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M/s Shiva Industries Versus Commissioner of Central Excise, Kanpur

2016 (1) TMI 194 - CESTAT ALLAHABAD

Duty demand - Duty on the basis of annual capacity of production - Compounded Levy Scheme - benefit of duty on the basis of capacity of production was available only to those independent processors who do not have proprietory interest in any factory primarily and substantially engaged in the spinning of yarn or weaving or knitting of fabrics, in terms of Explanation-1 under Rule 96ZNA - Revenue contends that appellant did not qualify for the benefit available to an independent processor as they .....

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that the department for a long period had not communicated any objection to the information provided by the appellant in June, 2001. There does not appear to be any fact which could not have been verified by the department from the information given by the appellant in June, 01. The information supplied to the Defence Deptt. was for purposes of facilitating overall assessment and registration based on facility/services of vendors. Merely because it was informed to Defence Deptt. that they had we .....

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ht by the department, the same was given by the appellant. Still the show-cause notice was issued after 4 years. In these circumstances, it cannot be held that there was a deliberate fraud or mis-statement on the part of the appellant. The conclusion that the appellant had proprietary interest in some other concern has been arrived at on the basis of legal interpretation of various aspects of the terms such as letter of partnership, proprietary interest, connected undertakings etc. There is no j .....

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acts are that the appellant M/s Shiva Industries a partnership firm, came into existence on 2.6.2001 in a partnership deed wherein Shri Narendra Kumar Surekha and M/s Shiva Textile Mills through their partner joined hands to increase their business. The partnership firm planned to supply textile fabrics to the Defence Establishment. The partnership firm furnished the details of partners, address of their factory and manufacturing facility in their registration application dated 6.6.2001 to the D .....

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Excise, Division Kanpur and also requested to re-open one sealed chamber stenter w.e.f. 8.6.2001. Under the Special Procedure, the duty was payable on the basis of capacity of production of independent textile processors under the Compounded Levy Scheme. The duty payable was based on annual capacity of production which in turn was determined on basis of various parameters such as no. of stenters, length and breadth of the chamber, approximate value of the goods. The benefit of duty on the basis .....

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e Commissioner came to the conclusion that M/s Shiva Industries cannot be treated as an independent processor because M/s Shiva Industries were having proprietory interest in one of the partners' firm (i.e. M/s Shiva Textile Mills), which were having weaving and knitting facilities and were two bodies corporate under the same management. 2.1 Commissioner also referred to the statement of Shri Narendra Kumar Surekha, who accepted that they had opened the Air Stenter. The Commissioner held tha .....

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extended time period is not applicable in the present case. He referred to their application dated 7.6.2001 in which they applied for the Special Procedure and requested for one chamber stenter to be opened. This letter was replied by the Dy. Commissioner, Central Excise, Division-I vide C.No. V-13/56/Tech/Shiva Indu./2001/3065 dated 18.6.2001. To this letter from the Central Excise authorities, the appellant gave the detailed reply vide their letter dated 23.6.2001. 5. The learned AR took us t .....

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that they had already submitted a list of plant and machinery. They returned the ASP (Application Form) to Central Excise authorities after making corrections. They also clarified the query from Central Excise regarding another unit which had applied for the Special Procedure. Most importantly they declared the constitution of their partnership firm along with a copy of the partnership deed. 6.2 The reference to invocation of extended time period in the show-cause notice is briefly stated at pa .....

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ion No. 29/96-CE(NT) dated 3.9.1996." The show-cause notice refers to clause (6) of the partnership deed which reads as follows: - "6. That the said Suit Sunita Dodojwala has joined the firm on behalf of M/s Shiva Textile Mills who have independent status and proprietary rights on their assets as per settled terms contained in Annexure-A". 6.3 The conclusion is reached in the show-cause notice that clause (6) of the partnership deed dated 6.6.2001 is nothing but a colourable devic .....

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s were concealed from the Central Excise and impression was sought to be created that the partnership firm had one property only at 35B, Dada Nagar, Kanpur and 22C, Site 1 Pankey, Kanpur. 6.4 We find from records that the details of the partnership concern as well as a photo copy of the partnership deed were submitted to the department in June, 2001. But, the show-cause notice for the period June, 01 to Feb, 02 was issued on 29.5.2006 invoking the extended time period. Even if the department had .....

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tates that M/s Shiva Industries shall not have any proprietary or ownership right of any kind on the plant and machinery of M/s Shiva Textile Mills, but will continue to have their own independent status also. Similarly, M/s Shiva Textile Mills would not have any ownership right on the plant and machinery of M/s Shiva Industries. It is alleged that such partnership deed is contrary to the spirit and provisions of Indian Partnership Act. Reference has been made to Section 14 of the Law of Partner .....

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detailed information including details of plant and machinery as well as a copy of the partnership deed. It is held in the adjudication order that M/s Shiva Industries had an unambiguous proprietory interest in the combined factories of both partners where facilities of knitting, weaving and processing etc. were available. The said combined facilities available in the different factories of both partners were brought in a partnership firm for the purpose of maximizing business gains. It is furth .....

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made, we do not see how any facts were concealed from the Department to justify extended time period. 6.5 The documents did not reveal that the assets of the partners became the property of the appellant by bringing them into its stock. It does not seem to be established that the partnership firm had proprietory interest in another firm when a legal distinct deed of partnership firm is separate from its partner as an arguable point under Central Excise. Without going into the merits of the case .....

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