TaxTMI 
TaxTMI 
2018 (3) TMI 1841
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.... for manufacture of cotton yarn. After conducting a detailed investigation and recording of statements from the customers, workers, transporters, a show cause notice dated 14-7-1999 was issued to both the units, on two issues, (i) clubbing of value of clearances of both the units and denying SSI exemption and demanded duty of Rs. 3 lakhs (BED) and Rs. 45,000/- AED (T) and (ii). Demand of excise duty of Rs. 19,22,816/- (BED) and Rs. 2,88,422/- AED (T) on the cotton yarn in cheese form, cleared in the guise of Plain Reel Hank (PRH). 3. After due process of law, the adjudicating authority/Commissioner of Central Excise, Coimbatore, vide Order-in-Original No. 14 of 2001, framed the following points for consideration, "(a) Whether the clearances of M/s. Vyas Textiles A Vyas Testiles 'B' unit were to be clubbed for the purpose of the SSI exemption? (b) Whether the proviso to Section 11A can be invoked for demanding duty if the claimants were clubbed? (c) Whether the assessee have cleared cheese yarn in the guise of hank yarn? (d) If so, the quantum of such clear....
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.... of filing the application for registration. 26. Now, coming to the question whether there was any suppression at all in the case. I see front the file that, the assessee have declared the unit, as Unit 'B', the address as the same as that of the 'A' unit, the address of the applicant also the same as that of the unit 'A'. The unit is also situated in the same premises which has been clearly indicated in the ground plan filed along with the application. Both the units fall under the same Range Office. In the circumstances the department cannot say now that facts were not known to them, the department had the knowledge of existence of two units. The RT-12 return (copies of some of the months available on file) were filed with same Range Officer and assessed by him. In such a situation, I do not agree with the allegation that there has been suppression of facts. So, in this case the existence of suppression of facts with intention to evade payment of duty has not been proved. Accordingly, the demand of Rs. 3,45,000/- falls on the issue of time bar. This view is supported by many Tribunal and High Court judgments, wherein it had been clearly held that 'to invoke extended....
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....ve gone through all the statements of the customers and the case records. None of the statement is supported by any material evidence. Adding to this infirmity is the other factor that in all the statements the customers have stated that they have not maintained any stock books for the raw materials. This seems to be absurd. Further, none of the customers have questioned as to why cone/cheese yarns were invoiced as hank yarn. This also lacks logic as no manufacture would accept an invoice with wrong description that too over a period spanning few years. All these things point out that even if the statement were obtained without any duress, they may not be legally sustainable as they were not supported by any documentary evidence. I rely on the judgments of the Tribunal in the case of the Chandrabadan Bara Bhai 1987 E.LT. (29) 668 and Dhampur Sugar Mills 1999 E.C.R. (63) 669, wherein the Tribunals have held that genuineness of veracity of the statements cannot be relied where there was no corroborated with records. In their order the Tribunal in the case of M/s. Chandrabadan Bara Bhai have observed that "it is certainly unsafe and even hazardous to rely on uncorroborated statements"....
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....statement lacks merits and does not support departments case. 31. The statement, by the other transporter namely M/s. Kamalakkanan Transports is the other statement relied by the notice, also lacks merit as the same was not supported by any material evidence. 32. Now coming to the other aspects i.e., the presence of different set of invoices in the factory I see from the statement of Shri S.M. Shanmugham, Authorised Signatory that the circumstances for the same were property explained. I do not see any observation in this aspect. They have explained that the consignments in respect of the invoices found were cancelled by the units. The investigation has not proved that the consignments in respect of these invoices have actually been despatched. In the absence of such evidence the allegation that they have maintained different set of invoices with ulterior motive cannot sustain. 33. At this juncture the argument that the investigation has also included cases were "CFM/bales" needs a discussion. The basis of the allegation that HB bales were infact cheese yarn only was that the weight per bag was 50 kg/60 kg which cannot be the case in respec....
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.... 38. Accordingly, I pass the following order. ORDER I drop all the proceedings initiated against M/s. Vyas Textiles and M/s. Vyas Textiles Unit 'B' in the Show Cause Notices C.No. V/52/15/100/99 Cx.Adj. dated 14-7-99. 4. Being aggrieved, the Commissioner of Central Excise, Coimbatore, preferred Appeal No. E/381/2002, before the Customs, Excise & Service Tax Appellate Tribunal, South Zonal Bench, Chennai. Vide order, dated 2-12-2014, CESTAT, Chennai, has passed the following order : - "9. We have carefully examined the submissions made by both sides. Revenue filed appeal against the impugned order on the grounds that there is suppression of facts with a clear intention to evade payment of duty and demand raised is sustainable and the adjudicating authority has not appreciated the facts and has not applied the preponderance of probability. The department also alleged that the appellants have obtained two registrations owned by the same proprietor and functioning in the same premises which is a clear intention to evade duty. Therefore, the demand was sustainable for denial of SSI exemption for both the units for the year 1994-95. On the secon....
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....ained two registrations by changing the initials of G.M. Vyas and M.G. Vyas appears to be factually incorrect. The Revenue contention that respondent has deliberately given a wrong initials as G.M. Vyas and M.G. Vyas while applying for Registration in the Department. We find that Unit I was registered in the name of G.M. Vyas whereas the second unit was held by M.G. Vyas who is s/o. G.M. Vyas. As evident, from the registration certificates, the department has not adduced any evidence to prove that M.G. Vyas is not the son of G.M. Vyas and both relates to same individual. Therefore, we do not find any merit in the Revenue's allegation that proprietor has obtained registration by falsely declaring the name by changing the initials. 12. On the suppression of facts alleged by Revenue, we find that both the units have obtained central excise registration certificates much prior to the SSI exemption extended to cotton yarn vide Notification No. 90/94, dated 25-4-94. We find from the documents submitted by the respondent is their cross-objections, the respondents had adduced two letters vide No. 311/VT/94 and No. 312/VT/97 both dated 12-5-94 to the Collector of Central Excis....
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.... impugned order which is reproduced as under : - "28.1  First I would like to take the statements of the workers who has stated that they have never seen the 'half bale' being packed in their factory. To this the assessee has placed a counter argument that other than the set of workers referred to in the statement other set of workers were engaged and half bales were in fact been packed. I do see some merits in their argument. It is not the case that the unit has never manufactured hanks. The notice itself has accepted that the unit had facility to manufacture hanks. Further, it has been accepted that the clearance of hanks in other forms that is other than 'HB' bales were made. In the circumstances the argument of the assessee that "half bales" were infact, been packed assumes greater credibility, as the hanks manufactured in the factory could have been packed into half bales, while they were packed in to full bales/chippam. So the evidence of the worker loses its relevance once the manufacture of hanks has been established. 28.2. Next comes the statements of customers. In all the statements the customers have stated that they require cheese yarn for th....
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....rtment has to establish through corroborative documentary evidence and not merely relying on a general statement from the customers. 15. We also find that the statement of the transporters relied on by the department has no relevance who has stopped business with the respondents for more than 2 years during the relevant period. Even no documents were recovered from the transporter to support his averments made in the statements. As seen from the list of customers appended to the cross-objection, the respondents have cleared the goods to more than hundred customers over the period of five years. If that being the position, relying on only seven customers' statements that, too without, any corroborative evidence would not be a valid proof. The very fact that respondent have cleared the goods to M/s. National Handloom Development Corporation which is a Public Sector Undertaking supports the fact that they have not cleared cheese yarn in the guise of PRH. The respondents have submitted returns to the Textile Commissioner giving full details of Hank Yarn manufactured in fulfilment of obligation by the Government shows that, there was no intention on the part of respondents....
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.... is regarding clandestine manufacturer and removal of finished product for evading excise duty, the same cannot be held to be proved on the basis of principle of preponderance of probabilities and the Revenue has to prove the same beyond doubt. The reference is answered accordingly. 11. As a result, this reference case is dismissed. However, there will be no order as to cost. The above case law is squarely applicable to the facts of the case. As already discussed above, the department has demanded excise duty on cheese yarn on the ground that respondents have clandestinely removed in the guise of PRJ purely on oral statements without any corroborative evidence either from the respondent's premises or from the buyer's documents etc. Therefore, we find that the adjudicating authority has discussed the issues at length and has given a detailed order while dropping the demand proposed in SCN. By respectfully following the decision of the Hon'ble High Court, (supra), we do no find any infirmity in the impugned order passed by the adjudicating authority. Accordingly, we uphold the order of the adjudicating authority and reject the appeal filed by Revenue."....
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....is not correct and sustainable as per law. Therefore, CESTAT has erred by not clubbing the turnover of both the units for the purpose of the SSI exemption. B. The CESTAT has erred in not holding that declarations opting under SSI scheme separately for both the units is a gross misdeclaration when they knew pretty well that they are proprietorship firms and owned by one and the same individual. This has been done with an intention to evade payment excise duty by wrongly availing SSI exemption for both the units and suppressed the information from the department with an intention to avail the ineligible exemption. In this regard, it is pertinent to refer to the decision given by the Hon'ble. Tribunal in the case of M/s. Aspee Agro v. CCE, Surat, 2001 (134) E.L.T. 139 (T), wherein it was held that instead of declaring the correct. nature of goods, if the classification list merely describe the goods as parts of agricultural implements, then it is justifiable to invoke extended period. In this case also, Mr. M.G. Vyas, knowing that both the units are owned by him had filed option to avail SSI benefits for each units as if the both are separate units hea....
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.... Further, the CESTAT has not correctly reasoned or given any finding as to how these statements cannot be accepted especially when the customers themselves have admitted the receipt of cone yarns which are used by them for the manufacture of Terry Towels which is totally different from the description given in the invoice. Such a decision cannot stand the test of legal scrutiny and liable to be set aside. E. The CESTAT has not recorded nor adduced any reason to establish that the customers from whom statements were recorded have given their statements due to their animosity or to malign the respondents or that the statements were obtained under duress. It should be pointed out here that the statements given by the customers have not been retracted and in the absence of the same, the statements recorded are to be accepted as true. Further, no cross examination of the persons, viz., the customers, transporters, workers who have given statements were not true and thus absolve them of their guilt. Under these circumstances, it is clear that illegality has been committed by the respondent, the burden would shift to the respondent and not on the departmen....
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....ints out to illegal dealing on the part of the respondents. In view of the factual position, the finding given by the Hon'ble Tribunal that there is no sufficient corroborative evidence to sustain the case against the respondent lacks merit and hence liable to be set aside. I. The CESTAT has not given cognizance on the following case laws which is very relevant in this case. (a) In the case of Collector of Customs v. D. Bhoormull [AIR 1974 SC 859 = 1983 (13) E.L.T. 1546 (S.C.)], the Hon'ble Supreme Court, while discussing the admissibility of preponderance of probability has held that even with regard to burden in criminal prosecution, Department is not required to prove its case with mathematical precision to a demonstrable degree and that all that it is required is the establishment of such a degree of probability that a prudent man may, on its basis, believe in the existence of the fact in issue. This decision was also referred and relied by the Hon'ble Supreme Court in the case of M/s. Maganlal Gulabchand Shah v. U.O.I. [1992 (59) E.L.T. 235 (Guj.)]. (b) Further,....
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.... be set aside." Heard Mr. A.P. Srinivas Learned Standing Counsel for the appellant and perused the materials available on record. 7. The Commissioner of Central Excise, Coimbatore, adjudicating authority, has extensively considered the evidence and submissions and ultimately, found that there is no ground to proceed against the assessee and thus, dropped all further proceedings, initiated in the show cause notice C.NO. V./52/15/100/99 Cx. Adj., dated 14-7-1999. CESTAT, Chennai, has considered the facts of the case and after analyzing the evidence/statements, held that the adjudicating authority has discussed the issues at length and has given a detailed order, while dropping the demand proposed in the show cause notice. That apart, the CESTAT, Chennai, has held that there is no infirmity in the Order-in-Original, passed by the adjudicating authority. 8. Though Mr. A.P. Srinivas, Learned Counsel for the appellant placed reliance on the above judgments and submitted that the Tribunal, did not assign valid reasons nor indicated application of mind, but misdirected itself, by not applying the correct legal position and therefore, the findings are irrational and perve....