TMI Blog2011 (4) TMI 667X X X X Extracts X X X X X X X X Extracts X X X X ..... period of limitation and penalty upheld. To sum up the Appeals filed by M/s Akal Engineers, M/s Perfect Fasteners and M/s Unique Industries are allowed by setting aside the penalty. The Appeal filed by M/s Guru Dashmesh Engineers and Traders, the Appeal filed by M/s Esteem Electrodes (P) Ltd and the Appeal filed by Revenue against Shri. Rakesh Kumar are rejected. - E/Appeal No. 2533/2005, 2532/05, 2534/05, 2531/05, 2530/05, 182/05 - - - Dated:- 19-4-2011 - Shri Justice R.M.S. Khandeparkar, Shri Mathew John, JJ. Appeared for the Appellants: Shri G.K. Sarkar, Advocate, Shri K.K. Anand, Advocate Appeared for the Respondent: Shri Sunil Kumar, DR Appeared for the Appellant: Shri Sunil Kumar, DR Appeared for the Respondent: Shri S. Malhotra,Advocate Per Mathew John: This proceeding is for deciding 6 appeals. The matter relates to alleged duty evasion during the period 1990-91 to 1994-95. The Show Cause Notice was issued in Oct 1996. All these appeals arise from matters decided by the same adjudication order. But in appeals filed by the affected parties before Commissioner (Appeal), three different orders were issued one relating to M/s M/s Guru Dashmesh Engin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Company. Shri. Z. S. Sidhu is Managing Director. Shri. Navdeep Singh Sidhu is a Director Welding Electrodes 4. There are two other parties involved. They are,- (i) M/s. Unique Industries Proprietorship concern of Shri. Davinder Singh (ii) M/s India Corporation proprietorship concern of Shri Rakesh Kumar. M/s Unique Industries allegedly helped by issuing invoices in its name for products manufactured by the first unit. M/s India Corporation is the buyer of the products from the first unit in the name of the four different units and also from Unique Industries who allegedly fabricated some documents to help the first four units to evade excise duty. 5. Here it is necessary to record the order of the Tribunal in the first round of Litigation. Para 9, 10, 11 of the order are reproduced below: 9. We find that in this case in the show cause notice consolidated duty was demanded from all the manufacturing units. In the impugned order, the learned Commissioner after considering the evidence on record, held that there is sufficient evidence to prove that Shri Zabarjang Singh Sidhu is the mastermind behind the business operation of these units. It has also been est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Court in the matter in the present appeals requires reconsideration by the adjudicating authority. The impugned order is set aside and the matter is remanded to the adjudicating authority for de novo adjudication. The adjudicating authority will decide afresh after affording an opportunity of personal hearing to the appellants. Both the sides are at liberty to produce the evidence in support of their claim. Appeals are disposed of by way of remand. 6. In the second round of adjudication demand of duty amounting to Rs. 14,26,617/- is demanded from M/s Guru Dashmesh Engineers and Traders for all goods cleared in their name and in the names of M/s Akal Engineers, M/s Perfect Fasteners and M/s Unique Industries and duty amounting to Rs. 21,57,377/- is confirmed against Esteem Electrodes Pvt. Ltd for goods alleged manufactured and cleared by them. Further penalties were imposed on all the six parties under section 11AC of the Central Excise Act read with Rule 173Q of Central Excise Rules 1944. These amounts got modified by the three Orders-in-Appeal which are impugned in this proceeding. 7. We heard arguments on both sides for some time. Due to the poor presentation of facts and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (ii) There was yet another entity by Name M/s Johnson Gas Service owned by Shri. Z. S. Sidhu which was providing interest free loans to these three entities; This entity was not doing any manufacturing activity; (iii) There was free flow of funds among all the four entities at the free will of Z.S. Sidhu who was operating the bank accounts of all the four units; Demand Draft taken using money in the account of one firm was sometimes deposited as payment by other units for purchase of raw material; (iv) Raw material needed by a unit is paid for by funds drawn from another unit as if all the units were the same; Such transactions were not reflected as loan on principal to principal basis in the books of accounts and no interest was paid on such amount by any unit to any other unit. (v) There was free transfer of raw material from one unit to another; (vi) M/s Akal Engineering and M/s Perfect Fasteners were lying closed during the relevant period as is evidenced from the electricity bills for the units which show billing at the minimum level; M/s Akal Engineering was not existing at its address at village Kot Shamir; The machinery in their books of accounts were installed at t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments in each of the Appeals are summarized below: E-2533/05- Guru Dashmesh Engineers and Traders. 14. The main arguments by the Appellants are as under: (a) There is violation of principles of natural justice because they asked for adjournment on 19-02-2004 and thereafter no date was fixed for hearing but decision was communicated after five months. The Ld. Commissioner (Appeal) has noted this plea but recorded the view that enough opportunity was given by him during Appeal and that is good enough. The contention is that giving opportunity during first appeal is no remedy for denial of natural justice during the adjudication stage. (b) Since the order holds Shri Z. S. Sadhu as the real manufacturer, duty ought to have been demanded from him and not from this firm in which Shri. Sadhu is only a partner. Separate SSI exemption should have been extended to him. (c) There is no evidence to show that the goods sold by Perfect Fasteners, Akal Engineering and Unique Industries were manufactured by this firm. (d) There is allegation in the SCN that this Appellant financed Perfect Fasteners and Akal Engineers for purchase of Diesel. There is also allegation that Esteem Elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l) has imposed penalty under Rule 173Q and the amounts to a new case made out by Commissioner (Appeals). 14.3 Reasons given by Guru Dashmesh Engineers and Traders as to why clearance of Unique Industries should not be added to clearance of the Appellant a) Unique Industries is a proprietary concern of Shri. Davider Singh. Merely based on his statement that the unit was not functional during 1994-95 his clearance is clubbed with the clearance of the Appellant. On the other hand there is evidence to show that sale proceeds were received in the bank account of Unique Industries and payments for electricity charges and raw materials were made from that account. During cross-examination of Davinder Singh in the first proceedings he was evasive to the questions put. Since bank accounts show that he was getting the sale proceeds in his account he should be considered as the manufacturer. b) The allegations in the SCN that there was advancing of interest free loans and financial control by Z.S. Sidhu is contradictory to the case that there was no manufacturing activity by the firm because there is no need for funding of a non-operational unit. 15. E/Appeal 2532/2005 filed by Akal E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r and he was eligible for SSI exemption for goods manufactured by him; (c) Penalty is imposed under Rule 173Q which amounts to a new case made out by Commissioner (Appeals). (d) Even if the facts alleged are admitted, Rule 173 Q does not provide for imposing penalty for issue of dummy invoices which is the only offence alleged against the Appellant; Penalty under this rule could be imposed only on manufacturers. Findings 18. We do not find any violation of principles of natural justice because the impugned adjudication was in second round and all the submissions of the parties were already heard. Further when an opportunity was given the parties did not show keenness in availing the opportunity. Further when the Commissioner (Appeal) gave adequate opportunity the Appellants did not have any further submissions to make except to say that they should have been heard by the Adjudicating authority. So it is very obvious that the issue is being raised more as a technical objection rather than as a denial of opportunity to explain their case. So we are not impressed by this argument. 19. There is no question of extending separate SSI exemption limit to each partner of a firm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uring the impugned goods. The appeal just makes an allegation that the finding of Commissioner (Appeal) is contrary to law and facts and further states he has grossly erred in giving his finding. 22. The Appeal filed by M/s Akal Engineers is no better except that it states that its machinery was installed in Village Kot Shamir away from the premises of M/s Guru Dashmesh Engineering and Traders and that M/s India Corporation has said that they were purchasing goods from M/s Akal Engineers. The first contention is rebutted by revenue giving evidence that the machinery was in fact at the premises of Guru Dashmesh Engineering and Traders. The second fact is no evidence to prove that M/s Akal Engineers were manufacturing the goods. 23. The Appeal filed by Unique Industries also does not give any fact to prove that they have in fact manufactured the goods sold using their invoice. 24. The main Appellant M/s Guru Dashmesh Engineering and Traders have given some arguments why the clearance of other units should not be clubbed with their clearance. The main argument is that they might have got some goods manufactured under job-work basis from other units and such clearances do not for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is time barred because the parties concerned have filed returns during the relevant time. The evidences put forward by revenue shows that these returns mis-declared facts as to who manufactured the goods. The clearances were made under invoices of entities which did not manufacture the goods. So the extended period under section 11A is correctly invoked. 29. We do not find merit in the argument that SCN proposed penalty under Rule 173-Q read with Section 11AC and hence no penalty can be imposed for the reason that section 11AC was not in the statute book when the offence was committed. It is a settled position that once offence is stated clearly wrong quoting of section does not make the notice unsustainable, so long as there was another legal provision in place under which the proposed action could have been taken 30. The Appellant also argues that penalty under Rule 173Q is not maintainable because that amounts to travelling beyond the finding in the order. We find that there is no issue of travelling beyond the finding because clearing goods under the invoice of some other person would constitute an offence under clauses (a), (b) and (d) of Rule 173Q and hence the penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts are the following: (a) The allegation is based on assumptions and presumptions only; (b) They were actually selling different components required for making flux in separate packs but invoiced as flux and therefore the argument of the department regarding shelf life of wet flux is not relevant; (c) Department has enquired about only three of the purchasers and those enquiries were also not very conclusive to show that goods were sold as welding electrodes; (d) Even if sale of raw material was considered as sale of finished goods during the relevant period they were within the SSI exemption limit and there was no reason to account sale of finished goods as sale of raw material. (e) Show Cause notice itself shows numerous instances of sale of sale of wire rods; (f) The sale of these materials to Guru Dashmesh Engineering and Traders was on account of the fact that they had let out their premises to that firm to do trial production of welding electrodes; (g) Reliance cannot be placed on information furnished to Department of Atomic Energy. This was a false statement made by the Appellant. Findings 35. We do not find much merit in the preliminary objections rai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is applicable in this case and therefore the demand is not time barred. 36. The Appellant also argues that penalty under section 11AC is not maintainable because the section did not exist when the alleged offence was committed. They argue also that Rule 173 Q cannot be invoked because that amounts to travelling beyond the SCN and the finding in the order. We find that penalty under Rule 173 Q read with Rule 11AC was proposed in the SCN. Therefore is no issue of travelling beyond the SCN or finding because suppression of production and clandestine removal would constitute an offence under clauses (a), (b) and (d) o0f Rule 173Q and hence the penalty is correctly imposed. 37. On the whole we do not find any merit in the argument of the Appellant and hence the Appeal is rejected. Appeal No. E/182/2005 filed by Revenue against Ramesh Kumar Proprietor of India Corporation. 38. In this case Revenue is in Appeal against the order of Commissioner Appeal setting aside the penalty of Rs. 10,00,000/- imposed on the respondent under Rule 209A of the Central Excise Rules by the adjudication order. 39. M/s India Corporation was a buyer of goods from the Appellants in Appeal Nos. E/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... value of the goods. The fact that the re-constructed invoices do not show these crucial details shows that the idea of re-construction was for fraudulent purpose of helping the persons issuing the invoices. 43. The Commissioner (Appeal) dropped penalty imposed on this Respondent by the adjudicating authority. Revenue is aggrieved about this order. 44. We note that the charge against the respondent is not that they re-casted any document. The charge is that the Respondent produced documents re-casted by others. How this becomes an offence punishable under rule 209A of the erstwhile Central excise Rules 1944 is not clear. It is not clear whether he was asked about the alleged discrepancy prior to issue of Show Cause Notice. The Ld. DR's argument that he did not say about re-casting of the documents earlier is relevant only if he was asked about it earlier. At any rate it is not brought out clearly that when he was dealing with the goods he had knowledge that the goods were liable to confiscation under Central Excise laws. The fact that he received goods invoiced by M/s Unique Industries through an employee of M/s Guru Deshmesh Engineers and Traders is not sufficient evidence in t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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