Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 1094 - CESTAT NEW DELHISSI exemption - wrong availment of Exemption benefit - Notification No.175/86-CE and 1/93-CE - denial of SSI notification - clubbing of value of clearances - impugned order does not hold one person as the manufacturer and the others as dummies - Held that:- the manufacture and clearances made by the respective noticees/appellants - M/s Atlantic Chemical Industries, M/s Foamsil Chemicals (not appellant here) and M/s Arun Chemicals for the item namely RBA availing the benefit of Notification No.175/86-CE (1/93-CE later) have to be clubbed together as we hold that these units are one and the same, when their operations are under common management and financial control and have mutuality of financial interest with each other. When it is so, then we agree with the findings of the impugned order. The three units namely, M/s Atlantic Chemical Industries, M/s Foamsil Chemicals and M/s Arun Chemicals, whatever is their constitution, (these are proprietary concerns), are under common management and closely controlled by only one person Shri J.S. Jain, who is one of the appellants here. The facts and circumstances have warranted to examine the reality of these units; and after going behind the mask of these entities, it has been revealed that activities of these units i.e. manufacture, clearance etc. has to be clubbed together supported by the decision of Hon'ble Supreme Court in the case of Calcutta Chromotype Ltd. vs. C.C.E., Calcutta [1998 (3) TMI 138 - SUPREME COURT OF INDIA]. Regarding the submission that M/s Arun Chemicals had got no manufacturing activity, it may be mentioned that both M/s Foamsil Chemicals and M/s Arun Chemicals have been actively involved in the operations of wrongly availing exemption under Notification No.175/86-CE by -artificial fragmentation when there was no distinction in management of the firms’. Therefore, M/s Arun Chemicals (who is one of the appellants) deserves to be penalized under Rule 9(2) and 173Q of Central Excise Rules. We are giving no specific findings on M/s Foamsil Chemicals as they are not the appellant here. It is clear that noticee appellants M/s Atlantic Chemicals played a major role in the manufacturing of the item RBA. Many of the machinery items and facilities for manufacturing are available only with M/s Atlantic Chemicals. Therefore, after clubbing of clearances of the subject three units, liabilities for payment of duty of Central Excise is hereby fixed on M/s Atlantic Chemicals. Consequently, the appellant M/s Atlantic Chemicals is to pay total duty of Central Excise of ₹ 71,06,066/- (i.e. ₹ 38,45,363/- + ₹ 31,39,343/- + ₹ 1,21,360/-) for the RBA manufactured and cleared during 1989-90 to 1993-94. In this regard, corresponding penalty of ₹ 70,20,000/- is also imposed on M/s Atlantic Chemicals under Rule 2(2) and 173Q of C.Excise Rules. Further M/s Arun Chemicals have been involved in continuing this operation of wrongly claiming exemption Notification No.175/86-CE ; therefore, the penalty of ₹ 1,20,000/- imposed on them is hereby sustained. Demand and imposition of penalties - RBA manufactured and not accounted for - removed clandestinely in the guise of soda bicarbonate - Held that:- the retractions and modifications do not matter when overall evidences conclusively prove that appellants in fact cleared their product RBA in the guise of soda bi carb thus evading central excise duty. It has also come on record that soda bi carbonate cannot be technically used by the manufacturers concerned, who are using RBA as one of the raw materials for their products in Kerala. In other words, soda bi carb is not the substitute for the use of RBA in the respective rubber or other industries. In this regard, we entirely agree with the findings given by the Commissioner (Adjudication) in the impugned order. It also appears from the record that “the RBA cleared in the guise of Soda bi carb by Atlantic Chemicals and Arun Chemicals, were received for further disposal by the Ceyenar Chemicals, India Rubber & Chemicals and Lotus Chemicals. It is evident that Ceyenar Chemicals, Inda Rubber & Chemicals and Lotus Chemicals had sold the said goods to various hawai rubber sheets manufacturers and also collected the differential amount between the price of such supplied RBA and price of Soda bi Carb and arranged then remittance to Atlantic Chemicals and Sh. J.S. Jain. In their defence submissions dated 9.1.95, India Rubber & Chemicals, Ceyenar Chemicals & Lotus Chemicals have denied the allegations and contested the proposed penalty in the SCN. However, these submissions are not supported by any evidence. On the other hand, there is overwhelming evidence indicating the receipt and disposal of RBA transported under the garb of Soda bi Carb as discussed above. It is, therefore, held that they have been concerned in the receipt and disposal of the said offending goods and hence liable to penalty under Rule 209A of the CER”. Penalties imposed in the impugned order on M/s Atlantic Chemicals (of ₹ 29 lakhs) and on M/s Arun Chemicals (of ₹ 6 lakhs) are modified and we instead impose the penalty of ₹ 35,00,000/- (Rupees thirty five lakhs only) on M/s Atlantic Chemicals only in this regard under Rule 9(2) and Rule 173Q of the Central Excise Rules. Further, it is to be noted that M/s Arun Chemicals along with M/s Atlantic Chemicals and others has been actively involved in the clearance of RBA in the guise ofsoda bi carb and therefore, deserve imposition of penalties. Consequently, penalty of ₹ 6 lakhs imposed on M/s Arun Chemicals by the impugned order under Rule 9(2) and Rule 173Q of Central Excise Rules is hereby sustained. Demand and imposition of penalties - extra production of RBA (based on the test reports) - not accounted for in the production records and was removed clandestinely without payment of duty - Held that:- change of extra production is based solely on the ‘test reports’ and the Revenue has not been able to give any other corroboratory evidence to support this charge of extra production against the respective assesees. Further, when M/s Arun Chemicals do not have required manufacturing facility available with them there cannot be any production of RBA on record by them. Moreover, unless there are sufficient corroboratory evidences on records to support this charge of extra production of RBA (based on the test reports), we are of the considered view that there would be no sufficient justification to sustain the charge of extra-production of RBA (based on mere test reports), where the Revenue claims that central excise duty was not paid by the respective noticees/appellants. In other words, when we do not find any corroborative evidence(s) to sustain the charge of extra unaccountable production of RBA (based on test report), we have no option but to hold that this charge of unaccounted production of RBA (based on sample test reports) by the noticees namely, Atlantic Chemicals, M/s Foamsil Chemicals and M/s Arun Chemicals remain unsustainable and hereby dropped. Consequently, the penalties imposed on the respective noticees are also not sustainable and are hereby dropped. Imposition of penalties - Held that:- we are of the considered view that there is no reason to interfere with the above penalties. The impugned order has rightly imposed these penalties on the respective noticees appellants for the reasons mentioned in the impugned order. - Appeal disposed of
|