TMI Blog2009 (5) TMI 277X X X X Extracts X X X X X X X X Extracts X X X X ..... ll scale units was rejected by the State Government is not relevant as the benefit of concessional rate of duty under Notification No. 231/85 is not dependent on registration as small scale units by the State Government. – Commissioner (A) order setting aside demand, upheld - E/2916-2921/2004 - 425-430/2009-EX(PB), - Dated:- 26-5-2009 - Justice R.M.S. Khandeparkar, President and Shri M. Veeraiyan, Member (T) Shri Virender Choudhary, SDR, for the Appellant. Shri Naveen Mullick, Advocate, for the Respondent. [Order per: M. Veeraiyan, Member (T) (for the Bench) (Oral)]. - These six appeals are by the Department against the order of the Commissioner No. 8-18/Commr/C.Ex/03, dated 28-2-2003 which was passed in de novo proceedings in pursuance of CEGAT's Final Order No. 226-261/2000-C dated 3-5-2000. 2. M/s. Wearwell Tyres Tubes P. Ltd., the main respondent (hereinafter called respondent No. 1) is a registered manufacturer of tyres and they were paying duty at the normal rates. The three firms namely, M/s. Verma Tyres (hereinafter referred to as respondent No. 2) M/s. Devi Tyres (hereinafter referred to as respondent No. 3) and Shri S.K. Tyres (hereinafter referred t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed with the brand name of respondent No. 1 and the entire quantity so manufactured by respondent No. 2, 3 and 4 were sold back to respondent No. 1; that the sale by respondent No. 1 to respondents No. 2, 3 and 4 and sale back by respondents No. 2, 3 and 4 to respondent No. 1, were make belief arrangements and they have sought financial accommodation with the bank for such arrangement. The entire activities of respondents No. 2, 3 and 4 were controlled by officers of respondent No. 1 and three respondents were sham units/satellite units of respondent No. 1. Therefore the eligibility criterion prescribed under 231/85 should also take into account clearances made by respondent No. 1 which was more than Rs. 2 crores and therefore, the respondent No. 2, 3, and 4 were not eligible for the exemption availed by them. Accordingly, the 11 show cause notices proposed a total demand of Rs. 1,65,05,336/- covering the period from December, 1986 to March, 1994. The Commissioner vide the impugned order taking into consideration defence submissions contained in the reply to the show cause notice and those advanced at the time of personal hearing dropped the proceeding. 5. Learned SDR assails the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctivities of the respondents. Surprisingly, no statement of any of the person who has authored the documents has been relied upon. Infact, there is indication that no statement has been taken from any of the persons concerned. The show cause notices were based on mere inference of various documents adopted by the department. None of these documents have been shown to the witnesses and their version obtained. We are surprised that such a massive demand has been proposed based on "incriminating documents" resumed from the possession/control of the respondents and without deciding the veracity of the same in the investigation. The version of the respondents were available only in the replies to the show cause notice. 7.2 The Commissioner has taken into account the evidence relied upon in the show cause notice and in fact reproduced paras 10 and 11 of the show cause notice and analysed the defence submissions of the parties to the show cause notice and recorded his finding on each of the major evidence sought to be relied upon by the department. The relevant portion of the finding are reproduced below:- "13.1 In view of the CEGAT's order supra, M/s. VT, M/s. DT and M/s. SKT in supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e supplied green tyres to the smaller units but had issued invoices for intermediate goods viz. bead, tread, rubberised textile material. There is no evidence on record to prove it. On the contrary M/s. WWTL in this regard have submitted that CEGAT in a separate case vide its Final Order No. A/473-78/99-NB(DB) has allowed Modvat credit to M/s. VT, M/s. DT and M/s. SKT on tread rubber, bead and rubber sheets combined with textile materials and, therefore, the allegation that green tyres were supplied by them in the guise of bead, tread and rubber sheets was not correct. The CEGAT in its Order No. A/473-78/99-NB(DB) has allowed credit considering the fact that there were proper gate passes available for payment of duty on said inputs and these had also been entered in the Modvat documents. These Modvat documents were being regularly filed by the units to the Range Office and were also being verified by the Central Excise Officers. 14.5 As regards the allegation of supply of tyres at a favourable price by smaller companies to M/s. WWTL, it is observed from records that M/s. WWTL had undertaken marketing of the tyres manufactured by the smaller units and in doing so they had incurred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra 10 and 11 (page 5) of the notice itself. In para 10, it has been alleged that Shri Rajan Puri, G.M. of M/s. VT, exercising overall managerial and supervisory control of production, finished goods in stock and administrative control of M/s. WWTL, M/s. VT are exercising financial control over M/s. SKT whereas in para 11 it has been alleged that M/s. WWTL are having overall supervisory control over finance, administration, production, supply, payment of duty of M/s. VT, M/s. DT and M/s. SKT. 17.2 In the case of M/s. Bentex Industries Pvt. Ltd. and M/s. Bentex Electricals, both the companies were duly registered with the state and Central Excise Authorities as well as Sales Tax Department independently. They both had got their separate registration numbers for the purpose of labour, industrial law, provident fund, income tax etc. Both these companies were earlier issued show cause notices for denying the benefit of SSI exemption on the ground that they were using brand name of another person who was not entitled to the benefit of said exemption. Later on both the companies were issued another show cause notice proposing clubbing of their clearances. The Tribunal in this case - 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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