TaxTMI 
TaxTMI 
2005 (7) TMI 241
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....y concern of Shri M.M. Majithia in Sept. 1993. It was sold to Krishna Textile Works who used the same till Shri Majithia took over the same on monthly basis from 1-7-1997 to 31-10-1997. 2. The period of demand is 1993-94 to October 1997 amounting to Rs. 1,45,29,754/-. A mandatory penalty of equal amount under Section 11AC and a penalty of Rs. 10.00 lakhs on M/s. Sotex under Rule 173Q, fine in lieu of Rs. 10.00 lakhs on M/s. Sotex for redemption of plant etc. and penalty of Rs. 10.00 lakhs on Shri M.M. Majithia and Rs. 2.00 lakhs on Shri V.V. Rajani under Rule 209A and interest under Section 11AB was demanded. 3. All units manufacture branded as well as non-branded SS watch straps. SSI exemption under relevant notification was available only to unbranded straps and 85% of the production is that of branded straps which had been cleared on payment of duty by respective units. These units admittedly have full range of machinery for manufacture of watch straps as is evident from the notice as well as in the Order-in-Original. 4. Appellants produced audited accounts which are subject to statutory audit and income-tax and other supporting documents to show that : (a) Uni....
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....r units were duly accounted and repaid and wherever necessary bank loans were obtained independently and thus there should be no finding of financial flow back which could be upheld in this case. (b) contending that the balance sheet did show that there was separate capital accounts of the concerned partners and/or proprietors, as the case may be, and there was no flow back of any profit. (c) Allegation that M/s. Sotex was sending raw material to all the units was incorrect and that balance sheet shows that all purchase and consumption of raw materials were independent and a chart showing purchase and consumption of raw material was also enclosed to the reply pointing out that all units actually cleared branded goods on payment of duty. (d) Submitted to that M/s. Sotex used to send components to other units for further processing, finishing etc. and such finished parts were against sent back to Sotex by other units depending on the idle capacity. It was pointed out that balance sheets showed that job work charges have been regularly paid by Sotex for this process. Various documents of common purchase of raw materials and reliance of no clubbing in this ca....
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....e Commissioner relied upon gate pass books as alleged in the Show Cause Notice and confirmed the demand of imposition of penalty. However, he directed recovery of entire duty amount from M/s. Sotex though Show Cause Notice sought to recover duty individually from each unit. 8. (a) In appeal, against this order of the Commissioner, the Tribunal passed its order dated 18-5-2001 holding that duty could not be demanded beyond the charge in the Show Cause Notice. Therefore, the demand of duty on M/s. Sotex was quashed, except to the extent as demanded in the Show Cause Notice. It was found that the stand of the department is internally inconsistent and that though such stand could be supported under para 2 of the notification, there is no charge as such in the order or in the Show Cause Notice. The appeal of Sotex was remanded for redetermination for this limited purpose only. It was allowed on the ground that the demand on watch strap and remanded for consideration of issue of clubbing only to the extent of the demand raised on M/s. Sotex. All other three appeals were allowed. (b) A clarificatory order was passed on 22-5-2003 which clarified that instead of three appeals being al....
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....ized records; (iii) Value of clearances as per estimation on the basis of production capacity per day as per company and statements of supervisors. The appellants submit that for the year 1994-95, value of clearances declared by the unit is Rs. 66,77,052/- and the value of clandestine clearances is shown as Rs. 2,40,61,738/-. These figures when added should result in Rs. 3,07,39,590/-. However, the value taken for calculation of duty is Rs. 3,73,08,790/-. Such misapplication of mind, and upholding of demand thereafter, and reliance on assumed/ presumed production on estimation of machines cannot be upheld per se. (e) The matter of existence of these units and the activity were within the knowledge of the department vide proceedings initiated by Preventive Officers by Show Cause Notice dated 8-3-1994 issued to each unit and which culminated in order-in-appeal by Commissioner dated 3-7-1996. The Commissioner's finding in present order impugned on this issue in Para 8 is : "8... Moreover the statement of Shri Subhash Karia recorded at that time in connection with the case booked against Sonic which was adjudicated by the then Assistant Commissio....