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2015 (12) TMI 3 - CESTAT MUMBAI

2015 (12) TMI 3 - CESTAT MUMBAI - TMI - Waiver of pre deposit - 100% EOU - Clandestine manufacture and clearance of goods - DTA Clearances - Clearance of goods in the name of fictitious units - exemption on capital goods under Notification No. 53/97-Cus - Held that:- on the basis of evidences unearthed by the investigation, it is revealed that the Applicant M/s Vatan Textiles Ltd have manufactured final products i.e. fabric and cleared clandestinely in the domestic market without payment of exci .....

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o such job worker or they do not have any loom to manufacture of fabric. The so called job workers in their statements clearly stated that they did not carry out any job work on behalf of M/s Loomcraft and M/s Fabricart.

Goods manufactured by the Applicant M/S. VTL is neither exported nor cleared on payment of excise duty and without the permission of the development commissioner. The Applicant cleared said manufactured goods clandestinely without payment of duty. Thus the Applicant(V .....

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the said notification shall also not be prima facie available. M/s Loomcraft and M/s Fabricart are directly involved in abeting and aiding the evasion of excise and custom duty committed by VTL. - Applicants have not made out prima facie case for full waiver of the pre-deposit. - Partial stay granted. - C/ROA/96453/14-MUM, C/835/09-MUM - Dated:- 30-4-2015 - Mr. P.K. Jain, Member (Technical) And Mr. Ramesh Nair, Member (Judicial) Appeal No. : E/ROA/96451/14-MUM, E/927/09-MUM, E/ROA/96452/14-MUM, .....

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76/09-MUM & C/835/09-MUM For the Petitioner : Shri. Ashok Naval, Cost Accountant, and Ms. V.S. Birmale, Advocate For the Respondent : Shri. V.K. Agarwal, Addl. Commissioner(A.R.) ORDER Per : Ramesh Nair Applicants filed six applications for Restoration of Appeals. The respective appeals bearing Nos. E/927/09, E/923/09, E/926/09, E/835/09, E/832/05 and E/833/09 have already been restored alongwith other connecting appeals vide this Tribunals Misc. Order No. M/1112-1115/15/CB dated 2/3/2015 t .....

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L) have manufactured the goods in their EOU and cleared in DTA without payment of duty under the name of fictitious units viz. M/s. Loomcraft Fabrics Pvt. Ltd. and M/s. Fabrikart Furnishings Pvt Ltd; M/s. VTL have contravened the provisions of Notification No. 53/97-Cus as they have used the duty free capital goods for manufacture of the goods sold in DTA in the name of fictitious units; M/s. Loomcraft Fabrics Pvt Ltd have collected the amount representing duty of excise but has not been deposit .....

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gation, that two job workers were not found having any loom/machinery, they were found to be residential premises of Retired teacher and person working in medical shop, who in their statements have stated that they have not done any business of manufacturing of fabrics. Similarly M/s. Skill Silk Mills do not have any machinery for manufacturing of premium quality Jacquard Fabrics. The Proprietor of M/s. Skill Silk Mills, Aurangabad in his statement stated that no job work was done for M/s. Loomc .....

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to M/s. VTL. On this basis it was found that job work challans were fabricated in the name of above parties and the goods were actually manufactured at M/s. VTL. This has also been admitted by Shri. Zaheer Ansari, Director(Technical) of M/s. VTL in his statement dated 14/12/2004 and 24/2/2005 and Shri. Maqsood Ahmed, Maintenance & Production Engineer of M/s. VTL in statement recorded on 11/9/2004. On this basis show cause notice contended that M/s. VTL in fact manufactured and cleared the g .....

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chased by M/s. VTL only. Due to non availivility of DTA sale permission to M/s. VTL the goods in question were intended to be cleared in the name of M/s. Fabrikart. (ii) The CAD file of M/s. VTL on the computer contained designs in respect of M/s. VTL as also M/s. Loomcraft. These records show that goods were manufactured by the production department of M/s. VTL for the parties of M/s. Loomcraft like M/s. Raymonds, M/s. BDMC, M/s. M.K. Enterprises, M/s. Vivid Kollage, M/s. ITC Hotels etc. Howev .....

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ately explained about the beam numbers of VTL used for manufacture of goods in respect of customer of M/s. Loomcraft. Shri. Ansari Admited that goods manufactured and cleared to M/s. Raymond on job work basis by M/s. Loomcraft were actually manufactured on the looms of M/s. VTL. (iii) Some customers such as M/s. S.K. Handicraft, M/s. Jagdish Stores and M/s. Marriot Welcome Hotel have placed orders on M/s. VTL whereas material was shown to have been supplied from M/s. Loomcraft and M/s. Fabricart .....

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t and M/s. Fabricart. (v) M/s. Osho and M/s. MK Enterprises have sent yarn for job work to M/s. Loomcraft for manufacturing of fabric. Warping register of M/s. VTL revealed that material was manufactured by M/S. VTL for M/s. M K Enterprises and M/s. Osho. (vi) Shri. Shafeeq Ahmed, Director of VTL and M/s. Fabricart in his statement dated 2/11/2004 has admitted that goods cleared in the name of M/s. Fabricart supplied to M/s. Vivid Collage were actually manufactured at M/s. VTL. (vii) Shri. Zahee .....

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actured and cleared final product in the DTA without payment of duty through their own group companies i.e. M/s. Loomcraft and M/s. Fabricart. Therefore, they are liable for payment of excise duty on the said clandestinely removed goods. It was also contended that by manufacturing goods clandestinely on the exempted capital goods and clearing the same clandestinely, the appellant became ineligible for the exemption on said capital goods under Notification No. 53/97-Cus and consequently they are .....

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stoms Act, 1062. However I give an option to M/s. VTL to redeem the same on payment of fine of ₹ 1,35,00,000/-in lieu of confiscation. A(2) Demand for the amount, equal to the duty of Customs amounting to ₹ 2,73,80,647/- in respect of capital goods is hereby confirmed against M/s. VTL in terms of the conditions of Notification 53/1997-Cus and in terms of condition of the bond executed by M/s. VTL. A(3) The recovery of interest from M/s. VTL on the aforesaid amount is hereby confirmed .....

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/s. Rafeeq Ahmed Khan ₹ 27 lakhs 4) Shri. Shafeeq Ahmed Khan ₹ 27 lakhs 5) Shri. Zeheer Ansari ₹ 25 lakhs B(1) Demand of Central Excise duty of ₹ 4,33,75,032/- is hereby confirmed against M/s. VTL under the Proviso to Section 11A(1) of Central Excise Act, 1944 and the Conditions of the bond executed by M/s. VTL. B(2) Amount of interest on the aforesaid Excise duty amount is hereby confirmed as recoverable from M/s. VTL in terms of Section 11AB of Central Excise Act, 1944 .....

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hri. Shafeeq Ahmed Khan ₹ 40 lakhs 5) Shri. Zeheer Ansari ₹ 20 lakhs C) In terms of the under taking given under bond executed with the Department, M/s. VTL should discharge their aforesaid liabilities and pay the sum due to Govt. immediately. Other noticees should also forthwith pay the penalties imposed on them. D) Demand of ₹ 2,75,900/- issued under Section 11D on M/s. Loomcraft Fabrics Ltd. is hereby dropped. Aggrieved by the aforesaid impugned order, the applicants have fi .....

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ifferent persons. Therefore Warping register cannot be taken as concluding evidence for confirmation of demand. He further submits that during the period involved, M/s. VTL undertaken the job work for K.S.R. exports against DTA sale permission dated 31/3/2004, however quantity of fabric manufactured for job work was not considered. M/s. Loomcraft was engaged in the manufacturing fabric through job work and the said fact was informed to the department vide letter dated 4/11/2004 and accordingly M .....

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f alleges that goods have been cleared and sold therefore when goods were sold, cost construction method could not have been adopted. He submits that M/s. Raymond have sent the goods to M/s. Loomcraft for job work under the provisions of Rule 4(5)(a) of CCR, 2004. They have received the goods back from M/s. Loomcraft and after further processing, M/s. Raymond have cleared the final product at appropriate rate of duty at their end. Once the duty has been discharged on the final product manufactur .....

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direction in proper perspective. He further submits that the demand was confirmed for the extended period which is not sustainable. He submits that facts of the appellants entire activity was known to the department. Departmental officers made visit on 19/8/2002 and on that basis first show cause notice dated 17/2/2005 was issued. Show cause notice in the present case issued on 24/1/2006 therefore once the show cause notice was issued under a particular investigation, second show cause notice, .....

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s wrong and illegal. Without prejudice, Shri Nawal also submits that if at all the demand is sustainable on the capital goods, the benefit of depreciation of value should have been extended to the Appellant as provided under the Notification No. 53/97-CUS, therefore demand on capital goods without providing the depreciation is also not sustainable. He further submits that appellants unit is sick unit and proceedings under the BFIR is going on therefore on the ground of financial hardship, the a .....

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ion it has come on the record that the applicant in collusion with their group companies M/s. Loomcraft and M/s. Fabricart, adopted the modus operandi by which the goods manufactured in the 100% EOU was cleared clandestinely without payment of duty in the name of M/s. Loomcraft and M/s. Fabricart. He submits that on investigation, the stand taken by the appellant regarding the job work of M/s Loomcraft, has been proved wrong as no job worker was found to have undertaken the job work for M/s. Loo .....

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of the capital goods for EOU under notification NO. 53/97-CUS is available only when the condition laid down in the said notification is complied with. Capital goods imported must be used for manufacture of final product which is either exported or cleared for DTA on payment of appropriate excise duty with the permission of development Commissioner. In the present case, neither the goods cleared for export nor cleared for DTA on payment of duty. Therefore exemption under Notification 53/97-CUS .....

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. Union of India [2009(238) ELT 738(Guj)] 6. We have carefully considered the submissions made by both the sides. The Appellant M/s Vatan Textiles Ltd is an 100% EOU. As per the Export Import Policy, an EOU is set up primarily for manufacture of goods which is exported. However a part of the manufactured goods can be allowed to be cleared in DTA on payment of appropriate excise duty with the permission of Development Commissioner. In the present case, on the basis of evidences unearthed by the i .....

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ed by M/S. VTL were manufactured on job work basis on their behalf, got demolished on the basis of enquiries conducted with the so called job workers, where it was found that there exist no such job worker or they do not have any loom to manufacture of fabric. The so called job workers in their statements clearly stated that they did not carry out any job work on behalf of M/s Loomcraft and M/s Fabricart. Moreover, the records of warp found in the factory of M/S. VTL clearly shows that the goods .....

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goods imported by 100% EOU is exempted with the conditions that the same is used for manufacture of the final product which should either be exported or cleared in DTA on payment of excise duty with the permission of Development Commissioner. In the instant case the goods manufactured by the Applicant M/S. VTL is neither exported nor cleared on payment of excise duty and without the permission of the development commissioner. The Applicant cleared said manufactured goods clandestinely without p .....

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