TMI Blog2004 (4) TMI 412X X X X Extracts X X X X X X X X Extracts X X X X ..... six thousand four hundred and fifty one) (Rs. 2023001/- : BED and Rs. 303450/- AED (T) relating to the period 1998-99 from Sri. V. Madhu alias C.V. Maathesh, proprietor of M/s. Komalagoure Textile, Ganapathy, Coimbatore 6, under proviso to Section 11A(1) of the Central Excise Act, 1944. 2. I confirm and demand duty of Rs. 4192460/- (Rupees forty one lakhs ninety two thousand four hundred and sixty only) (Rs. 3645617/- : BED and. Rs. 546843/- : AED (T) ) relating to the period 1999-2000 from Shri V. Madhu @ C.V. Mathesh and M/s. Selvaganapathy Textiles, under proviso to Section 11A(1) of the Central Excise Act, 1944. 3. I demand interest at appropriate rates for the above duty amounts under Section 11AB of the Central Excise Act, 1944. 4. I impose a penalty of Rs. 23,26,451/- (Rupees twenty three lakhs twenty six thousand four hundred and fifty one) on M/s. Komalagoure Textiles (Proprietor Shri V. Madhu @ C.V. Maathesh) under Rule 173Q of erstwhile Central Excise Rules, 1944 enforceable under Section 38A of the Central Excise Act, 1944 read with Section 11AC ibid. 5. I impose a penalty of Rs. 41,92,460/- (Rupees forty one lakhs ninety two ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dhu, Technical Advisor of M/s. Selvaganapathy Textiles and statement was obtained from him on 3-2-2000 and on various other dates. Further investigation was also taken up and as a follow up action statements were recorded from various persons such as V. Madhu alias C.V. Maathesh of Komalagoure Textiles/M/s. Selvaganatphy Textiles, P. Dinesh of M/s. Sree Vignesh Textiles under Section 14 of the Act and also from various other persons including one C. Devaraj. It was in these circumstances that proceedings were initiated against the appellants by issue of show cause notice dated 25-7-2000 on an allegation that M/s. C.V. Maathesh Properietor of M/s. Komalagoure Textiles, and M/s. Selvaganapathy Textiles, lessee of M/s. Komalagoure Textiles had contravened the provisions of Rules 9(1), 52A, 53 and 173B, 173C, 173G, 173F and 174 of the CE Rules, 1944 inasmuch as they had wilfully suppressed the consumption of electricity, purchase and consumption of cotton, suppressed the production, clandestinely removed the goods and floated fictitious concerns for issuing invoices, and evaded payment of Central Excise duty and the show cause notice culminated in the order of adjudication passed by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Central Excise Department for cancellation of the Registration Certificate, documentary evidence showing the purchase of machinery, agreement for payment of rentals for land and building, income tax return, Sale deed etc. to show that both the units were independent and separate entities. He has further submitted that in fact Para 3(c) of the show cause notice itself admits that M/s. Selvaganapathy Textiles is the lessee of M/s. Komalagoure Textiles during the year 1999-2000. He submitted that the department has demanded duty of Rs. 42,73,996 - jointly from both the units for the said period apart from a separate duty demand of Rs. 23,26,451/- from M/s. Komalagoure Textiles for the year 98-99. He has also invited our attention to Para 57 of the impugned order, by which the Commissioner has held that C.V. Maathesh has floated the fictitious and dummy units like M/s. Selvavinayaga Textiles, Sree Ganapathy Textiles and Sree Vignesh Textiles for the purpose of clearing the cotton on cones, manufactured in M/s. Komalagoure Textiles and M/s. Selvaganapathy Textiles with intent to evade payment of Central Excise Duty etc. and has reached a conclusion that the total duty demanded is Rs. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ased their unit to M/s. Selvaganapathy they financially helped, M/s. Selvaganapathy in running the unit. Therefore, the demand for the period 1999-2000 has been correctly made on M/s. Selvaganapathy Textiles. She has also invited our attention to Para 56 of the impugned order wherein the Commissioner has referred to the statements given by various persons wherein they had admitted that the unaccounted cotton yarn on cones had been cleared directly from M/s. Komalagoure Textiles and M/s. Selvaganapathy Textiles but the invoices were raised by the dummy units. Sree Vignesh Textiles and Sree Ganapathy Textiles, as second sales so as to make it appear that the yarn had been sold by these dummy units. She therefore, prayed that the appellants are required to be put to terms as the Revenue has a strong case in their favour. 6. We have carefully considered the submissions made by both the sides. Before we proceed to consider whether a prima facie case has been made out by the appellants for waiver of pre-deposit of duty and penalty we shall first proceed to consider the preliminary objection raised by the appellants that joint show cause notice cannot be issued to two persons and for de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clear violations of the principles of natural justice and on this score alone, the impugned order is liable to be set aside for granting effective opportunity of hearing to the defence. 8. Coming to the next plea viz. invocation of the longer period of limitation, we observe that it was not the case of the Revenue that the appellants have not filed the RT 12 returns regularly and which have been assessed. Further, there was periodical inspection by the Audit Branch of the Department. Prima facie, it cannot be said that the appellants have held back information from the department about their activity. Further, on going through the records, such as SSI certificate, Registration certificate both under the Central Excise and Sales Tax Departments, Cancellation of Registration of M/s. Komalagoure Textiles etc. we find that the two units M/s. Komalagoure Textiles and M/s. Selvaganapathy Textile were functioning as two independent entities for two distinctly separate periods. Further we also find that the impugned order is bristled with contradiction inasmuch as the Commissioner has recorded a clear cut finding that Since M/s. Komalagoure Textiles had surrendered the licences and M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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