TaxTMI 
TaxTMI 
2026 (2) TMI 3
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.... and cleared school bags without payment of Central excise duty to Directorate of Elementary Education, Government of Tamil Nadu on behalf of M/s. Silvertones Impex Pvt. Ltd., New Delhi, proceedings were initiated. During investigation, eight number of representative samples of bag were found at the factory premises of the Appellant and the same were recovered vide Mahazar dated 02.09.2013. Further, statements from various persons were recorded and on conclusion of the investigation, show cause notice was issued on 17.06.2015. Thereafter, as per the impugned order, Adjudication authority held that the school bags are manufactured and cleared by Appellant without payment of central excise duty and confirmed the duty demand with interest and also imposed penalties under various provisions of Finance Act, 1994. Aggrieved by said order, present appeal is filed. 4. When the appeal came up for hearing, the Learned Counsel for the Appellant submits that the entire allegation is prima facie unsustainable; though it is admitted that Appellant is manufacturing and trading various kinds of school bags, M/s. Silvertone Impex Pvt., Ltd., Delhi had received order for four lakh school bags fro....
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....ters of cloth would be required per month; following other items like zip fasteners, buckles, etc., will be needed; the show cause notice (SCN) / impugned order is totally silent on these issues; even if one were to assume that the appellant was the manufacturer, the allegation that the subject goods had been manufactured by them is not sustainable in the absence of any evidence regarding purchase of raw materials such as fabrics, zip fasteners, buckles, etc.; it need not be overemphasized that to manufacture the quantity allegedly manufactured by the appellant, corresponding raw materials, employment of labour, investment of capital etc., are required. However, in the impugned order there is no findings on the following: (i) Purchase of raw materials to manufacture such huge quantity as alleged in the Show cause notice(SCN); (ii) Source and investment of capital to procure the required materials for the manufacture of the alleged quantity; (iii) Evidence of transport and receipt of raw materials into the factory and their use in manufacture of the excisable goods i.e. bags; (iv) Evidence for payment for the purchase of the raw materials; ....
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.... M/s. Sri Mahalaxmi Trading Co. It is also on record that they had opened Bank account and also given their address. Shri. Bhawarlal was introduced by M/s. NDS & Company, Chartered Accountant, Bangalore. Similarly, Mr. Govind Kumar who opened an account as Proprietor of M/s. Sri Mahalaxmi Trading Company was introduced by Ashish Kumar Choudary, Chartered Accountant (CA). Learned Counsel submits that before concluding that these firms are fictitious, DGCI deemed it proper not to conduct any investigations with the Bank or Chartered Accountant who had admittedly introduced Shri. Bhawarlal and Shri. Govind Kumar to the bank. Further no attempt was made to locate the person from the addresses given in the application and no attempt was made to find out the details of the person who had operated the account before concluding that these are fictitious firms. 8. The Learned Counsel also drew our attention to the statement of Shri. Jayakumar, Proprietor of M/s Inter State Logistics where it is stated that they have transported school bags from February 2013 to June 2013 whereas duty is demanded from April 2013 only. It shows that such school bags were transported which only confirm that....
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....ver existed in the said address and that since 1980 no bag manufacturer or trader has occupied any premises in the building situated at No. 20, Murali Market, M.T. Street, Bangalore - 560 053. Further investigation was conducted with the bank where M/s. Max Trading Co., Bangalore had their account and it was further established that they had no other address. All reasonable efforts made by the investigating officers did not result in bringing to light the whereabouts of the company or any person associated with it. It is also stated by Shri. Uday Kishan Suthar, that he had no clue about the company or its owners, though earlier he was supposedly in contact with them and with whom he had placed large orders. Thus, Adjudication Authority rightly reached to the conclusion that M/s. Max Trading Co., Bangalore never existed as a company and Shri. Uday Kishan Suthar has engineered the creation of the fictitious unit with an intention to mis-guide the tax authorities to evade payment of Central Excise Duty and other statutory taxes. 12. As regards, the contention of the Learned Counsel that no investigation was conducted with the Bank and the Chartered Accountants, Learned AR submits t....