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TMI Blog2011 (8) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... different. The Commissioner (Appeals) has dropped the charges against one of the parties namely, Shri Rakesh Kumar, the proprietor of M/s. India Corporation. The Department has come in appeal against this order. In the other five cases the appeals are by the assessees. 2. It is also relevant to note that this is the second round of litigation. The first adjudication order in the impugned matter was passed by Commissioner of Cental Excise on 7-5-1999. The parties came in appeal to the Tribunal. The Tribunal vide its order dated 27-8-2003 remanded the matter for de novo adjudication for the reason that the finding in the order was that clearances of five units were to be clubbed but the demand was again made separately from the five units. Tribunal ordered that the matter should be re-examined in the light of the Apex Court's decision in Gajanan Fabrics Distributors v. C.C.E., Pune - 1997 (92) E.L.T. 451 (S.C.). In the second round, the adjudication order is passed by the Joint Commissioner because by that time the powers delegated to the Joint Commissioner had been increased by the Board and the case fell within his competency. 3. This is a case where the SCN alleged tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts. 10. After giving these findings, the learned Commissioner confirmed the demand of each unit in respect of their clearances and imposed penalties under Rule 173Q of the Central Excise Rules. This approach of the Revenue is not approved by Hon'ble Supreme Court in the case of Gajanan Fabrics Distributors v. Collector of Central Excise, Pune reported in 1997 (92) 451 (S.C.). In this case, Hon'ble Supreme Court remanded the matter to the adjudicating authority where demand was confirmed from each unit after giving finding that all the units other than Gajanan Weaving Mills to be fictitious unit. The Hon'ble Supreme Court held as under : "We find, after having heard learned Counsel, that it is necessary to remand the matters to the Collector to consider the entire case afresh. The principal factor that leads us to this conclusion is the finding of the Collector, upheld by the Tribunal, that the seven units which are the appellants before us are only a corporate facade although registered with the various authorities with a view to camouflage their actual identity and thereby avail of the exemption which otherwise would be inadmissible to them. The Tribunal failed to give due ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Numbers are not assigned to pages. Paragraph numbers are given to certain paragraphs. How those paragraphs are chosen for number is not quite evident. The Commissioner (Appeals) also does not find it necessary to number the paragraphs in his orders. This has resulted in poor ordering of facts and arguments and difficulty for the Tribunal in referring to findings in these orders. This is a matter in which the Central Board of Excise and Customs can issue instructions, in the interest of Revenue, to guide its officers to make matters easier for all authorities who have to handle such orders after adjudication. 9. Further the Order-in-Original starts with the case against M/s. India Corporation who is just a buyer of the goods. For a logical ordering of the arguments this part of the case should have been examined after examining the cases against the manufacturers. In fact M/s. Guru Dashmesh Engineers and Traders have attacked the order stating that the order is as if only M/s. India Corporation matters in the impugned case. However the fact of the matter is that only M/s. India Corporation attended personal hearing during the second round of adjudication and the adjudicating ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92 to 1994-95 showing that the unit was in fact closed. There was no purchase of dyes required for wire drawing; (ix) M/s. Unique Industries was lying closed in 1994-95 as per the statement of its proprietor Mr. Davindar Singh; (x) The goods invoiced in the name of M/s. Unique Industries were delivered on Truck PB 09 2929 owned by Shri. Z.S. Sidhu. (xi) Shri Rakesh Kumar, Proprietor of M/s. India Corporation has stated that he had received bolts under the bills of M/s. Unique Industries during the period 1994-95 from Joginder Singh an employee of M/s. Guru Dashmesh Engg and Traders. 11. In the de novo adjudication the adjudicating officer decided that the clearances of M/s. Akal Engineers, M/s. Perfect Fasteners and M/s. Unique Industries are to be added to the clearances of M/s. Guru Dashmesh Engineers and Traders. He demanded duty on clearances without extending benefit of SSI exemption. The consequence of the order passed by adjudicating authority in the matter of M/s. Guru Dashmesh Engg. and Traders, M/s. Akal Engineers, M/s. Perfect Fasteners and M/s. Unique Industries can be summarized as under: S. No. Name of Party Duty demanded Penalty imposed 1. Guru Dashmes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oceedings cannot be demanded. 14.1 Reasons given by Guru Dashmesh Engineers and Traders as to why clearance of Akal Engineers should not be added to clearance of the appellant : (a) Akal Engineers was set up in early eighties by partners not related to Shri Z.S. Sidhu. During the major part of the impugned period it was owned by non-related persons - five out of six partners were outsiders. Only from 12-1-1995 it became a partnership concern of Smt. Jagroop Kaur. (b) No evidence of manufacture of the impugned goods by the appellant has been produced. (c) The order does not take into account the explanation given by Shri Janak Raj Garg about how manufacturing activity was carried on at night and how dies were managed and how goods have been got manufactured on job-work basis. 14.2 Reasons given by M/s. Guru Dashmesh Engineers and Traders as to why clearance of Perfect Fasteners should not be added to clearance of the appellant : (a) M/s. Perfect Fasteners were having machinery for manufacture as admitted in para 36.6 of order of the initial adjudication order. They had employed labourers and paid wages; (b) It is not shown that the power for which payment was made a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under Rule 173Q is imposed. This amounts to a new case made out by Commissioner (Appeals). (e) The Revenue has decided that the appellant was not a manufacturer. If that be the case penalty under Rule 173Q could not have been imposed because penalty under this rule is applicable only on a manufacturer and not a person who issued dummy invoices. 16. E/Appeal 2534/2005 filed by Perfect Fasteners The arguments raised by the appellants are the following: (a) The order passed is in violation of natural justice because adequate opportunity for hearing was not given; (b) They had the machinery for manufacture of bolts and they had the orders. They argue that adverse inference that they did not do any manufacturing should not be drawn from the fact that electric bills were raised on minimum consumption basis; (c) Since all transactions were accounted in the books of account no adverse inference should have been drawn; (d) Their clearances were well within the exemption limit set for small scale units; (e) No penalty can be imposed under Rule 173Q on a person who is not recognized as a manufacturer because that rule was applicable only to manufacturers and not to people who jus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rictions with reference to aggregate value of clearance by one or more manufacturers from the same factory. 20. The Order-in-Original discusses at length to show financial flow back among the four units concerned. In many cases involving the issue whether closely inter-related entities can claim separate SSI exemption, generally called by Central Excise Department and assessee claiming such exemption as "clubbing cases", various judicial pronouncements have laid down criteria to decide the matter. But such criteria are applicable where each of the entities prove its separate manufacturing activity at least based on a few parameters. Such decisions are not applicable to a case where goods manufactured by one firm is sold under the invoices of a few other entities. This case before us is primarily of this category. Revenue has a case that even if this argument fails the entities are essentially the same because there is all pervasive financial control by one person and the units functioned as it would be if the units were de facto the same. The arguments in the adjudication order and the order in first appeal have to be understood against this background. 21. Since the en ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity like Unique Industries does not mean that the goods were produced by such entity. The close relationship between this unit and the main appellant is brought out in the orders by lower authorities. Further as on the date of filing of the appeal the claim is that the unit of M/s. Unique Industries is a proprietorship concern of Mr. Navdeep Singh Sidhu, son of Z.S. Sidhu. This fact also indirectly confirms the finding that this unit was used as dummy unit by Shri Z.S. Sidhu. Thus we do not see much merit in the arguments submitted by M/s. Guru Dashmesh Engineering and Traders. 25. In the circumstances we do not find it necessary to examine the case in any further detail and we conclude that the goods sold under the invoices of M/s. Akal Engineering, M/s. Perfect Fasteners and M/s. Unique Industries were in fact manufactured by M/s. Guru Dashmesh Engineering and Traders. The issue regarding flow back of money, etc., are discussed in the order-in-original become relevant only when manufacture in the three units is proved and hence these issues are not discussed in this order though proved prima facie by the Revenue. 26. Since M/s. Guru Dashmesh Engineering and Traders wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing but gave a finding against the appellant in the matter of clandestine removal. Further the adjudicating authority did not allow separate SSI exemption in the hands of this appellant. The adjudication order demanded duty of ₹ 21,57,377/- from this appellant and also imposed a penalty of ₹ 21,57,377/- on this appellant under Section 11AC of the Act read with Rule 173Q. 32. The Commissioner (Appeals) gave a finding that SSI exemption should be allowed separately to this appellant. He accepted the submission and confirmed demand of duty only to the extent of ₹ 10,90,427/-. Further he reduced the penalty to ₹ 10,00,000/- which was imposed under Rule 173Q of the Central Excise Rules, 1944. 33. The case against the appellant is that the sale of wire and flux (raw materials) accounted by them were in fact sale of welding electrodes (finished product). Main evidence relied upon to prove clandestine removal are the following : (a) The firms to whom invoices were issued showing sale of flux, were not working during the period as evidenced from the fact that they had not filed any sales tax returns; (b) During 1990-91 to 1994-95 they accounte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner (Appeals) has given adequate opportunity for hearing and at that time their objection is that they were not given such opportunity in adjudication proceedings. The argument of the appellant that the returns filed by them with Department of Atomic Energy should not be taken as a true statement is not prima facie acceptable when this return is seen in the context of other evidences. The arguments that goods were sold in separate packets and invoiced as 'flux' is prima facie not acceptable. The issue raised that Department has enquired only with three purchasers of flux whereas there were many others also is not relevant because these three buyers accounted for 78% of the sales of raw materials. The statement regarding trial production by another unit under the control of the same person namely Z.S. Sidhu is prima facie a concocted story. The SCN lists instances of sales of raw material such as that to M/s. Guru Dashmesh Engineering and Traders to show how the accounts are manipulated. It is not accepted as genuine entries in their books of account and relying on the mention of these sales in SCN does not support the case of the appellant. The argument that they had nothing to gai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ners during the years 1993-94 and 1994-95 which did not bear the signature of the person issuing it; supplied invoices issued by Akal Engineering during 1993-94 with telephone number 74235 which telephone number did not exist in Bhatinda during the said year. 40. There is also an allegation that Shri Rakesh Kumar was not able to state the size and thickness of bolts purchased from the said units during 1993-94 and 1994-95 when his statement was recorded in April, 1996. There is also the allegation that he received goods under cover of invoices issued in the name of M/s. Unique Industries during the period 1994-95 whereas he had the knowledge that M/s. Unique Industries was owned by Shri Devendra Singh with whom he had business dealings during the year 1993-94. 41. The ld Advocate for the respondent submits that his client did not help in re-casting any invoice issued by M/s. Guru Dashmesh Engineering and Traders. They had received goods against invoices issued by M/s. Guru Dashmesh Engineers and Traders, M/s. Akal Engineering, M/s. Perfect Fasteners and M/s. Unique Industries. Out of these, invoices issued by M/s. Akal Engineering and M/s. Perfect Fasteners were misplac ..... X X X X Extracts X X X X X X X X Extracts X X X X
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