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Commissioner of Central Excise Versus M/s Saron Merchanical Works

2015 (12) TMI 738 - PUNJAB & HARYANA HIGH COURT

Duty demand - Clandestine removal of goods - Clubbing of clearances - Held that:- Tribunal failed to appreciate that the proprietors of both the units had not retracted from their statements as well as of their Accountant and Store Incharge made before the search team. Both the respondents had stored the raw material without maintaining any separate record regarding their respective manufacturing of boring machines by using raw material and machinery with the help of both the units as and when r .....

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pon the statements of the proprietors which were not under inducement or threat. - The fact of clandestine removal of goods had not been proved. Mere quoting the statements of the proprietors and some of their employees was not enough. The value of clandestinely removed goods had not been adjudged. - view adopted by the Commissioner (Appeals) and the Tribunal is a plausible view based on appreciation of material on record and, therefore, does not warrant any interference by this Court - Decided .....

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of the Central Excise Act, 1944 (in short, "the 1944 Act") against the order dated 10.8.2007, Annexure A.3 passed by the Commissioner (Appeals) and order dated 10.2.2014, Annexure A.4 passed by the Customs, Central Excise and Services Tax Appellate Tribunal, New Delhi (in short, "the Tribunal") in Appeal No.2916/07, claiming following substantial questions of law:- "i) Whether the Hon'ble Tribunal has erred in not appreciating the statements of the proprietor of the .....

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in the show cause notice?" 3. A few facts relevant for the decision of the controversy involved as narrated in CEA No.2 of 2015 may be noticed. On 10.6.2003, the Central Excise Preventive Officers, Ludhiana searched the factory premises of M/s Jagatjit Agro Industries on the strength of search warrants issued by the competent authority. It was found engaged in manufacturing of boring machines falling under sub head No.8430.00 of the Schedule to the Central Excise Tariff Act, 1985 (in short, .....

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ral Excise duty without obtaining Central Excise registration as required under section 6 of 1944 Act read with Rule 9 of the Central Excise Rules, 2002 (in short, "the 2002 Rules"). Consequently, show cause notice dated 5.1.2006 was served upon both the respondents proposing Central excise duty demand by clubbing their clearances. The adjudicating authority vide order dated 7.8.2006 confirmed the demand of duty amounting to ₹ 17,37,954/- by clubbing the sale of both the responde .....

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10.2.2014, Annexure A.4, the Tribunal dismissed the appeal holding that units of both the respondents were separate to each other as M/s Saron Mechanical works was working since the year 1994 whereas M/s Jagatjit Agro Industries had started working in the year 2001. Hence the instant appeals by the revenue. 4. We have heard learned counsel for the parties. 5. Learned counsel for the appellant-revenue submitted that the Tribunal failed to appreciate that the proprietors of both the units had not .....

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were issuing the sale bills as per their requirement. They had fragmented their sales in order to avail the benefit of SSI exemption fraudulently. The adjudicating authority had rightly clubbed the clearances of both the respondents removed by them in a clandestine manner. The Commissioner (Appeals) and the Tribunal ought to have relied upon the statements of the proprietors which were not under inducement or threat. Reliance was placed on judgments in Shiv Shakti Steel Tubes vs. Commissioner o .....

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n clubbing the clearances of both the respondents because the same could be done only when the other unit is dummy. In the present case, both the proprietors were separate manufacturers though they might be sharing certain facilities. Even otherwise, if the value shown in the show cause notice was taken as value of clearance, then also, the same did not exceed SSI benefit of ₹ 1 crore by either of the two respondents even if taken on 50:50 basis. 7. While reversing the findings recorded by .....

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it was noticed by the Commissioner (Appeals) as under:- "The duty from appellant No.1 has been demanded by clubbing the clearances of proprietary unit M/s Saron Mechncial Works (appellant No.2) owned by the father of Shri Jagatjit Singh, Prop. of the appellants No.1 firm. As per facts on record, during the visit on 10.6.2003 by the Central Excise officers to the appellants' units, some slips pads and loose slips relating to the appellants No.1 and 2 were recovered. The statement of one .....

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machines having value of ₹ 66,00,000/- and these slip pads were issued mostly by one Shri Pala Ram and in some cases issuing person not known as detailed in Annexure 1. The date of issue was not mentioned on these slip pads but these have been considered for the year 2002-03. (2) Manufacture and sale of 13 Boring Machines valued ₹ 16,25,000/- issued by Shri Roji Thomas details as per Annexure II. (3) the details of slip pads for the period 2003-04 issued by Shri Roji Thomas valued &# .....

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he investigation officers had recorded the statement of Shri Roji Thomas who has been shown as writer of loose slips and he had also admitted that these machines noted in slip had been manufactured and the version was subsequently confirmed by the respective proprietor of appellants No.1 and appellant No.2. They have specifically argued that there is absolutely no such statement of writer of slips as mentioned in Annexure 1 and appellant No.2. They have specifically argued that there is absolute .....

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e was not mentioned. Therefore, the head itself suggests that the dates were not mentioned on the slips and had it not been made clear and elaborated by the adjudicating authority that how the department has included the alleged sale shown as sales for the year 2002-03. Further under heading - slips issued by - in this annexure either it has mentioned "not known" or the name Pala Ram has been mentioned. In the entire proceedings I find that there is nothing on record about any statemen .....

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these machines were made, had been brought on record, it is difficult to hod that the said machines were manufactured and removed by the appellants in a clandestine manner. For placing reliance on such records i.e. loose slips it is necessary that at least author of these slips should have been examined and their statements should have been recorded supporting the charge that they have prepared these slips. In respect of Annexure VII which carries the details of loose slips there is no mention o .....

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the machine was sold. In respect of annexure 1 and annexure VIII it is also observed in absence of statement of these persons who have allegedly manufactured these machines, no reliance placed on these loose slips which is relevant to issue i.e. no evidence in respect of procurement of inputs with reference to alleged clandestine manufacture/clearances of goods mentioned in these two annexure I and VIII has been brought on record. Neither there is any evidence on record to the effect that as to .....

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hout declaring the unit i.e. M/s Saron Mechncial Works, Bhikhi Road Cheema Mandi as declaring unit, how the clearances of both the units are clubbed. It has been argued by the appellants that the unit is not dummy rather the unit is owned by father of the owner of the unit of appellant No.1 and No.2 have been clubbed. I find even Shri Roji Thomas, whose statements relied upon for including the clearances mentioned on slips as per annexures II and III has also stated that he was working for appel .....

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nd some of their employees who have stated that they were in need of financial assistance was not enough. The value of clandestinely removed goods has not been adjudged. This case was of crossing the sale of ₹ 1 crore notice had contested the authority of the slip pads and loose slips which were the basis of arriving at the alleged clandestine removal and duty demand in the show cause notice. But the adjudicating authority has not discussed the annexures and their authenticity for confirmi .....

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