TaxTMI 
TaxTMI 
2023 (7) TMI 473
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....f Rs. 4,16,25,199/- along with interest and equivalent penalty 2. E/409/20 12 15/Commissioner/CE/ Kol- II/Adjn/2011-12 dated 21.03.2012 April, 2010 to January, 2011 Central Excise duty of Rs. 1,42,57,448/- along with interest and equivalent penalty 3. E/77127/ 2017 01-05/Commr/CGST & CX/HWH/Adjn/2 017-18 dated 22.09.2017 February, 2011 to November, 2015 Central Excise duty of Rs. 13,94,46,610/- along with interest and equivalent penalty 4. E/78084/ 2018 01-02/Commr/CGST & CE/HWH/Adjn/2018-19 dated 01.05.2018 December, 2015 to March, 2017 Central Excise duty of Rs. 3,93,25,766/- along with interest and equivalent penalty 2. In the individual appeals being Appeal Nos. E/410/2012, E/77128/2017 and E/78085/2018, the authorized representative of the appellant firm, Sri Aayush Rungta has challenged the confirmation of personal penalties by the respective Orders-in-Original dated 21.03.2012, 22.09.2017 and 01.05.2018. 3. The facts of the case, briefly stated, are as follows: i. The appellant firm, a supplier of transmission line accessories and hardware....
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....it as traded goods. The appellant had purportedly contravened, amongst others, the provisions of Rules 4, 6, 8, 10, 11 and 12 of the Central Excise Rules, 2002 (hereinafter "Rules"), Sections 91 and 93 of the Finance Act, 2004 and Sections 126 and 130 of the Finance Act, 2007 and it was directed to show cause as to why Central Excise duty amounting to Rs. 4,05,32,570/- with Cesses payable thereon along with interest and penalty should not be recovered in terms of various provisions of the Central Excise Act, 1944 (hereinafter "Act"). It was also proposed in the show cause notice that the amount of Rs. 10.50 lacs already paid should be appropriated. Sri Dinesh Rungta, constituted attorney and authorized representative of M/s S. A. Enterprise, was also directed to show cause as to why personal penalty should not be imposed on him under Rule 26 of the Rules. iv. Subsequently, periodic show cause notices were issued raising demands of Central Excise duty together with interest and penalty against the appellant firm on similar grounds. It was also proposed in the said show cause notices that personal penalty should be imposed on the appellant firm's authorized representative, Sr....
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....the appellants are summarized below : A. That Central Excise duty could not have been charged on presumption basis. The inventory dated 08.02.2010 at page 53 of the Paper Book relating to Ex. Appeal No. 392/2012 clearly showed that there was only one forging machine, one part of landis machine and one brick furnace inside the premises at 207/7, Belilious Road, Howrah-1. The Central Excise officers who had visited the appellant firm's factory had recorded in the said inventory that all the aforesaid machines were old and covered with dust and filth, and the landis machine had not even been installed. The appellant firm's stand was further supported by the certificate of the Chartered Engineer (page nos. 2628-2629 in Part 6 of the combined Paper Book filed before this Hon'ble Tribunal), wherein it had been certified that the goods dealt with by the appellant firm could not have been manufactured using the aforesaid machines at the Belilious Road premises. The adjudicating authority had gravely erred in holding that there was no evidence in support of the claim that the aforesaid machinery had been lying unused for a long period of time or had not been used for manufacturing the goo....
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.... to 2197 in Part 4 of the of the combined Paper Book filed before this Hon'ble Tribunal. No job work was gotten done during April, 2013 to November, 2015 and, in any event, the appellant could not have been treated as the manufacturer in respect of the job workers' activities. F. That the Commissioner's finding regarding the appellant firm's failure to produce supporting documents proving physical movement of goods purchased from SubhLabh Enterprises to Viswanath Projects Ltd. was incorrect. Page nos. 702-711 of Annexure "A" of the reply against show cause notice dated 21.02.2014 clearly showed that the goods had been transported from the premises of SubhLabh Enterprises to the premises of Viswanath Projects Ltd. by truck bearing no. AP-16TX/9879. The appellant had also submitted challans along with the invoices in all other cases to show the movement of goods, for instance, the documents at page nos. 528 and 530 in Part-3, Volume I of the combined Paper Book filed before this Hon'ble Tribunal showed the movement of goods purchased by the appellant firm from Deepak Industries to M. P. Poorv Kshetra Vidyut Vitaran Co. Ltd., Chhatarpur in truck no. MP-15-HA-0282. G. That th....
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....nd that the legal issue arising for consideration in these appeals falls within a narrow compass - Whether a noticee can be charged with Central Excise duty solely on the basis of certain declarations/ representations made to its customers and without it being shown that the said noticee is a manufacturer within the meaning of Section 2(f) of the Act which defines "manufacture" and states that, amongst others, the word "manufacturer" is required to be construed accordingly? 9. We find that the show cause notice dated 24.12.2010, which was the first show cause notice in the matter, had been issued by primarily relying on the representations to various power supply corporations by the appellant firm that she was the manufacturer of the goods supplied by her. After referring to the statements given during the course of investigations by the appellant firm's authorized representative, the said show cause notice had relied on the stipulations and conditions of the tender documents/ contracts, as would appear from a reading of page nos. 55 to 75 of the Paper Book filed in relation to Ex. Appeal No. 392 of 2012. We note that the appellant firm had taken the factual stand that the d....
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....erate had disregarded the actual course of dealing between the parties concerned and, on the other hand, attached overwhelming importance to the appellant firm's declaration/representation given to power supply corporations of being a manufacturer and to the stipulations/ conditions of the tenders/ agreements. We agree with the submissions of Shri Khaitan on behalf of the appellant firm that the decisions of Aska Equipment, 2006 (202) ELT 795 --- 2010 (254) ELT A37 fully supported the appellants' case. 11. We observe that the enquiry and investigations leading up to issuance of the show cause notices dated 24.12.2010 and 24.03.2011, though giving rise to suspicion against the appellant firm, were insufficient to justify the confirmation of demands. We must bear in mind the fundamental principle of law that suspicion, howsoever grave, cannot take the place of proof. The appellant firm had consistently maintained its defence and, furthermore, no inconsistency could be pointed out to us between the statement dated 15.03.2011 of Appellant No.2/Shri Aayush Rungta and the statements given earlier by Shri Dinesh Rungta. In our opinion, the Department has not been able to prove its ....
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....d circumstances, we must hold that the payment of Rs.10.50 Lakhs had been made without prejudice to the appellant firm's rights and contentions. IV. Quantum of goods obtained through job work was quite small as compared to the quantum of trading sales. No incriminating statement had been obtained from any job worker or specific evidence adduced by the revenue establishing unaccounted supply of raw materials/semi-processed goods to job workers by the appellant firm or clandestine receipt of finished goods from the job workers over and above the declared quantities. In any event, we hold that the appellant firm should not have been held liable to duty in respect of job work activities by the job workers on a principal-to-principal basis. 13. As regards the Orders-in-Original dated 22.09.2017 and 01.05.2018, our conclusions and reasoning are stated in the following manner which would also summarize the crucial aspects of the matters: - A. Co-relatable purchase and sales : We find that the appellant firm's claim of trading is borne out from records such as purchase invoices and corresponding sale invoices. We find that the appellant firm has submitted voluminous docume....
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....ales'. Notwithstanding that the appellant firm may have flouted the procedures under central excise law relating to job work, no duty liability could have been fastened on the appellant firm as regards job work activities undertaken by the job workers on principal-to-principal basis. D. Testing at third party premises : The adjudicating authorities should have observed that only visual/ physical inspection of the goods had taken place at the appellant firm's premises and that tests like galvanization test, mechanical test, slip load test etc. had been conducted in outside laboratories. Such position is evident from the documents relied upon while issuing the show cause notice dated 21.02.2014 such as Annexures 'X' and 'B1' as also the test reports filed by the appellant firm in their defense, such as the documents at page nos. 5149 to 5400 (Part 8), page nos. 7897 to 7944 (Part 14), page nos. 8761 to 8786 (Part 17) of the combined Paper Book filed before this Tribunal. E. Demand on sale of materials to private parties and sale of wires, channels, angles etc. : We find that the Department has raised demands on the sale of materials to private parties and sale of wire....
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....nd 26 of the impugned Order-in-Original dated 22.09.2017 sweeping observations have been made against the appellant firm to the effect that the appellant firm had failed to prove the existence of its supplier and that "...the suppliers/vendors list, who gave the Noticee No. 1 manufactured goods for trading purpose, proved to be non-existent thereby indicating to be an afterthought and thereby creating paper trail..". In our opinion, the said observations cannot be confirmed and are liable to be set aside. G. Physical movement of goods : We do not find proper justification to confirm the findings that the appellant firm had not adduced evidence of the physical movement of goods purchased by her or gotten manufactured on job work basis or that the bills referred to by the appellant firm as trading sales did not contain any sort of supporting documents to prove conclusively that the subject sales were trading sales or that the submitted documents did not bring forth evidence of the physical movement of goods. The Commissioner failed to hold that the appellant firm had submitted not only invoices but also challans covering movement of the goods in question and the challan menti....