09.03.2010 and Smt.P.Amsavalli, their Computer Operator vide her statement dated 30.08.2010 have admitted the above facts. The notice did not dispute the veracity of the pen ....
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.... times more than that of the value mentioned in the bills received from ADR plastics, ADR Agencies and Raj Plastics; that the rates shown in the bills and the actual amounts paid in respect of the certain items received from ADR Plastics and their Group Companies as under : Description Bill amount in Rs. Actual Amount in Rs. 5 Lr Bucket (1 dozen) 102 246 9 Lr Bucket 8 28 10 Lr Bucket 12 35 25 Lr Drum 30 97 iv) Shri T.KamalRaj, Proprietor of M/s.Kamal Plastics Store, Coimbatore had admitted, in his statement dated 11.05.2010 (marked as Sl.No.19 of Annexure-C to the SCN - Page 34 of the SCN) that " He used to inform Shri SelvaRaj of ADR Plastics about their requirements of plastics articles and the goods will be received through Vinayaga Parcel Service; that they used to get the bills from ADR Plastics or ADR Agencies or Raj Plastics by couriers; that however, most of the times the description of goods in the bills received from ADR Group concerns will be different from that of the goods actually received by them and the bill value will be only half the value of the goods received by them; that he used to pay the amounts mentioned in th....
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....eceive bills of ADR Plastics or ADR Agencies or Raj Plastics for less quantity of goods with less value as against the actual quanity and actual value of the goods supplied; that sometimes they do not get any bills for the goods received from them; they used to make payments in cash in respect of the goods received to Shri Gunasingh based on the details contained in the Estimate Quotation he used to bring with him after making entry on the same about the payments made to him". ix) Shri A.Joseph, Manager of M/s.Annai Plastics, Tirunelveli, in his statement dated 30.07.2010 (Marked as Sl.No.25 of Annexure-C of the SCN - Page 40 of the SCN) had confessed that "he admits the receipt of the goods as mentioned in the Chits from ADR Plastics; Shri Gunasingh would send the goods as per the orders and send the bills of ADR Plastics, ADR Agencies and Raj Plastics. These bills would show less quantity and reduced value. Sometimes the goods are sent without bills; Shri Gunasingh would personally bring the chits titled 'Estimate Quotation' showing the actual quantity of the goods supplied and the actual values thereof, while coming for collection". x) Shri M.Mohammed Raffic, Proprietor of....
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....encesbefore law as per Section 9D of Central Excise Act, 1944, as the statements have been recorded under Summon proceedings as per Section 14 of the Central Excise Act, 1944. 5.4 Hence, the value determined in terms of paras 18 & 19 of the SCN by doubling the sale value furnished in their Ledger Accounts is justifiable and the determination of the actual value of clearances of accounted sales from unit of the group is in order. That the impugned order calls for no interference. 6. Heard both sides and have gone through the facts. 7.1 In writ petitions filed by Raj, D.Gunasingh and ADRA before the Hon'ble High Court of madras (Madurai) Bench, the Hon'ble High Court in their order dt. 31.01.2019 referred to supra noted that ADR Plastics has filed regular statutory appeal before CESTAT Chennai numbered as E/40595/2015 and took the view that the Court should have the benefit of the order passed by the CESTAT Chennai in the said appeal and directed for disposal of the said appeal on merits and in accordance with law on or before 31.03.2019. 7.2 The issue that comes up for decision in this appeal is whether the clubbing of clearances of ADRA and Raj with ADRP (appellants her....
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...., were again taken to the factory premises on 21.05.2010 to be browsed using Tally Software installed in the computer of ADRP. However, from the records it is not forthcoming if the Certificate as required under Section 36B (4) of the Central Excise Act was recorded from Ms.Amsavalli the computer operator of Raj Plastics. Hence the mandatory requirements of Section 36B ibid have been clearly followed in the breach. It is also pertinent to note that although pen drives and CPU were seized on 09.03.2010, the data therein was admittedly copied / printed out only on 20/21.05.2010, i.e after more than two months. The statement of Ms.Amsavalli, Computer Operator of Raj Plastics was recorded after a further gap of three months, on 30.08.2010. It also emerges that the said Ms.Amsavalli had joined Raj Plastics less than a month before the seizure of the pen drives, namely, on 14.02.2010. In the circumstances, we find that Ld. Advocate is correct in his assertion that the requirement of Section 36B have not been complied with; so also, the evidence of a newly joined employee (Ms. Amsavalli) cannot be relied upon. 7.6 This Tribunal has echoed the sanctity of Section 36B in the decisions of....
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....arding usage of unauthenticated software, we find that we have not allowed the revenue in our Final Order to put to use any files opened with unauthenticated software in the remand proceedings ordered. This application is rejected." 14. Thus, as seen from above, the Tribunal had clarified that Revenue has no right to use any files opened with unauthenticated software in the remand proceedings. In the denovo proceedings, the Commissioner has therefore excluded the evidence obtained from the filed opened with unauthenticated software. As seen above, in the impugned order it is discussed in detail the reason for dropping duty demand of Rs. 7,60,79,469/-. Therefore, we do not find any merit in the appeal filed by the department in E/401/2009 requesting to interfere with the dropping of the said demand of duty." 7.7 In the circumstances, we are of the considered opinion that the printouts taken from the pen drives cannot be said to have passed the strict proceduralities mandated in Section 9B ibid and hence cannot be treated as admissible evidence. 7.8 We find that in their reply dt. 19.05.2014 of ADR Plastics and reply dt. 17.11.2014 to the SCN, the appellants had given ....
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....ecorded from them as admissible evidence. We therefore find merit in the contention of Ld.Advocate that such statements which have been recorded, relied upon and however not cross examined even after a specific request was made for the same by the appellant, cannot be considered as admissible evidence. In reaching this conclusion, we draw sustenance from a slew of decisions of various higher appellate forums. For example Vijaya Samundeshwari Textiles (P) Ltd. and others - 2017 (11) TMI 815- CESTAT Chennai, where this very Bench, relying upon the judgment of the Hon'ble High Court of Delhi in the case of J.K Cigarettes - 2009 (242) ELT 189 (Del.), held that in the absence of examination of witnesses of the cross examination, the statements are inadmissible evidence and the demand of duty based on such statements alone is unsustainable. We are therefore of the considered opinion that the denial of request for cross examination by the adjudicating authority will only serve to vitiate the entire proceedings particularly when the purported corroborative documentary evidence in the form of printouts from pen drive have been held to be as failing the test of Section 36B ibid. 7.10 It i....
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....the clearances of ADRP is required to be clubbed with that of ADRP and Raj are not on a sound or legal footing. There is no allegation that the three units have separate manufacturing set up with their own machinery. There is also no allegation that there is any transfer or use of funds between the group units and that there was financial flow back between them. On the other hand, as has been consistently argued by the appellants right from the reply to SCN, each of these entities have separate bank accounts, separate registration under the Factories Act, ESI Act, PF Act and Sales Tax Act. separate Income tax Permanent Account Number (PAN) and separate employees, without any deputation of employees between them, no interdependent between the units in respect of plant and machinery. There is no charge of intermingling of goods manufactured since each units manufactured different products. Each unit have separate electricity service connection, and capital of each firm is separate. Nothing has been brought on record during investigation or brought forth in adjudication to disprove or demolish the above averments of the appellant. This being so, only for the reason that D.Gunasingh is....