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2022 (10) TMI 93
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....e duty demanded to the tune of Rs.18,44,400/- in Annexure B to the SCN F. No. V (8415)15- 204/Adj/99 dtd. 22.09.1999 does not survive for confirmation. iii. I impose penalty of Rs.2,00,000/-(Rs. Two lakh only) under Rule 173Q of the Rules on M/s Ultramatix Computer Support System Pvt. Ltd. iv. I impose personal penalty of a. Rs.1,00,000/-(Rs. One lakh only) under Rule 209A of the Rules on Shri. Shirwadkar, Director of M/s Ultramatix Computer Support System. b. Rs. 50,000/-(Rs. Fifty thousand only) under Rule 209A on Shri. Jayant Shirwadkar, partner of M/s Ultramatix Computer Support System Pvt. Ltd. v. I order confiscation of land, building plant and machinery, material belonging to M/s Ultramatix Computer Support System Pvt. Ltd. under Rule 173Q(1) of the Rules. However I give option of payment of redemption fine of Rs. 10.00.000 only) in lieu of the said confiscation to M/s Utramatix Computer Support Systems Pvt. Ltd. This order is issued without prejudice to any other action that may be taken under this Act or any other Act for the time being in force within India." 1.2 For ease of reference we refer the appellant in....
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....n the basis of invoices issued by the said two dummy units and recover Central Excise duty of Rs. 19,35,000/- c. Total duty amounting to Rs 37,79,400/- (Rs 18,44,400 + Rs 19,35,000) should not be demanded and recovered from them by invoking Proviso to section 11 A (1) of Central Excise Act, 1944 read with rule 9 (2) of the Central excise Rules, 1944. d. Interest @20% should not be recovered from them under Sec.11AB of the Act e. Penalty should not be imposed on Appellant 1 under Sec. 11AC of the Act f. Penalty should not be imposed on Appellant 1 under 173Q of the Rules. g. Penalty should not be imposed on Shri. Shrikant Shirwadkar and Smt. H.S.Shirwadkar, Directors of UCSSPL; Smt. H.S.Shirwadkar Partner of the dummy unit viz. M/s Shrikant Refrigeration Co. and Shri. Jayant Shirwadkar, Partner in the other dummy company viz. M/s Excel Technologies (in short ET), under Rule 209A of the Rules. h. Land, building, plant, machinery, material etc. should not be confiscated under Rule 173Q(2) of the Rules 2.5 Further para 5 of the show Cause Notice stated as follows: "5. And Shri Shrikant Shirwadkar, Director of M/s UCSSPL.....
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....ctor of M/s UCSSPL under Rule 209A of the Rules • ordered for the confiscation of plant, machinery, material etc. of M/s UCSSPL under Rule 173Q(1) of the Rules, which was ordered to be released on RF of Rs. 50,000/- in lieu of confiscation. 2.8 Aggrieved by the aforesaid Order in Original, M/s UCSSPL filed an appeal with the Hon'ble CESTAT which was decided vide order No. A/387-388/WZB/2006/C-IV/EB dtd.20.02.2006, remanding the matter for de-novo adjudication with the following observations: "2. The impugned order passed by Adjudicating Commissioner has confirmed part of the duty demand of Rs 18.00 Lakhs (Rupees Eighteen Lakhs only) by holding that even though all the three units are registered for the same premises, the clearances are required to be clubbed for determining the exemption limit and duty liability. We find that the Adjudicating Authority has wrongly referred to Notification No.1/93-CE dated 28.02.2003fwhich is not applicable to the impugned goods) instead of considering exemption Notification No.75/87-CE dated 01.03.1997. The Adjudicating Commissioner has also dropped part of the demand relating to the allegation of clearance of Air condi....
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....owever, there is no Show Cause Notice issued to SRC and ET asking them as to why they are not dummy and why their turnover should not be clubbed in the turnover of UCSSPL. Non-issuance of Notice to SRC and ET vitiate the entire proceeding initiated in the present case. Kindly refer: • Alpha Toyo Ltd. [1994 (71) ELT 689(T)] • Ogesh Industries [1997 (94) ELT 88 (T)] • Ramsay Pharma [ 2001 (127) ELT 789 (T)] • K.R. Balachandran [2003 (151) ELT 68 (T)] • Copier Force Vs. CCE [2008 (231) ELT 224 (T)] • Show cause notice in first round of litigation was adjudicated by the order dated 8.1.2002: • imposing penalty of Rs.1,80,000/- on the appellant 1 Rs.50,000/- on Appellant 3, • dropped the proposal to impose penalty on Mrs. H. S. Shirwadkar, Partner of SRC and Mr. Jayant Shirwadkar (Appellant 2), • imposed fine of Rs.50,000/- in lieu of confiscation on the appellants. No appeal was filed by revenue against this order in appeals filed by the Appellant tribunal has vide its order dated 20.02.2006 remanded the matter to Commissioner for de novo adjudication. In the re....
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....66) ELT 375 (Raj.)] • Rollatainers Limited [2004 (170) ELT 257 (SC)] • S. C. Patel [2011 (264) ELT 414 (T)] • Binod Kumar Maheswari [1997 (90) ELT 83 (T).] • The Appellant 1, M/s SRC & M/s ET are independently registered with the sales tax department and income tax department. Have independent balance sheets along with profit and loss account. In these circumstances, the clubbing of turnover is not permissible Kindly Refer: • Associated Engineering Projects [2019 (370) ELT 756 (T)] • Sree Nirmal Spinners [2014 (300) ELT 469 (T)] • Electro Mechanical Engg. Corpn. [2003 (152) ELT 194 (T)] • Noble Chlorochem Pvt. Ltd. [2020 (7) TMI 291 - CESTAT CHANDIGARH] • The Revenue has raised contention that partners of SRC, ET and Directors of the Appellants are related and therefore the entities are relates in the present case. The above finding is contrary to the decisions as follows: • Kiran Biscuits & Foods [2004-TIOL-1078-CESTASTBANG.] • Mars Stationary - [2017 (3) TMI 919 - CESTAT] • Mere fact that one director of one company is also pa....
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.... Revenue that the items in dispute should be classified as complete AC and therefore chargeable to higher rate of duty, is incorrect and baseless. • M/s SRC & M/s ET, like Appellant 1, were also engaged in supply, installation, testing at commissioning at site of Microprocessor based turnkey AC plants used mainly in telecom industries & data centers. The site work after dispatch of parts from the factory takes approx. 4 to 6 months period & then a complete AC plant is handed over to the client with acceptance testing done at site to measure that desired temperature & humidity set points are achieved on round the clock 24 x 7 basis. Then seasonal testing of these AC plant is carried out in monsoon months & summer months for its final approval & acceptance with handing/taking over. • Appellant 1 bought the parts from SRC/ET for 14 plants & sold them to MTNL as parts. Appellant 1 end product has been approved as parts. It is incorrect to suggest that Appellant 1 buy full AC Units & sell the same to MTNL as parts. Hence, the proposed classification as full AC is perverse and incorrect. • Board Order No. 58/1/2002-CX dated 15.1.2002 issued under Se....
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.... can be imposed under 1944 Rules. Explanation reads as under: • "For the removal of doubts, it is hereby declared that no act or omission on the part of any person shall be punishable as an offence which would not have been so punishable if this section had not come into force." • Shaw Wallace - 2003 (156) ELT 406 (T) • Chemo Pulp - 2000 (119) ELT 715 (T-LB) • Ranga Vilas GS & W Mills - 2002 (149) ELT 742 (TLB). • Thus in no way in which penalty can be imposed under Rule 173Q and confiscation can be ordered. • The Hon'ble Supreme Court in case of Punjab National Bank Vs. VOI - 2022 (2) TMI 1171 - SUPREME COURT has held that Rule 173Q(2) has been omitted with effect from 12.5.2000 and therefore any order passed after 12.5.2000 invoking Rule 173(Q) is not sustainable in law. Thus the imposition of redemption fine under Rule 173Q is not sustainable. • Penalty has been imposed on individuals in the present case under Rule 209A of the erstwhile Central Excise Rules 1944. As mentioned supra, without invoking Section 38A, penalty cannot be imposed under Rule 209A on individuals also. It is furth....
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....r Rule 209A are not sustainable as goods were not held liable to confiscation. They relied upon the judgment in the case laws of Castrol India Ltd. Vs Commissioner [2008 (222) E.L.T. 408 (Tribunal)] and Godrej & Boyce Vs Commissioner [2002 (148) E.L.T. 161 (Tribunal)]. Hon'ble Gujarat High Court in the case of Sanjay V Deora Vs CESTAT (2014 (306) ELT 533 (Guj.)] held that penalty under Rule 26 of Central Excise Rules, 2002 is leviable, can be imposed even if the goods are not confiscated or have not been rendered liable for confiscation or even if the show cause notice did not propose confiscation of goods. The SLP filed against this judgment was dismissed as reported in Sanjay V Deora Vs CESTAT [2014 (309) ELT A131 (S.C.)] Hon'ble CESTAT in the case of Amex Alloys P Ltd Vs Commissioner of C. Ex. & S.T., Coimbatore [2013 (296) E.L.T. 229 (Tri. - Chennai)] held that the reason that goods were not available to confiscation should not be a reason to avoid penalty. The provisions of Rules 26 of Central Excise Rules, 2002 and erstwhile Rule 209A ibid are pari materia with each other, Thus the penalties are correctly imposed and are sustainable. 4.1 We have considered the impu....
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....e from 01.09.1994, the then Commissioner and the original adjudicating authority however had no option but to the order of finalization of Classification of the goods manufactured by M/s UCSSPL and drop the demand on the goods claimed to be parts of air conditioner only. 6.4. However, I find that during the course of investigations conducted by the departmental officers additional aspects in this case emerged which indicated that the goods claimed to be parts of air conditioners were actually air-conditioners cleared in CKD/SKD condition and two dummy units were floated by the assessee for meeting the requirements of their customers viz. MTNL, DOT, AIR. In view of this new development, the SCN proposed to revise the classification of the goods as air-conditioner and deny the benefit of Notifn.75/87 dtd. 1.3.87 claimed by the assessee. As such, the part of demand, holding that the goods under consideration were not 'parts of air-conditioners' but 'air-conditioner', was confirmed by the then Commissioner invoking provisions of Sec.11 A (1). This is very much within the scope of the legal provisions, since this was an outcome of the investigations and new fact....
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....or assembly goes at the site, so we started clearing the goods under parts and accessories of the air-conditioning units. Secondly our bankers were not ready to finance to Ms UCSSPL. So, we decided that we should now manufacture/assemble the units in M/s SRC and Ms ET. Considering production, execution urgencies we started operating in these two companies. We were under the impression that these two companies should avail the benefit and accordingly, we prepared the invoices and challans. These 14 units were cleared to Ms UCSSPL which in turn were cleared to MTNL." 6.5 I find that, Shri. Shrikant Shirwadkar, Director, UCSSPL, in his statement dtd. 01.10.1996 admitted that they did not receive any consideration from Ms SRC & M/s ET for labor force and machinery utilized by these floated units belonging to M/s UCSSPL as there was no separate labour force and machinery belonging to M/s SRC & M/s ET. In his statement recorded on 5.5.95 Shri. Shrikant Shirwadkar further deposed that M/s SRC & M/S ET manufactured air conditioning systems which were cleared to M/s UCSSPL, who in turn sold these systems to their end customers. Also payments were received by M/s UCSSPL from the end....
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....ssments were pending finalization and confirming the demand based on the new facts on record was well within the scope of the provisions of the Act. While taking this view, 1 rely on CESTAT's decision in case of M/s Lamifab & Papers Ltd. V/s Commissioner of Central Excise & Customs, Aurangabad [2012(275)E.L.T.93 (Tri.- Mumbai)]. While deciding the aspect of time bar on the grounds of provisional assessment, the CESTAT in this case held that since the assessment for the said period were provisional, for the period subsequent to the change of classification by the department duty demanded on account of finalization of assessment is not hit by the limitation. In the instant case, I find that the Classification lists of M/s SRC & M/s ET which were approved provisionally by the jurisdictional Astt. Commissioner vide order No. V(84)17-- 30/CL/VC/94/1050 and V(84)17-28/CL/VC/94/1051 both dtd. 02.03.1995 respectively have been finalized by the Asstt. Commissioner, Incharge of Central Excise pune II Division vide Finalization Order No. V(84)15-25/Pt. II/Adj/Ultra/09-10 dtd.31.10.2011 and V(84)15. 25/Pt. II/Adj/Ultra/09-10 dtd.02.11.2011 respectively. I further take note that while final....
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....ircular elaborates that if one firm or one individual owns several factories he or it gets exemption only in respect of one lot and the manufacturer being only one entity there is no question of distributing the exemption. Further, while relying on this circular, clarification given in para 4 of the circular seem to have escaped the attention of the assessee wherein it has been clarified that the question whether different partnerships having common partners, are treatable as separate manufacturers of the same manufacturer, would be a question of facts in each case to be determined on the basis of such factors, amongst other, like composition of the partnership, existence of the factory, license, nature of goods manufactured etc. The Circular leaves it to the discretion of the deciding authority to decide the matter on the basis of the facts of the case. 7.1.2. I therefore hold that the partial application of the relied upon Circular by assessee is incorrect. Cognizance of all paras and clarifications given by Board in the circular has to be taken while deciding the issue. I find that Board's Circular supra implies that the matter of giving SSI benefit is to be decided....
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....eparate entity for the purpose of exemption limit. However, while remanding the matter back for fresh decision, Hon'ble Supreme Court has doubtlessly supported Tribunal's finding that the units were having mutuality of interest, since the three units were having common management, common procurement of raw material, common manufacturing operations etc. The matter was remanded back for deciding a short portion as to whether Board's Circular No.6/92 supra was applicable in this case or not. The ratio of this decision is also not applicable in the instant case. It is evident from records that the goods manufactured by all the three units were same and label "Ultramatix" was affixed on the goods before clearance to the end clients/ customers. Further, M/s SRC & M/s ET cleared the goods first to M/s UCSSPL who in turn cleared the goods to the final customers. The payment/ recovery from the customers was effected by M/s UCSSPL who in turn paid the portion in the name of M/s SRC & M/s ET. Thereby it can be concluded that M/s SRC & M/S ET were merely bearing label of separate corporate identity but behind the corporate veil the three units were umbilically corded to M/s UCSSPL.....
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.... to provide them because of batch production activity. iii Ms SRC was carrying out its activity in shed A whereas M/s ET were carrying its activity in shed B." 7.2.1 I find that the assessee have argued that separate Central Excise Registration was issued to each of the units & as per the procedure laid down in the Basic manual such registration is to be granted after verification of the ground plan with the actual premises. I find that the ground plan submitted by the three units at the time of applying for registration show three independent factory premises with clear cut separate boundary and separate exit/ gate for each unit. The three units were carved out of one industrial shed by putting mere partition for segregation of the premises. It can be presumed that this plan was matching with actual premises before issue of registration by the competent authority. The registrations were issued to M/s SRC & M/s ET on 05.05.1994 and to M/s UCSSPL on 05.08.1994. However, investigations were carried by departmental officers in the year 1995. In the Panchanama drawn on 17.2.1995 of the premises of 142/1C near Parmar Industrial Estate, Chinchwad in the presence of two ....
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....Renu Tondon V/s UOI case. Whereas in the instant case, not only the office and staff of the units was common but purchase of raw material was common, machinery was shared amongst these units and no legal documents such as rent deed etc. were produced in their defense. While holding that the three units were nothing but extension of M/s UCSSPL I draw sustenance from the judgment of Tri. Bombay in case of M/s Harnik Food Industries V/s Commissioner of Central Excise, Pune [2009 (243) E.L.T.322(Bom)] wherein based on identical evidences tribunal has held that cumulative effect of all the circumstances leads to conclusion of one unit being dummy of another. 7.4. No financial flow back: Though the noticee has claimed that there is no financial flow back, I find that the available record reveal the contrary situation and financial flow back can very well be established here. As regard mutuality of interest and financial flow back it is observed that Shri. Shrikant Shirwadkar in his supplementary statement dtd 5.5.95 has clearly deposed that 'M/s Excel and M/s SRC manufactured AC Systems which were sold to UCSSPL and UCSSPL inturn sold them to final clients. M/s UCSSPL received p....
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....re a corporate body is a distinct juristic body, in case of partnership firm identity of firm stands merged with identity of the partners. As such I hold that non issuance of SCN to M/s SRC & M/s ET is of no consequence here. This view taken by me is supported by the decision of Hon'ble Supreme Court in case of Commissioner of Central Excise, Coimbatore V/s V. Madhu @C. V. Maadhesh [2002(146)E.L.T.252(S.C.)] where the Apex court has held that 'Splitting up of the Show Cause Notice of two units not necessary when stand of the department is that one firm is a fictitious firm or a dummy of the other-At the stage of issuance of Show Cause Notice, particularly when the view of the department is that one firm is fictitious business firm or a dummy of the other, it would be more easier and appropriate to examine the matter together'. 7.7. Demand time barred: While taking this view, assessee have relied on the findings of the Order in Original passed by the then Commissioner C. Excise Pune I, holding therein that extended period is not applicable as far as clearances in respect of M/s UCSSPL is concerned. As such the demand being issued covering the period from Sept. 9....
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.... Regarding classification of the goods, assessee have argued that the components of air conditioning machines were supplied to MINL and after procuring some components from outside, the air conditioning plants were installed at site of MTNL and as such in view of Board's clarification given in Sec. 37B the classification of the goods claimed by the assessee as parts of air-conditioners is correct. 7.8.1. However, I find that from the agreement between M/s UCSSPL and MTNL it is seen that the agreement was entered into, for supply of air-conditioners. The invoices available on record show that complete air-conditioning systems have been cleared to MTNL. The SCN holds that the assessee cleared air-conditioners in CKD/SKD condition. Assessee had entered into contract of supply, installation, testing and commission of air-conditioners. As such it was imperative that some parts required for installation and commission of the air-conditioners would be provided at site. As such, the clause regarding purchase of other components at site is appearing in the contract. On the basis of this inconsequential ground it cannot be concluded that the contract was for supply of parts of a....
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....ey relied upon in support of their claim are not relevant in the facts and circumstances of the case. Here specific 14 clearances shown in the name of two units are in question. There is sufficient evidence suggesting that there was only one manufacturing entity namely M/s UCSSPL. M/s SRC and M/s ET were only used for bifurcating the value of clearances of UCSSPL to remain in the exemption limit. The goods in question are actually manufactured by UCSSPL only as there was free transfer of funds, of labour, of materials, and of machines, there was common manufacturing process, common labour etc. Their registration with Income Tax, Sales Tax Registration (of UCSSPL dtd. 1/4/1996 (pg.256, 257 of appeal book) of SRC on 31/3/95 (pg.258 and 259 of appeal book) and M/s ET on 31/3/1995 (pg.260, 261 of appeal book)] do not alter the fact that the goods were manufactured by UCSSPL. It can be seen that the goods were shown as removed from the premises of M/s ET and M/S SRC under proforma invoices cum gate passes nos. 1 dtd. 12/9/1994, 2 dated 16/9/1994 (pg.113), and 4 dtd. 19/11/1994 of M/s SRC and proforma invoice (cum gate pass) nos. 1 dated 17/9/1994, 2 dated 19/9/1994, 3 dtd. 20/9/1994 and....
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.... in March 1995 (page nos.321 and 323 of main appeal book). Since the classification dispute was pending the same could not be cancelled as informed to them vide letters dated 28/7/1995 (pages 322 and 324 of main appeal book). 4.3.5 It can be seen from the condition no.7 of the agreement dated 1/1/1994 between M/s D.R. Shah & Co. (page 163 of appeal) and M/s UCSSPL that UCSSPL could not give on licence or part with the use of any part of the said property in any manner whatsoever. The Appellants have relied upon the two Lease agreements both dtd. 1/5/1994 between UCSSPL and SRC and between UCSSPL and ET. It seems that these documents annexed by the Appellants as Sub-lease agreement were not registered. Section 49 of the Registration Act, 1908, sets out the consequences of non-registration of documents, which are required to be compulsorily registered. Section 49 makes it clear that a lease deed which is compulsorily registerable, if not registered, will not affect the immovable property comprised therein in any manner. Such a lease deed will also not be received as evidence of any transaction affecting such property. From the statements of the concerned persons also it is evident....
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..... In the case of Commissioner of Customs, Kandla v. Essar Oil Ltd. - 2004 (172) E.L.T. 433 (S.C.) it has been held that by "fraud" is meant an intention to deceive; whether it is from any expectation of advantage to the party himself or from the ill-will towards the other is immaterial. "Fraud" involves two elements, deceit and injury to the deceived. 15. Undue advantage obtained by the deceiver will almost always cause loss or detriment to the deceived. Similarly a "fraud" is an act of deliberate deception with the design of securing something by taking unfair advantage of another. It is a deception in order to gain by another's loss. It is a cheating intended to get an advantage. (See : S.P. Changalvaraya Naidu v. Jagannath [1994 (1) SCC 1 : AIR 1994 S.C. 853]. It is said to be made when it appears that a false representation has been made (i) knowingly, or (ii) without belief in its truth, or (iii) recklessly and carelessly whether it be true or false [Ref : Roshan Deen v. Preeti Lal [(2002) 1 SCC 100], Ram Preeti Yadav v. U.P. Board of High School and Intermediate Education [(2003) 8 SCC 311], Ram Chandra Singh's case (supra) and Ashok Leyland Ltd. v. State of T.N. and....
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....gannath, AIR 1994 S.C. 853]. It is a fraud in law if a party makes representations, which he knows to be false, and injury ensues therefrom although the motive from which the representations proceeded may not have been bad. [Ref : Commissioner of Customs v. Essar Oil Ltd., (2004) 11 SCC 364 = 2004 (172) E.L.T. 433 (S.C.)]. 19. When material evidence establishes fraud against Revenue, white collar crimes committed under absolute secrecy shall not be exonerated as has been held by Apex Court judgment in the case of K.I. Pavunny v. AC, Cochin - 1997 (90) E.L.T. 241 (S.C.). No adjudication is barred under Section 28 of the Customs Act, 1962 if Revenue is defrauded for the reason that enactments like Customs Act, 1962, and Customs Tariff Act, 1975 are not merely taxing statutes but are also potent instruments in the hands of the Government to safeguard interest of the economy. One of its measures is to prevent deceptive practices of undue claim of fiscal incentives. 20. It is cardinal principle of law which is enshrined in Section 17 of Limitation Act that fraud nullifies everything for which plea of time bar is untenable following the ratio laid down by Apex Court in ....
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.... making the supplies. 4.3.10 It is also noted that the appellants have admitted during investigation that from M/s MTNL to whom these goods were supplied they collected the duty at the @ 30% as provided by their contract, but against these 14 Air Conditioning Systems the duty was not deposited. 4.3.11 In view of the discussions as above we do not find any merits in the submissions of the appellant in respect of finding of facts. 4.4.1 In the impugned order it has been held that this is a case where in the corporate veil needs to be lifted to determine the true nature of transactions. Hon'ble Supreme Court has in case of Calcutta Chromotype [1998 (99) E.L.T. 202 (S.C.)] has held as follows: 12. The principle that a company under the Companies Act, 1956 is a separate entity and, therefore, where the manufacturer and the buyer are two separate companies, they cannot, than anything more, be `related persons' within the meaning of clause (c) of sub-section (4) of Section 4 of the Act is not of universal application. Law has traveled quite a bit after decision of the House of Lords in the case of Salomon v. Salomon [1897 AC 22]. This is how this Court noticed in Tata Engineer....
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....members recognised for who they are in certain exceptional circumstances. Pennington in his Company Law (4^th Ed.) states : Four inroads have been made by the law on the principle of separate legal personality of companies. By far the most extensive of these has been made by legislation imposing taxation. The Government, naturally enough, does not willingly suffer schemes for the avoidance of taxation which depend for their success on the employment of the principle of separate legal personality, and in fact legislation has gone so far that in certain circumstances taxation can be heavier if companies are employed by the taxpayer in an attempt to minimise his tax liability than if he uses other means to give effect to his wishes. Taxation of companies is a complex subject, and is outside the scope of this book. The reader who wishes to pursue the subject is referred to the many standard text books on Corporation Tax, Income Tax, Capital Gains Tax and Capital Transfer Tax. The other inroads on the principle of separate corporate personality have been made by two sections of the Companies Act, 1948, by judicial disregard of the principle where the protection of public interests....
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....ssed upon the need to make a departure from the Westminster principle based upon the observations of Lord Tomlin in the case of IRC v. Duke of Westminster [(1936) AC 1] that every assessee is entitled to arrange his affairs as to not attract taxes. The Court said that tax planning may be legitimate provided it is within the framework of law. Colourable devices, however, cannot be part of tax planning. Dubious methods resorting to artifice or subterfuge to avoid payment of taxes on what really is income can today no longer be applauded and legitimised as a splendid work by a wise man but has to be condemned and punished with severest of penalties. If we examine the thrust of all the decisions, there is no bar on the authorities to lift the veil of a company, whether a manufacturer or a buyer, to see it was not wearing that mask of not being treated as related person when, in fact, both, the manufacturer and the buyer, are in fact the same persons. Under sub-section (1) of Section 4 of the Act, value of the excisable goods shall not be deemed to be normal price thereof, i.e., the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade....
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....on within the meaning of clause (c) of Section 4(4) of the Act. Again if the price is not the sole consideration, then again clause (a) of Section 4(1) will not be applicable to arrive at the value of the excisable goods for the purpose of levy of duty of excise. 4.4.2 Hon'ble Supreme Court in the case of Supreme Washers (P) Ltd. [(2003 (151) E.L.T. 14 (S.C.)]; 5. Having heard the learned Counsel for the parties and perusing the records, we are in agreement with the finding of the Tribunal that there is mutuality of interest between the appellants. The reliance placed by the Tribunal on facts like the three companies having common management under Shri S.L. Raheja, having common procurement of raw material having common stock accounting and planning, having interdependence in manufacturing operations, having common stock of raw materials and semi finished goods, having common use of machinery between the three units, having common marketing arrangements and free flow of finance between three units cumulatively indicates interdependence of the three units with each other as also inter-relationship, cumulatively establishes the appellants inter-relationship and interd....
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....t in every case, where ingenuity is expended, to get behind the smokescreen and discover the true state of affairs. Thus, the principle of lifting the corporate veil for discovering the true state of affairs behind the veil of the corporate entity is a well settled legal principle. It is this principle which has to be applied for determining as to whether two or more manufacturing units owned by separate partnership firms, private limited companies and/or public limited companies are to be treated as the units of the same manufacture. On this point, the Apex Court in case of CCE, Delhi v. Modi Alkalies & Chemicals Ltd., reported in 2004 (171) E.L.T. 155 (S.C.), has held that when on lifting the corporate veil it is found that only one person/company has extraordinary interest and pervasive control over the financial matters and management of other companies, irrespective of the latter having separate sales tax, income tax and central excise registration, their clearances have to be clubbed for determining their eligibility for the SSI Exemption Notification No. 1/93-C.E. In this regard, Para 87 of the judgment is reproduced below :- "Whether there is inter-dependence and w....
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.... the same. The factors which have weighed with CEGAT like registration of three companies under the sales tax and income tax authorities have to be considered in the background of factual position noted above. When the corporate veil is lifted what comes into focus is only the shadow and not any substance about the existence of the three companies independently. The Circular No. 6/92, dated 29-5-1992 has no relevance because it related to Notification No. 175/86-C.E., dated 1-3-1986 and did not relate to Notification No. 1/93. The extended period of limitation was clearly applicable on the facts of the case, as suppression of material features and factors has been clearly established. If in reality the three companies are front companies then the price per unit to be assessed in the hands of MACL is Rs. 5 and not Rs. 0.50 as disclosed. The question whether there was manufacture or not was not in issue before the Commissioner. The plea that there was no manufacture has also to be rejected in view of the fact that exemption was claimed by the three companies as manufacturers to avail the benefit of Central Excise Notification No. 1/93. Same view has been expressed by the Ape....
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.... of them is a functioning unit and not a non-functional dummy unit, the duty can be demanded separately from each unit. 7.1.4 However, if there is only one unit which is functioning unit and other units are just dummy units, not actually engaged in manufacturing activities, duty would have to be demanded only from the existing unit by treating the other units as dummy units, and clubbing the clearances made in the name of those dummy units with the clearances of the main unit and for this purpose, there is no need to invoke the provision regarding clubbing in the SSI Exemption Notification." The civil appeals filed against this order by the appellants were dismissed by the Hon'ble Apex Court as reported at [2015 (323) E.L.T. A124 (S.C.)] , [2015 (325) E.L.T. A145 (S.C.)] & [2016 (335) E.L.T. A163 (S.C.)]. 4.4.4 In the case of Box & Carton India Pvt. Ltd. [2008 (228) E.L.T. 85 (Tri. - Del.)] tribunal held- "5. We have considered the rival submissions. The undisputed facts are as under : (1) While SFP is a proprietorship concern of Shri S.K. Gandhi since 1-4-02 (earlier a partnership concerned with his real brother Shri A.K. Gandhi as the other ....
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....ut any authorization from SFP, letters on behalf of SFP to SFP's customers; receipt in the premises of BCI of the raw material purchased in the name of SFP and numerous instances of BCI offering to supply corrugated boxes to its customers through SFP to enable them to save the excise duty, are not at all satisfactory. 5.2 From the above facts the inescapable conclusion would be that though on paper BCI and SFP bear the label of separate corporate identity - BCI a private limited Company with Shri A.K. Gandhi, his wife and wife of Shri S.K. Gandhi as Directors and SFP, a proprietorship concern of Shri S.K. Gandhi, behind this corporate veil, the two concerns are being run as one unit. The absence of machinery for printing cartons in SFP and there being no power connection in it coupled with the above mentioned letters of BCI to its customer offering to supply the corrugated boxes through SFP are a clear indication that SFP is just an extension of BCI and two units were being run as one unit only and the goods actually manufactured in BCI were being cleared through SFP claiming SSI exemption. The Commissioner, therefore, has rightly clubbed the clearances of the two units an....
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.... a concession of the Learned Counsel for the appellants is noted that the appellants are not disputing classification of Filter Parts, Humidifier Parts, Valve Parts and Gauges. As noticed in the earlier part of the judgment, the major dispute raised was as regards the Battery Parts. The appellants claimed that the Battery Parts fall under the heading 39.26 whereas the Department treated it as falling under the heading 85.07. In paragraph 4, the Appellate Tribunal noted that it was not disputed that Plastic Spill Proof Vent Plugs, Flame Retardant Microporous Vent Plugs, Ceramic Vent Plug, Microporous Vent Plug, Aqua Trap Vent Plug and Microporous Filter Discs are used in Batteries as battery parts. A finding was recorded that Heading 39.26 is for residual plastic items. The entries under Heading 84.21 are of filtering or purifying machinery apparatus and parts thereof. The Appellate Tribunal placed reliance on Section Note 2 of Section XVI which provided that parts of the battery have to be classified under Heading 85.07. We have perused the Section Note 2 referred by the Appellate Tribunal. We have also perused the relevant entries under Heading 39.26. It is a residual heading cont....
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....onnection. When he was asked to explain the various financial transaction between the different entities, he could not explain any. In these circumstances, the Revenue confirmed the demand of excise duty by clubbing. Notification 8/2003-C.E., dated 1-3-2003 relates to SSI Exemption. The said notification exempts following from Central Excise duty. TABLE S. No. Value of clearances Rate of duty (1) (2) (3) 1 First clearances up to an aggregate value not exceeding one hundred lakh rupees made on or after the 1st day of April in any financial year. Nil 2 All clearances of the specified goods which are used as inputs for further manufacture of any specified goods within the factory of production of the specified goods. Nil Section 2(v), (vi) and (vii) reads as follows : (v) where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each factory; (vi) where the specified goods are cleared by one or more manufacturers from a factory, the exemption s....
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.... said case also the appellant had separate electricity connection, shed as well as machinery. In the instant case, however, there is no separate electricity connection and there is no machinery owned by the dummy units. Moreover, there was no evidence in the said case regarding financial flowback whereas in the Instant case the appellant has failed to explain the transactions made between the 3 entities. Thus, the facts are significantly different in the instant case. Ld. Counsel has relied on the decision in case of Jifcon Tools Pvt. Ltd. (supra). In the said case, units sought to be clubbed, had separate premises, independent electrical connection, independently financed by MSFC, independent capital machinery supported with by respective purchase invoices, independent labor force at the factory. In the instant case, there is no independent machinery, no separate record of raw materials used, no separate electrical connection and funds, the facts are significantly different. In the case of Jifcon Tools Pvt. Ltd. (supra), the demand was essentially raised on account of common partners and the two entities. Other than that, there was separate premises with separate manufacturing fac....
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....demand. By confirming the demand upon all the seven units the Collector appears, however, to have treated them all as assessees and, implicitly recognized their independent existence." 14. Ld. AR had argued that demand can only be confirmed against the entity which is not dummy entity as held by Hon'ble Apex Court. He argued that in these circumstances, issue of SCN to all entities would be of no avail. He further argued that all 3 entities were represented by Sh. Rajan David and thus there was no violation of principles of natural justice as notice was issued to Sh. Rajan David. We find force in the argument of Ld. AR. The entire argument of Revenue is based on the fact that only one entity has factory/machines and other two are creations on paper to avoid payment of tax. In these circumstances, recognition of separate existence by issue to SCN would have run counter to the allegation that they are dummy. Moreover, we find opportunity was given to Sh. Rajan David to defend and he was authorized signatory of all entities. In these circumstances, we do not find any merit in appeal and the same is dismissed." 4.4.7 In the case of Sri Vivekananda Industries (2017-TIOL- 369....
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....y." 4.4.8 In Chirag Electronics and [2014-TIOL-2327-CESTAT-DEL] tribunal held- " 4. We have perused the impugned order. As regards the clubbing, we find that the impugned order has fully taken into accounts the facts like unity of control, financial flow back, absence of manufacturing facility at M/s. CPMPL, common employees and office, and rent-free space given to M/s. CPMPL and after a detailed discussion supported by judicial pronouncements has clearly established the sustainability of the allegation that clearances of two units are to be clubbed as M/s. CPMPL was merely a dummy unit of M/s. CE. The adjudicating authority also established on sustainable basis that the brand name " Chirag " did not belong to the appellants but actually belonged to others who have been mentioned by name in the impugned order. Mr. Praveen Parashar's application to get the said brand name registered in his name had not been approved. That the brand name happens to be the same as the name of a son in the family does not make the brand name belong to them. As M/s. CPMPL is found to be a dummy unit, the seizure and subsequent confiscation is also clearly sustainable as has been brought ....
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.... the partners of the firms common procurement of raw material, intermixed documentation of sale of final products were brought on record during the proceedings. The statements recorded during the investigation clearly brought out the common procurement of raw material and their consumption in these two units without any restriction. On careful consideration of the evidences available in this regard, it is clear that there is complete common administration and financial control of the two firms. Day-to-day affairs of HPC are managed by the partners of the HP. As already noted that both the firms belong to the same family i.e. one firm owned by husbands as partners another firm is owned by wives as partners. In such situation, when overwhelming common interest is involved, it is not necessary to point out individual instance of financial benefit to one number or other of the same family. The question of financial flow back gets shadowed in a situation like this where a small group of close family members are managing the intricately connected two partnership firms involved in same business." Affirmed by the Hon'ble Supreme Court as reported at [2018 (360) E.L.T. A137 (S.C.)]] 4....
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....ld: "Learned advocate has drawn our attention to various decisions of the Tribunal laying down that common partner in the two offices or having common office etc., cannot be made ground for clubbing the clearances of the two units. However, we find that the ratio of the above units is not applicable to the facts of the instant case, inasmuch as the core issue is not clubbing of clearances of the two units, but relates to the clearances of finished product actually manufactured in the factory of M/s. Shree Rubber Works in the name of M/s. Shree Ambica Rubber Co. The appreciation of evidences on record leads us to only one inevitable conclusion that the goods were being manufactured in the factory of M/s. Shree Rubber Works. Admittedly, at the time of visit of the officers in the factory of M/s. Shree Ambica Rubber Co., no manufacturing activity was witnessed and the machinery installed therein was found to be in dis-mantled condition. Electricity connection was found to be disconnected and electric consumption as revealed by the Electricity department was found to be Nil. The cumulative effect of all the above evidences is that the goods were never manufactured in the facto....
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....ster resin. The other raw materials were surface mat, chopped stranded mat (CSM), woven rovings, rovings etc. (ii) The polyester resins were being supplied by M/s. Bakelite Hylam Limited and the mat materials such as surface mat, chopped stranded mat etc. were being supplied by M/s. FGP Ltd. These raw materials were to be used mixing in suitable proportion with catalyst and accelerator. The type of polyester resin was decided according to the purpose to which the tanks or pipelines were subjected to use. (iii) The tanks and other process vessels will be fabricated after making the necessary mould according to the dimensions and then FRP line by hand laid up, filament winding technique making use of the filament wound machine installed at our workshed. Here again, the type of resin was to be chosen according to the service conditions to which the pipelines would be used." The non-availability of the minimum machinery required for the manufacture of final products drives the lost nail in the coffin of EPI's claim that they were an independent unit. We therefore, agree with the lower authorities that EPI is only a shadow concern of MEPP which was floated to ....
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....its have different family members as their partners. It is also evident that goods were moved in same vehicle under same invoices/kachha slip by the same salesman. Amount collected by the salesman (sometimes in parts) cannot be segregated between the two units. The Benami accounts maintained with Oriental Bank of Commerce were used for transactions in respect of both the units. Since financial transactions cannot be segregated between the two units mutuality of interest is thus clearly established. 20. From the written submissions made at the time of hearing, we find that the appellant is contesting only that the clearances of M/s.HCW be not clubbed and inclusion of other partners, namely, Ms.Geeta Rani, Sh. Jai Prakash and Sh. Kaushal Kumar. It is contended that attribution to Geeta Rani about private records does not attribute criminality to her as she was only a sleeping partner. We find that the private records amongst other places were recovered from the residential premises of Smt Geeta Rani and this fact of recovery of the records from her residence was admitted by her in her statement dated 14.10.1996. 21. The appellant have contended that the liability la....
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....changed for the sole motive of duty evasion. However, it was shown as on lease. In the present proceedings neither any demand has been confirmed against M/s. SFPL nor have its clearances been clubbed with M/s. HBC. These facts have nothing to do with the clubbing of clearances of M/s. HBC and M/s. HCW. Thus, the factum of one unit on lease does not make any difference in this case. The kachha records were resumed from the residential premises, factory premises and office premises of M/s.HBC. The office of M/s. HBC was being maintained inside M/s.MEW and the manufacturing unit of M/s. HCW existed on the first floor of same building of M/s.MEW. Hence it cannot be said that no records were recovered from M/s. HCW. 24. It is also contended that both the firms had separate manufacturing premises, separate machinery manufacturing different goods and were owned by separate partnership firms. We find that while the units have separate premises with separate machinery owned by separate firms, the partners of both the firms are close relatives and members of same family and as elaborated earlier there was overarching control of Sh.Montoo and Sh. Jai Prakash on these firms. In M/s. H....
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....en issuing bogus invoices/dispatch slips. The raw materials and packing materials were also accounted for in the same private ledgers and no separate ledgers were maintained in respect of Noticee No.1 and 2. Even the raw materials were transferred sometime from the premises of Noticee No.1 to 2 and vice versa without issuing any document an without giving and receiving any payments. The Biscuits and the sweets manufactured in the factory premises of Noticee no.1 and 2 respectively were also being removed from the factory premises on the same bogus invoices/dispatch slips. So much so goods were also transported to the various stations in the same truck and were delivered by the same deliveryman. The sale proceeds were collected by the same deliveryman and were further handed over to Sh. Montoo and Sh. Jai Prakash who used to make entries in the same ledger and no separate ledgers were maintained for Noticee No.1 and 2. The expenditure incurred on the sale of the goods were also common for both the units. The payments to the staff of both the units were made by Sh. Jai Prakash and signatures were obtained on the private slips. The sale proceeds were deposited in the six benami accoun....
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....he data retrieved from the seized computer. The payments received for supplies by M/s. Pioneer Hardware industries were also reflected in the note books seized from the residence of Shri Somesh S. Malik. M/s. Satya, Technocast manufactured the same product with the same infrastructure as was manufactured by M/s. Pioneer Hardware Industries and M/s. Satyam Technocast merged in such a way during the period relevant to this show cause notice that both these units are inseparable and the clearances made by both these units have to be clubbed on the ground that both these units belong to the same person i.e. Shri Somesh Malik during the relevant period. The facts and figures of this case establish that these units did not have separate legal entity even though M/s. Pioneer Hardware Industries was a partnership firm till 16-7-2001 with Shri Somesh Malik (Proprietor of M/s. Satyam Technocast) evidence ownership interest in the partnership and also managing all its affairs during the period relevant to the instant SCN." 11. The Tribunal vide the impugned judgment dated 11-3-2004 [2004 (176) E.L.T. 235 (Tribunal)] has set aside the order of the Commissioner. On going through the or....
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....pects of the managements." The issue for which the appellants rely upon this decision was not an issue before the tribunal in this case and hence is distinguishable. • Ogesh Industries [1997 (94) ELT 88 (T)] The first argument advanced by Shri Gujral, ld. Advocate, was that M/s. Gore Industries were a separate corporate entity from M/s. Ogesh Industries. He has shown that in his order, the Dy. Collector has observed that he had no reason to disbelieve that these two corporate entities were separate and distinct. It is his claim that no Panchnama was conducted in the premises of M/s. Gore Industries. In the absence of Panchnama, there was no basis to the observation of the Dy. Collector that the officers on a visit, found no machines, no raw materials or other evidence to establish that no manufacture could be undertaken therein. He submitted that the attendance records would show that there were 7 workers working in the factory of M/s. Gore Industries. He stated that the work of pressing the sheets in the form of locks was done by hand. Other operations were got done on job work basis from M/s. Ogesh as well as from other concerns, referred in the sta....
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....ed Bhawan Ltd., Naini, carrying on the same business of manufacturing and selling allopathic as well as ayurvedic medicines falling under CET Sub-headings 3003.10 and 3003.30 respectively, and has imposed a penalty of Rs. 21 lakhs upon the appellants." From the facts as stated above we find that the issue involved in the present appeal is in relation to denial of exemption under Notification 175/86-CE and Notification No 1/93-CE for the reason that the unit which claimed exemption was under control of some other unit. Issue considered by the tribunal in this order is not the issue before us. Hence distinguishable. • K.R. Balachandran [2003 (151) ELT 68 (T)] 14. ........The Rama Industries has been separately located with separate lease deed and unit has been manufacturing different items namely LPG domestic gas stoves while Meera Industries had been manufacturing domestic pressure cookers and pans. The item being different the brand name is also different and the evidence on record here shows that Meera Industries could not have used the brand name of Rama Industries as the product of the Rama Industries is different. Be that as it may it is fundament....
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....und alone the impugned order is set aside and appeal allowed besides the other ground of time-bar and also for insufficiency of evidence to uphold the charges of evasion of duty in the matter." From the above it is quite evident that facts are clearly distinguishable from the facts of the present case. • Copier Force Vs. CCE [2008 (231) ELT 224 (T)] "9.6 However, we find that no show cause notices were issued to the dummy units floated by CFI. In the light of the ratio of following case law cited by the appellants, the demand on CFI is bad in law as regards demand on photocopiers relatable to the dummies in the absence of show cause notices issued to the dummy units. In the case law it has been held that non-issuance of show cause notice to the alleged dummy units proposing clubbing with the principal unit would vitiate the proceedings, per se. The following are the case law cited by the appellants : 1. SKN Gas Appliances v. CCE - 2000 (120) E.L.T. 732 2. Ramsay Pharma Pvt. Ltd. v. CCE - 2001 (127) E.L.T. 789 3. Ogesh Industries v. CCE - 1997 (94) E.L.T. 88 4. CCE v. Sethia Foods - 2003 (156)....
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....to be stated in the course of the proceedings. ..." 4.5.4 Hon'ble Supreme Court in the case of Madhu @ C.V. Maadhesh (2002 (146) E.L.T. 252 (S.C.)] held "6. Inasmuch as a show cause notice has been issued to both M/s. Komalagowre Textiles and M/s. Selvaganapathy Textiles, we fail to understand as to how any prejudice is caused to either of the parties. At the stage of issuance of show cause notice, particularly when the view of the Department is that one firm is a fictitious business firm or a dummy of the other, it would be easier and more appropriate to examine the matter together. Therefore, it was not necessary to split up the show cause notice in respect of M/s. Komalagowre Textiles and M/s. Selvaganapathy Textiles. However, if appropriate objections are raised before the authorities concerned, the same may be examined and, if necessary, separate proceedings may be held in regard to M/s. Komalagowre Textiles and M/s. Selvaganapathy Textiles." 4.5.5 Following the above case of Hon'ble Supreme Court tribunal has in the case of Shri M Gunasekaran Vs CCE, Madurai [2010 (253) E.L.T. 632 (Tri. - Chennai) held "Viewed in the light of the Hon'ble Supreme Co....
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.... to inform the recipient of the allegations against him so that he can meet them effectively and is not prejudiced by manifestly vague notice which leaves him confused and unable to answer/reply. The assessee must be given a reasonable and real opportunity and made aware as to what he has to meet. But, the notice cannot be read as a legislative enactment which is to the point, precise and required to show exceptional lucidity. What is required to be seen is whether the allegations made have been conveyed and set forth, to enable the recipient/assessee to get an opportunity to defend himself against the charges. Notice should not suffer from obscurity and unintelligibility as to deny a fair and adequate chance to the recipient/assessee to get himself fully exonerated and avoid incidence of tax. What transpired after the notice was served, conduct of the parties thereafter, hearing given, are all factors that have to be examined to ascertain as to any prejudice was caused resulting in an arbitrary and unjust decision. Principle of prejudice resulting from vagueness and uncertainty has to be examined in pragmatic and a reasonable manner. 4.5.7 Hon'ble Allahabad High Court in th....
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.... various components that go into its making, "excisable goods" come into existence and the mere fact that such goods are subsequently fixed on a foundation that will not remove them from the category of excisable goods in which they fell before being so fixed. In the case of Makson Pharmaceuticals (I) Ltd. v. Commissioner [2006 (202) E.L.T. 129 (Tribunal)] tribunal observed - "7. It is clear from the facts on record that before the water treatment plant could be fixed on the foundation, it was required to be assembled, so that it could function as a water treatment plant. This is why all the required components etc. were purchased by the appellant so that they could be assembled into a water treatment plant, which was a marketable commodity. It could not only be fixed on a foundation, but could also be removed by retaining its character as a water treatment plant. When a marketable commodity such as water treatment plant comes into existence by assembling various components that go into its making, "excisable goods" come into existence and the mere fact that such goods are subsequently fixed on a foundation that will not remove them from the category of excisable goods in ....
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....CTV. The application of Rule 2(a) for interpretation of excise tariff was also examined by the lower authority. The appellants had all the facilities of manufacture which included numbering, matching, assembling and testing within their factory premises. On careful consideration of the impugned orders, we are of the considered view that the ratio of the Apex Court in the appellant's own case regarding classification of the impugned goods shall apply in these cases also. Accordingly, we uphold the classification of the impugned goods under CETH 8528 of the Tariff. 4.6.5 The Tribunal has in the case of Vardhman Acrylics Ltd. [2002 (146) E.L.T. 604 (Tri. - Del.)] held "8. We have seen the expert opinion. The expert opinion only indicate that the cloth could be used as a filter. However, use of the cloth is not determinant for classification of the product. The product is normally classified in the form it is presented for clearance. In the instant case at the time of clearance of these imported goods, the goods were 100% cotton cloth in running length and therefore, they have been rightly classified under Chapter Heading 52.08." 4.7.1 The Appellants claim that Rule 173Q....
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....;, provided for vesting of confiscated "Goods" in the Central Government. Lastly, after omission of Rule 173Q(2) of 1944 Rules w.e.f. 12.05.2000 and after supersession of Rule 211 of 1944 Rules in the year 2001, the newly enacted Rule 28 of the Rules of 2001, Rule 28 of the Rules of 2002 and Rule 28 of the Rules of 2017, did not provide for confiscation of any land, building, plant, machinery etc. and their consequent vesting in the Central Government, as Rule 28 only provided for vesting in the Central Government of the "Goods" confiscated by the Central Excise Authorities under the Excise Act, 1944. This derivation of the legislature's intent, in conjunction with the ratio laid in the case of Kotak Mahindra Bank (supra) makes it apparent that the confiscation proceedings were not saved by these mentioned provisions and that the final confiscation order dated 26.03.2007 and 29.03.2007 were passed without jurisdiction by the Commissioner of Central Excise and Customs." 4.7.2 In view of the above decision of the Hon'ble Apex Court, we are not in position to sustain the impugned order to the extent of confiscation made under Rule 173 Q (2) of the erstwhile Central Excise Rules....
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....een amended in any manner, with retrospective effect. If any importer did not include the costs and services as provided for under Rule 9, then noninclusion would have attracted penal action under Sections 111 and 112 of the Customs Act, irrespective of who issued the show cause notice. It is not the issue of show cause notice which determines the liability to penalty. Liability to penalty arises if the goods are liable to confiscation under Section 111. None of these sections has been amended in any way with retrospective effect so as to bring in its purview misdeclaration of value as a punishable offence under the aforesaid sections. In the instant case what has been validated by the Finance Act, 2009 is the action taken by DGCEI officers in respect of issue of show cause notices for Customs violations. This has nothing to do with the confiscability of the goods, if they had been imported in violation of the provisions of Customs Act. Therefore, in the instant case, the penalty has been rightly imposed under Section 112(a) by the adjudicating authority for misdeclaration of value and consequent evasion of customs duty by deliberately suppressing material facts. The appellant has ....
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.... manufactured, produced or stored by him; or (bb) takes credit of duty or money in respect of inputs or capital goods for being used in the manufacture of final products or capital goods for use in the factory of the manufacturer of final product, as the case may be, wrongly or without taking reasonable steps to ensure that appropriate duty on the said inputs or capital goods has been paid as indicated in the invoice or any other document approved under these rules evidencing the payment of excise duty or the countervailing duty, as the case may be, accompanying thereof, or takes credit of duty or money which he knows or which he has reason to believe, is not permissible under these rules, or does not utilise the inputs or capital goods in the manner provided for in these rules, or utilises credit of duty or money in respect of inputs or capital goods in contravention of any of the provisions of these rules, or does not render proper and true account of the receipt and disposal of the said inputs or capital goods and the credit of duty or money taken thereon as required under these rules, or contravenes any of the provisions contained in Section AA or AAA of Chapter V of these r....
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....ention of any of the provisions of these rules or the notifications issued under these rules; or (b) does not account for any excisable goods produced or manufactured or stored by him; or (c) engages in the manufacture, production or storage of any excisable goods without having applied for the registration certificate required under section 6 of the Act; or (d) contravenes any of the provisions of these rules or the notifications issued under these rules with intent to evade payment of duty,- then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer , as the case may be, shall be liable to a penalty not exceeding the duty on the excisable goods in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed, or rupees ten thousand, whichever is greater. 26. Penalty for certain offences.- Any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with....
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....nt 3 were directly responsible for removing of the excisable goods without payment of the duty as is evident from the impugned order and Commissioner has specifically referred to the statements of Shri Jayant Shirwadkar and Shri Shrikant Shirwadkar stating as follows: a. Shri Jayant Shirwadkar, Partner of M/s SRC in his statement dated 18/2/1995 (where he signed as Accounts Executive for M/s UCSSPL) admitted that they were having a unit in Bhosari viz. M/s Ultramatrix Systems Pvt. Ltd. engaged in manufacture, installation & commissioning of air-conditioning package units and stated "...We were not sure whether we should carry out the business in UCSSPL or USPL as collaborators agreement and the other things were uncertain. In 1994, after Budget, we were not sure on which company the collaboration to be entered and in which company /unit as the activities to be conducted after collaboration. This was because of there was drastic change in excise structure. We started planning to form partnership company namely M/s Shrikant Refrigeration Co. having partners Mrs. H.$. Shirwadker and Mr. Jayant Shirwadkar and M/s Excel Tech. Corp. having partners Mrs. Anjali Shirwadka....
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....ed 7 Air-conditioning Systems to M/s UCSSPL. d. Shri Dilip Yendole, accountant and authorized signatory of M/s SRC in his statement dated 17/2/1995 stated that "we are pasting stickers which contains wordings "MADE IN INDIA BY ULTRAMATRIX IN TECHNICAL COLLABORATION With R.C. CONDIZIONATORY -ITALY". He also stated that the stickers 'ULTRAMATRIX' are affixed on the goods manufactured and cleared by these units. In view of explanation III inserted in Notification No.75/87-CE dtd. 1.03.1987 vide Notification No. 11/94-CE dated 1.3.1994 exemption contained in this notification shall not apply to the specified goods bearing brand name, symbol, monogram," From the above statements it is clear that the Appellant 2 and Appellant 3 admitted to their role in the alleged activities for evading the central excise duty they also admitted the fact that they were collecting the duty @ 30 % on the value of goods supplied to their Customers as Central Excise Duty as per the contract, but were not paying the same to government account. Hence we do not have any hesitation in holding that the both Shri Shrikant Shiwadkar and Shri Jayant Shiwadkar were in complete knowledge of the th....