TaxTMI 
TaxTMI 
2019 (11) TMI 1615
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....ioner, Central Excise, Meerut-I [Additional Commissioner] in connection with the four show cause notices issued to the Appellant requiring them to show cause why the benefit of the exemption sought under a notification dated 10 June, 2003 should not be denied. 3. Excise Appeal No. 51337 of 2016 and Excise Appeal No. 51903 of 2016 have been filed to assail the order dated 4 February, 2016 passed by the Commissioner (Appeals) by which the order dated 16 April, 2015 passed by the Joint Commissioner, Central Excise, Dehradun [The Joint Commissioner] has been upheld and the Appeals have been dismissed. 4. It needs to be noted that both the Additional Commissioner and the Joint Commissioner have denied the benefit of an exemption granted under the Notification No. 50/2003-CE dated 10 June, 2003 [exemption notification] to the Appellants and have confirmed the demand of Central Excise duty with interest and penalty. It also needs to be noted that the Commissioner (Appeals) in the two Excise Appeals bearing Nos. 51337 of 2016 and 51903 of 2016 has relied upon the earlier order dated 25 February, 2015 and separate reasons have not been recorded. 5. An important condition mentioned ....
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....tion under condition (i), inform in writing to the jurisdictional Deputy Commissioner of Central Excise or Assistant Commissioner of Central Excise, as the case may be, with a copy to the Superintendent of Central Excise giving the following particulars, namely:- (a) name and address of the manufacturer; (b) location/locations of factory/factories; (c) description of inputs used in manufacture of specified goods; (d) description of the specified goods produced; (e) date on which option under this notification has been exercised. (ii) The manufacturer may, for the current financial year, submit his option in writing on or before the 30th day of November, 2003. 2. The exemption contained in this notification shall apply only to the following kinds of units, namely:- (a) new industrial units set up in areas mentioned in Annexure-II and Annexure-III, which have commenced commercial production on or after the 7th day of January, 2003 but not later than the 31st day of March, 2010; (b) industrial units existing before the 7th day of January, 2003 in areas mentioned in Annexure-II, but which have undertaken s....
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....were informed by the factory representative that it also had a manufacturing unit at the New Delhi address. 10. On the ground floor, the officers found: (1) Spot Welding (02); (2) Compressor (01); (3) Service Grinding (01); (4) Sharper (01); (5) Drill Machine (01); (6) Grinder (01); (7) Milling Machine (01); (8) Lathe Machine (01); (9) Sheering Machine (01); (10) Vacuum Plate (01); (11) Power press (07). 11. All the above machines except the Power Press were found installed. The Power Press, however, was put into use only on 17 April, 2010 as was informed by Ram Swaroop Kalia. 12. A Panchnama was drawn in the presence of two independent witnesses. Statements of Ram Swaroop Kalia, Plant Incharge and Gopal Sharma, Human Resources Manager were also recorded under Section 14 of the Central Excise Act, 1944 [Excise Act]. The gist of the statement of Gopal Sharma is as follows : "(i) M/s Bentex Control & Switchgear Co., B-2 Khasra No. 10, Dev Bhoomi Industrial Estate, Village Bantakheri, Roorkee filed its declaration on 17.03.2010 to claim exemption from whole of Excise duty under Notification No. 50/2003-CE dated 10.06.2003. (ii) The unit is a partnership firm....
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....antecedents of your above referred declaration. The findings of the team are as follows: (i) No production activity was going on in the unit at the day of visit. (ii) No raw materials were found available in the unit. (iii) Even no manufacturing activity was going on and no worker was found working on the date of visit. (iv) During course of visit of unit, it has been found that the cartoons in which finished goods packed were marked as SKN and manufactured at B-63 to 65/3, Naraina Indl. Area, Phase-2, New Delhi and some cartons were opened in the presence of factory representative and found that the specification plates were fixed on finished goods, which were marked as manufactured at B-63 to 65/3, Naraina Indl. Area, Phase-2, New Delhi. The photographs have been taken to strengthen the findings of the team A Panchnama in presence of two impendent witnesses was also drawn by the officers on spot to substantiate the above findings. A stated of Shri R.S. Kalia, Plant Incharge of above factory was also recorded. In the light of the above, it is apparent that M/s Bentex Control & Switchgear Co. B-2, Khasra No. 10, Dev Bho....
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....d that the unit had started commercial production on 18 April, 2010 and raised its first commercial invoices on 19 March, 2010. The Appellant, therefore, prayed that declaration dated 17 March, 2010 should be accepted. 15. A further enquiry was conducted and statement of Ashok Sharma, Manager (Accounts and Administration) was also recorded on 19 January, 2011 under Section 14 of the Excise Act. The gist of the statement is as follows : "(i) Their manufacturing unit is situated at B-2 Khasra No. 10, Dev Bhoomi Industrial Estate, Roorkee and the office as well as registered office is at B-63 to 65/3, NIA, Phase-II, New Delhi-110028. (ii) Apart from above, they have their sister concern situated at B-63 to 65/3, NIA, Phase II, New Delhi-28. (iii) Both the unit have common partners namely- (i) Mr. Kapil Chopra (ii) Mr. Satish Chopra (iii) Mr. Rahul Chopra (iv) Mr. Karan Chopra All residing at 47, Anand Lok, New Delhi-110049. (iv) The declaration was filed on 17.03.2010. (v) The raw material used in manufacturing are Copper strips, CRC Sheets, Brass Sheet, PCB Meter Card, SM Counter, Meter Body ....
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....atements recorded under Section 14 of the Excise Act as also the reply filed by the Appellants to the letter dated 4 May, 2010, the show cause notice mentions: "9. From the above narrated facts it appears that M/s Bentex Control & Switchgear Co. (i) filed its declaration under Notification No. 50/2003 dated 10.6.2003 on 17.3.10 but could not commence its commercial production before 31.03.2010 as the Panchnama reveals that the cartons in which finished goods packed were marked as SKN and manufactured at B-63 to 65/3 Naraina Industrial Area, Phase-II, New Delhi and some cartons were opened in presence of factory representative and found that the specification plates were fixed on finished goods which were marked as manufactured at B-63 to 65/3 Naraina Industrial Area, Phase-II, New Delhi thus trying to show that the packed goods were manufactured at Roorkee but originally were brought from their New Delhi unit and thus not fulfilling the basic condition as laid down under the said Notification regarding commercial production. (ii) The party vide its statement dated 18.04.10 admitted the fact that due to illiterate labour they have loaded SKN marked labels ....
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....exemption notification. The relevant findings are as follows : "9.6 xxxxxxxxxxxxxx The fact that such a large quantity of finished goods in the packed cartons having the marking indicating there on the fact/origin of manufacture of the same to the party's Delhi unit, which incidentally were found in ready-to-dispatch condition cannot be the result of the sheer mistake on the part of the illiterate labour as contented by the party. After all, the illiterate labour discharge their function under the supervision of their supervisor, the production managers and the dispatch staff. Further the labour in a manufacturing unit manufacturing electrical items cannot be termed as an illiterate, they ought to be at least semi-skilled if not skilled. Moreover raw materials are kept in the stores, receipt and issue of the raw materials is carried out by the store keeper which can't be an illiterate person. After the issue and before putting in production line, raw materials are subjected to quality control check. Quality control check is also carried out before effecting clearance of the finished goods. This system is adopted in almost all the manufacturing units. A manufacturing unit e....
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...., which in the instant case is box of Motor Starter supposedly being manufactured by them. All evidences point to the fact that no raw materials had been brought in the unit, but in the garb of raw materials, fully finished goods were being brought by the party from their Delhi unit. Further this also gets credence from the fact that machines installed in the said factory had not been put to use for manufacture of the commercial production." 21. The Adjudicating Authority further observed that the Appellant was not even in a position to undertake trial production due to non-installation of Power Press which was an essential machine for the production and so the goods could not have been produced at the Roorkee unit. 22. The adjudicating authority also found that all the show cause notices had been issued within time and the contention of the Appellant that penalty should not be imposed since it was bona fide omission could not be accepted as it was a well planned strategy designed by the Appellant with an intent to evade payment of duty. The benefit of cum duty was also not granted and nor the Appellant was found entitled to avail credit of duty paid on inputs and capital goo....
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....earance. The benefit of cum duty price was also not given to the Appellant nor did the Commissioner (Appeals) find any justification to give the benefit of Cenvat credit to the Appellant. The penalty imposed by the Adjudicating Authority was sustained. 25. Six Appeals have, accordingly, been filed to assail the six orders passed by the Commissioner (Appeals). 26. Ms. Priyanka Goel, learned Counsel appearing for the appellant has made the following submissions: (i) The benefit of the exemption notification has been wrongly denied to the Appellant as the Appellant had fulfilled all the necessary conditions contained in the exemption notification; (ii) The Department failed to substantiate that the goods which were sold under the commercial invoices were not manufactured at the Roorkee unit; (iii) It had been explained by Ram Swaroop Kalia, Plant Head of the unit that Roorkee Unit was procuring the components and steel boxes from the Delhi unit and were joining these parts into the steel boxes and then packing them into cartons and, therefore, there was no requirement of using the Power Press Machine; (iv) The Appellant had employed workers an....
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.... been imposed upon the Appellant. 28. The submissions advanced by the learned Counsel for the Appellant and the learned Authorised Representative of the Department have been considered. 29. It is not in dispute that the main unit of the Appellant for manufacture of the four items declared by the Appellant is situated at Naraina, New Delhi. According to the Appellant, it purchased the plant/machinery at Roorkee sometimes in February/March, 2010. At Roorkee admittedly two units namely M/s SKN Bentex Lighting and M/s Bentex Control & Switchgear Company are running from the premises. In the present Appeals, the issues are only with M/s Bentex Control & Switchgear Company. The declaration submitted by the Appellant on 17 March, 2010 for claiming exemption from excise duty in terms of the exemption notification mentions that the Appellant intends to manufacture four items namely, Motor Starters, KWH Meters, Miniature Circuit Breakers and Change Over Switches. The Appellant, however, claims that it started commercial production of Motor Starters only prior to 31 March, 2010 and it did not start commercial production of KWH Meters. Miniature Circuit Breakers and Change Over Switches.....
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.... mention that the goods were manufactured at B-63 to 65/3, Naraina Industrial Area, Phase-II, New Delhi with markings of "SKN" and even the labels on the products inside the cartons would indicate that they were manufactured at Naraina, New Delhi. The explanation offered by the Appellant that it was because of illiteracy of the labours engaged by the Appellant did not appeal either to the adjudicating authority or to the appellate authority nor does it appeal to us. When the basis for claiming exemption is that the commercial production at Roorkee unit should have started on or before 31 March, 2010, it is difficult to believe that senior officers of the unit at Roorkee unit would have overlooked this most important aspect, if the goods were actually manufactured at the Roorkee unit. 32. It was also necessary for the Appellant, as a manufacturing unit of electrical goods, to have maintained proper records regarding the manufacture of goods. But even after a period of one month from the date of production, the Appellant had no documents or registers to substantiate its claim about commercial production. If labours are engaged, it was imperative for the Appellant, in view of the s....
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....xemption from payment of excise duty is based on a proper consideration of the inspection report and the documents filed by the Appellant and cannot be said to be perverse. 36. Learned Counsel for the Appellant has placed reliance upon certain decisions to contend that the commercial production had started prior to 31 March, 2010. In M/s Shilpkar India Pvt. Ltd. Vs. CCE, Hapur [2018 (3) TMI 1231-CESTAT, New Delhi], the Division Bench found that the Appellant had availed the facility of a diesel generator set and supporting evidence had also been filed and, therefore, mere non-availability of electrical connection could not have been made a ground to hold that the commercial production had not started prior to 31 March, 2010. The Bench also noticed that the Appellant, apart from the invoices, had also submitted proof of receipt of goods. In the present case only invoices had been placed. The Appellant did not produce any document showing receipt of goods by the person in whose favour the invoices had been issued nor any document was filed to show receipt of money by the Appellant. 37. In East India Udyog Ltd., Sahibabad, Ghaziabad & Shri N.K. Lohia Versus Commissioner of Centr....