TaxTMI 
TaxTMI 
2024 (7) TMI 1040
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....es, 2004 on the appellant- company and a penalty of Rs. 10,00,000/- upon the appellant no. 2, the Director of the company, under Rules 26 (1) & (2) (ii) of the Central Excise Rules, 2002. An amount of Rs. 4,00,000/- deposited by the appellant-company during the course of investigation has also been appropriated by the Ld. Commissioner towards the aforesaid duty liability confirmed. Aggrieved against the confirmation of the demands mentioned above, the appellants have filed these appeals. 2. The facts of the case are that the appellant is a manufacturer of various packaging items such as printed cartons, corrugated boxes, labels, stickers, etc., falling under heading no. 48192020, 48211020 & 4707900 of the of the Central Excise Tariff. During the period from 26.06.2007 to 11.08.2009, the appellant manufactured and cleared finished excisable goods from their factory for sale to customers under cover of central excise invoices on payment of appropriate central excise duty. The appellant also undertook job work to various customers on receipt of job charges, on which they have not paid central excise duty. The appellant filed monthly statutory returns declaring the information as re....
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....these goods cleared under job work challans. 2.4. The Officers of the Headquarter of Anti-Evasion Unit of the Central Excise Department visited the appellant's factory on 11.08.2009 and seized certain documents. Statements of various officers and Directors of the company were also recorded. On the basis of the investigation conducted, a Show Cause Notice dated 30.04.2012 was issued to the appellant alleging that during the said period, the appellants had surreptitiously manufactured excisable goods and removed the same without payment of central excise duty under the cover of challans as well as under the guise of job work. After due process, the Notice was adjudicated by the Commissioner and the impugned order was passed. 3. The impugned order has been passed mainly on the basis of the following findings of the ld. adjudicating authority: - (i) The appellant claimed that they undertook job work on behalf of other principal manufacturers, such as, M/s. Future Educare, M/s. U.V. Coaters (P) Ltd., M/s. U. Like Carton Manufacturing Co., M/s. Carton Corporation, etc. However, in his findings, the ld. adjudicating authority observed that there was no manufacturing unit th....
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....the appellant for further processing on job work basis, only in paper, whereas the goods removed under such alleged job work challans were actually dutiable finished goods manufactured and cleared by the appellant. The contention of the appellant is that this purported finding of the Ld. Commissioner is ex-facie contrary to the materials on record; the documents available on record clearly establish that the three companies, viz., M/s. U.V. Coaters Pvt. Ltd., M/s. U. Like Carton Manufacturing Co. and M/s. Carton Corporation were existing during the relevant period of time and they were having necessary infrastructure to undertake manufacture or carry out processing activities on their own in their respective units and were carrying on independent business on principal-to-principal basis with all concerned, including the appellant. Thus, the appellants submit that the conclusion of the Ld. Commissioner in the impugned order about the non-existence of the said three companies is based on mere assumptions and presumptions and, hence, untenable and unsustainable. 4.2. It is further submitted that the entire duty demand of Rs. 1,62,71,224/- has been confirmed in the impugned order on....
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....e demands confirmed on the basis of these annexures D/4', 'D/5', 'D/6' and 'D/7', would not survive. 4.3. A duty demand of Rs. 16.23 lakhs (including education cess and SHE cess) has been demanded and confirmed as per Annexure 'D/8' of the Show Cause Notice by the said order. In this regard, the appellants submit that the delivery challans referred to therein were exclusively issued for return of goods after job work to M/s. Future Educare (P) Ltd., for which the appellant raised bills claiming job charges; the goods cleared under these delivery challans are covers of exercise books which were printed by the appellant on job work basis; these covers were then used by the said M/s. Future Educare (P) Ltd. (either by itself or through others) for making exercise books/registers which are exempted from duty under Notification No. 4/2006-CE dated March 1, 2006. In addition, they submit that during the relevant period, the printing job carried out by the appellant was exempted from Service Tax as per Notification No. 14/2004-ST dated September 10, 2004; as such this purported demand of Rs. 16.23 lakhs is, on the face of it, illegal, invalid, untenable and unsustainable. 4.4. It is....
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.... 'D/1' to 'D/3' of the Show Cause Notice, on the misconceived ground that the appellant had surreptitiously manufactured and cleared the said finished goods/semi-finished goods for which no central excise invoice was raised and no duty was paid; this is a patently erroneous finding by the ld. adjudicating authority; the reconciliation charts along with relevant documents submitted by them before the Ld. Commissioner has been completely ignored; the relevant documents, including reconciliation charts, included in the Paper Book conclusively demonstrate ex-facie incorrectness and untenability of the said demand of Rs. 101.07 lakhs. 4.5. In the Annexures 'D/1 to 'D/3' of the Show Cause Notice, the appellant pointed out the following discrepancies: i) Delivery Challans have been issued for clearance of semi-finished printed sheets customer specific. Where unit of measurement is in sheets, the items has been considered as semi-finished goods in as much as unit of Measurement of finished goods is always in 'pieces'. ii) In many cases, delivery challans have been issued for clearance of finished goods, but description of goods in delivery challans are differen....
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....bad. In support of the aforesaid arguments, the appellant placed their reliance on the following decisions: (i) CCE vs Laxmi Engineering Works, 2010 (254) E.L.T. 205 (P&H) (ii) CCE vs Lord's Chemicals Ltd., 2010 (258) E.L.T. 48 (Cal) (iii) Sakeen Alloys Pvt. Ltd. Vs. CCE, 2013 (296) E.L.T. 392 (T) 4.7. Regarding, the penalties imposed on the appellant-company and its Director, the appellant submits that the company has paid central excise duty wherever payable by them; they were not liable to pay central excise duty on the job charges received by them; as the company is not liable to pay duty on the job charges, the demand of duty on these job charges is not sustainable and hence no penalty imposable on the appellant-company; for the same reason, it is contended that no penalty is imposable on the Director of the company also. 4.8. Accordingly, the appellants prayed for setting aside the demands of duty confirmed and penalties imposed in the impugned order. 5. The Ld. Authorized Representative appearing for the Revenue submits that the appellant-company has undertaken complete manufacture of finished goods and cleared the same under the guise of ....
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....l Excise Act, 1944, they should have visited the factory of the appellant and ascertained the nature of the activities undertaken by them. Since, they have mainly undertaken the job of 'printing' which is an exempted activity and the process of 'printing' does not amount to manufacture, the demands confirmed on the basis of these Annexures D/1 to D/8', would not survive. 7.3. The letter was written by the appellant on 02.04.2007. However, the Department has not initiated any action to ascertain the veracity of the contents of the letter. The Headquarters Anti-Evasion Unit visited the appellant's factory only on 11.08.2009 and seized certain documents, based on which the Show Cause Notice dated 30.04.2012 was issued. We observe that the Notice considered the entire job work done by the appellant to various assesses as finished goods manufactured by them and demanded central Excise duty of Rs. 1,62,71,224/-, which has been confirmed in the impugned order on the basis of Annexures 'D/1' to 'D/8' to the Notice. 7.4. We observe that a total duty demand of Rs. 101.07 lakhs has been confirmed as per the Annexures 'D/1' to 'D/3 to the Notice. A perusal of the Deli....
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....rers at their factory to make finished goods. We observe that most of the challans mentioned in the Annexures D/1 to D/3 to the Notice mentioned the job work undertaken by them as 'printing only'. We do not find any discussion contrary to this claim of the appellant in the impugned order. Further, we observe that the appellant raised bills on the principal manufacturers claiming job charges with reference to the supplier's challan as well as the challan of the appellant. The Department has not brought in any evidence to establish that the appellant has actually received the cost of finished goods and not the 'job charges' alone. 7.6. We observe that the impugned order alleges that the appellant has clandestinely cleared their finished goods in the guise of job work. The appellant submits that clandestine removal, being a serious charge, is required to be proved beyond doubt on the basis of affirmative evidence and not on the basis of inferences. We agree with the submission of the appellant that clandestine removal must be proved and supported by sufficient evidence and the burden of proof in this regard is on the Department. Such onus to prove is required to....
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....above said three SSI units have sent inputs under the job challans for processing and the semi-finished goods were returned to the respective companies under the appellant's job challans and the appellant raised the bills on the said companies for the 'job charges' giving reference of both the challans. The only job work which the appellant undertook for these companies was 'printing' of the boards sent and returned the same. The activities undertaken by the appellant to these companies does not amount to 'manufacture' as defined under Section 2 (f) of the Central Excise Act, 1944. On receipt of the semi-finished goods, the respective units undertook further processing and the final product chargeable to duty emerge only at the premises of the respective units. We observe that the Department has not brought in any evidence to counter these submissions made by the appellant. The Department merely alleges that these units were not existing and hence they could not have sent the material for job work. However, the appellant submits that the three SSI units had independent existence and they had their own plant and machinery, who dealt with many other companies ....
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..... The intimation was given to the concerned Superintendent much before the visit of the anti-evasion wing of the Commissionerate on 11.08.2009. This intimation given by the appellant cannot be considered as an afterthought or cover-up to conceal their manufacturing activities. The purpose of the intimation is to give an opportunity to the Department officers to verify the contents of the intimation in case of any doubt. Since, no verification was done either at the end of the appellant or at the end of the above said principals (SSI Units), we hold that the allegation of the Department after a period of 5 years that those units were not existing at the time of investigation and they have not undertaken job work, is not sustainable. 8.5. The appellant has contended that the only job work they undertook was 'printing' of the boards and returned the same to the principals for further processing at their factory. The activity of 'printing' undertaken by them to these companies does not amount to 'manufacture' as defined under Section 2 (f) of the Central Excise Act, 1944. On receipt of the semi-finished goods, the respective units undertook further processing....
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....not arise. 11. Regarding the penalty imposed on the Director, Shri Milan Kumar Mehra, we observe that the impugned order alleged that he is the mastermind in floating the fictitious units and instrumental in clearing the finished goods clandestinely without payment of duty under the guise of job work. Since the allegation of clandestine removal of the goods without payment of duty has not been established, we hold that no penalty imposable on the Director/Appellant No. 2. Accordingly, we set aside the penalty imposed on Appellant No. 2. 12. In view of the above discussion, we set aside the impugned order and allow the appeals filed by the appellants, with consequential relief, if any, as per law. (Order pronounced in the open court on 09.07.2024) ============= Document 1 ANNEXURE-'B" 446 WIDE ANGLE PACKAGING SYSTEM PVT. LTD. WORKS VILLAGE CHAKUNDI NH-2 (DELHI ROADE PO. DANKUN DIST HOOGHLY PIN 7123102659-1873, FAX 2659-1874 REGD. OFFICE: SOL, KANKURGACHI ROAD, KOLKATA - 700 054 E-MAK [email protected] To. The Superintendent, Central Excise, Dankuni Division 29/1B N.K.Baner gee Street Rishra, Hooghly Sub-Job work for non excise unit ....