9911796707
TMI Blog2011 (5) TMI 419X X X X Extracts X X X X X X X X Extracts X X X X ..... had cleared the inputs viz. Copper tubes, finished redrawn copper tubes, and copper scrap, clandestinely, without accounting in the central excise statutory records and without payment of duty; ii) One of the group companies viz M/s. Neha Refrigeration (NR in short), existed only on paper and did not have any factory or manufacturing facility for the manufacture of Copper tubes. In fact, M/s. Neha Refrigeration, was floated by the appellants with the sole objective of clearing the said goods manufactured by M/s. NE, in order to evade payment of duty; iii) NE had charged and collected through the said fictitious firm viz. M/s. Neha refrigeration much higher prices, than the prices declared in the Central Excise invoices for the purpose of payment of duty; iv) One group company M/s. Sapna Coils had availed Modvat credit on the invoices issued by M/s. NE, without receipt of the copper tubes in their factory. (b) On completion of the investigation, a Show Cause Notice (SCN) No DGAE/BZU/202/12(4) 80/97/ Pt II dated 31.12.1998 was issued to M/s N E by the Dy. Director, Directorate General of Anti Evasion (Central Excise) Zonal Unit, Mumbai as to why, - A) (1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in question, belonging to M/s. NE and Sapna . Coils, should not be confiscated under the provisions of Rule 173Q (2) of the Central Excise Rules, 1944. The SCN also contained proposal for imposition of Penalty under Rule 209A of the Central Excise Rules 1944 on the appellants. 3. The case was adjudicated by the Joint Commissioner, Central Excise Mumbai -III who passed the order,- (i) confirming the demand of Central Excise duty amounting to Rs. 8735/- (Rupees Eight Thousand Seven Hundred Thirty Five only) in respect of goods manufactured and cleared clandestinely without payment of duty under proviso to Section 11 A (1) of the Central Excise Act, 1944. (ii) confirming the demand of Central Excise duty amounting to Rs. 5,12,863/- (Rupees Five Lakhs Twelve Thousand Eight Hundred Sixty Three only) in respect of undervaluation of copper tubes supplied by M/s. NE, to M/s. SE and M/s. S. Coils, as per records, but diverted and sold to other companies under the delivery challans and bills of M/s. NR, a fictitious firm under proviso to Section 11A (1) of the Central Excise Act, 1944. (iii) imposing a penalty of Rs. 5,21,598/- (Rupees Five Lakh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the said Act, 1944. As regards M/s. Sapna Coils Private Limited, the impugned Order-in-Appeal has confirmed the demand of recovery of Modvat credit of Rs. 1,33,774/- availed under the provisions of Rule 57 (I) of the said Rules, 1944 and equal penalty is imposed under Rule 173Q and Section 11 AC of Central Excise Act, 1944. Penalty of Rs. 50,000/- imposed on the other 2 Appellants was also confirmed. 5. The learned advocate for the appellant makes the following submissions:- (1) a new point, which has not been made before the adjudicating and appellate authorities, has been urged; that is, the show-cause notice dated 31/12/1998 issued by the Dy. Director, Anti Evasion Central Excise Zonal Unit, Mumbai is without jurisdiction as officers of the Directorate General of Central Excise Intelligence were appointed as Central Excise officers only vide Notification No. 38/2001-CE(N.T.) dated 26/06/2001 w.e.f. 01/07/2001. Since the competent authority to issue show-cause notice is not the authority who has issued, the show-cause notice itself is invalid. In this regard he placed reliance on the apex court judgment in the case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d the quantity indicated is 634 kgs.Thus they submit that a comparison of the entries made in the Blue Star inward gate register do not tally at all with the invoices of M/s. Navdeep Engineering either in terms of invoice numbers or vehicle numbers or in respect of quantities mentioned. Similarly, in respect of other 14 invoices of Navdeep Engineering, namely, Invoice Nos. 8 dated 11/07/1995, 9 dated 14/07/1995, 10 dated 18/07/1995, 11 dated 22/07/1995, 14 dated 04/08/1995, 15 dated 12/08/1995, 16 dated 19/08/1995, 17 dated 03/09/1995, 19 dated 17/09/1995, 18 dated 09/03/1997, 19 dated 12/03/1997, 20 dated 12/03/1997, 21 dated 13/03/1997 and 23 dated 19/03/1997, there are no entries at all in the inward gate register maintained by Blue Star company. In respect of other purchasers, namely, M/s. Shriram Refrigeration and M/s. Kelvinator India Limited, etc. no investigation has been carried out by the department to show that the supplies made by M/s. Navdeep Engineering to their sister concerns were in fact diverted to the above said companies. Thus, there is no corroborative evidence adduced by the department to allege that M/s. Navdeep Engineering had diverted the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f India Ltd., etc. Thus the statement given by Shri Subhash Chandra Sharma are inconsistent and such statements cannot be considered as admissible evidence. They have further argued that the shortage of copper tubes was found to be 375 kgs. in the adjudication order and the alleged shortages could be processing loss over a period of 8 years when the appellants were in production and in the absence of any evidence regarding clandestine clearance, no duty can be confirmed against the observed shortage. The learned advocate also submits that while the show-cause notice proposes to impose penalty under Section 11AC on the appellants, the confirmation of the penalty by the learned appellate authority is under Rule 173Q for the period prior to 28-9-96. Since the ingredients of Section 11AC and Rule 173Q are different, the penalty imposed under Rule 173Q is not sustainable and they rely upon the Bombay High Court judgment in the case of Commissioner of Central Excise vs. Nakoda Textile Industries Ltd. 2009 (240) ELT 199. It is also submitted that no penalty could be imposed on Shri Subhash Chandra Sharma, who is the proprietor of Navdeep Engineering, as penal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom Sapna group of companies, pertaining to transactions of M/s. Navdeep Engineering, it was noticed that the entries made in the private registers tallied with the particulars such as date, quantity mentioned in the Central Excise invoices raised by M/s. Navdeep Engineering to M/s. Sapna Coils; however, these goods were sent to companies like M/s. Blue Star Ltd., M/s. Shriram Refrigeration, M/s. Kelvinator India Limited against the invoices raised by M/s. Neha Refrigeration. Mr. Subhash Chandra Sharma, proprietor of Sapna Engineering and Navdeep Engineering and one of the Directors of M/s. Sapna Coils Pvt. Ltd., had admitted that the copper tubes covered under the Central Excise invoices were in fact, diverted and sold to M/s. Shri Ram Refrigeration, Hyderabad, M/s. Kelvinator of India Ltd., Faridabad and M/s. Blue Star Limited, Thane and from the inward gate register of M/s. Blue Star Limited, it is seen that same vehicle, quantity of copper tubes as indicated in the Central Excise invoices were found mentioned in the said register; therefore, there is corroboration of the facts stated by Mr. Subhash Chandra Sharma in his statement. Further, the private registers also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the officers of the Directorate General of Anti-evasion specified therein with the powers of corresponding Central Excise Officers throughout the territory of India. Thus the Deputy Director of Anti-evasion Directorate was competent to issue the show cause notice, as rightly contended by the Ld. DR. 9. The main charge in the show cause notice against the appellants is that M/s. Navdeep Engineering had cleared re-drawn copper tubes to M/s. Sapna Engineering and Sapna Coils on payment of duty at lower values and these goods have been subsequently diverted to reputed buyers like M/s. Blue Star Limited, M/s. Shri Ram Refrigeration Ltd. and M/s. Kelvinator of India Ltd. etc. at much higher prices thereby evading Central Excise duty. The only piece of evidence is the statement of Shri Subhash Chandra Sharma and the entries purported to have been made in the private registers seized from the premises Sapna group of companies. Though the department alleges that corroboration is available from the records of M/s. Blue Star Limited, on a comparison of invoices issued by Navdeep Engineering with the recorded entries for the receipt of goods in the inward gate register of M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as held by the apex court in the case of Francis Stanly @ Stalin vs. Intelligence Officer, Narcotic Control Bureau, Trivandrum [MANU/SC/8783/2006] and Assistant Collector of Central Excise, Rajamundry vs. Duncan Agro Industries Ltd.[MANU/SC/0486/2000] .In the instant case, it is seen that there are no corroborative evidences forthcoming and whatever evidence has been adduced by the department by way of gate register of M/s Blue Star, does not corroborate the case of the department. Accordingly confirmation of demand, merely based on the statements of Mr. S.C. Sharma, Mr. S.P. Sharma and Manoj Sharma and purported entries in the private records seized during the investigation, without any corroboration, can not be legally sustained. Accordingly it has to be held that the department has failed to prove the diversion of duty paid copper tubes by M/s. Navdeep Engineering supplied to Sapna Engineering and Sapna Coils as indicated in the invoices to reputed buyers like Blue Star Ltd., M/s. Shri Ram Refrigeration Ltd., M/s. Kelvinator of India Ltd, etc. It is also observed that these firms have purchased the copper tubes from Neha Refrigeration and have made paymen ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
