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2005 (7) TMI 241 - AT - Central ExciseSSI Exemption - Clubbing and clandestine removal - Duty Demand - Bar of Limitation - Confiscation - Liability under Rule 173Q(1) - Penalty - HELD THAT:- It is an admitted position that the show cause notice has a reference to all the four units required to be termed as one unit and their values of clearances were required to be clubbed together and eligibility to SSI exemption notification was to be determined afresh, yet the notice demands duty separately from each of the units. The demands in the notice are in conflict with the charge. Such notices are required to be set aside. The order impugned is demanding duty of Rs. 1,45,29,754/- from M/s. Sotex, the proprietary firm of Shri M.M. Majithia. The demand cannot be upheld, since the demand in the Show Cause Notice proposed to be recovered from M/s. Sotex was not a figure of Rs. 1,45,29,754/- but much less, the present proposal to confirm the duty demand beyond which was proposed in the Show Cause Notice at Rs. 35,806/- & Rs. 2,884/- cannot be upheld. The finding that the three units are just dummy units cannot be upheld when the department is recognizing separate clearances and duty demands on these other units. 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. Since the ld. Commissioner has found that SS coil were removed for slitting and not have been found to be diverted for any other purpose, the non-following of procedure of Modvat rules will not call for the heavy penalty of Rs. 1.00 lakh under Rule 173Q on Sotex. The same is required to be set aside. Since no duty demands and/or confiscation liability under Rule 173Q(1) are being upheld, the confiscation ordered on M/s. Sotex under Rule 173Q(2) is not upheld. The same is set aside. Since duty demands on M/s. Sotex are not being upheld, the penalty of Rs. 1,45,29,754/- u/s 11AC as imposed is to be set aside. The duty demand of Rs. 18,900/- on 8,400 kgs of scrap found short at M/s. Unity along with Rs. 34,000/- demand of duty on watch straps found short at premises of M/s. Unity under Section 11A determined on M/s. Sotex when M/s. Unity is an independent registered assessee under Central Excise Act, 1944 & a partnership firm, the same is misdirected demand and penalty. The same cannot be upheld as imposed on M/s. Sotex. The duty demands are also set aside for same reasons. When no demands on shortages found at M/s. Unity are being found & held, there is no cause to visit M/s. Sotex with a penalty of 100% under Section 11AC cannot be upheld for the same. That penalty is to be set aside. Since no demands of M/s. Sotex are being upheld, the interest demand will abate. When no confiscation as arrived in this order is being upheld, the penalty under Rule 209A on Shri M.M. Majithia or Shri V.V. Rajani cannot be upheld. Thus, order is set aside and appeals allowed.
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