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2016 (1) TMI 194

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..... ation 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 weaving and knitting facilities owned by partners does not necessarily lead to the conclusion that they had, under Central Excise Law, proprietory interest in them. - it was open to department to verify all the assets of the partners and the facilities the partnership firm intended to use. Thus, a show-cause notice issued under extended time period is unsustainable. There is no evidence that inquiries were made from the appellants which were not replied to. Whatever information was sought 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 .....

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..... ed in the spinning of yarn or weaving or knitting of fabrics, in terms of Explanation-1 under Rule 96ZNA. The case of Revenue is built around the fact that the appellant did not qualify for the benefit available to an independent processor as they were having proprietory interest in other manufacturing facilities of weaving/knitting. The 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 that the processing of drying dyeing cannot be said to be carried out exclusively in a Hot Air Stenter. This was also a ground for rejecting the Special Procedure relating to processed textile fabrics. Accordingly, the Commissioner confirmed demand of duty payable under Section 3 in terms of proviso to Section 11A(1) invoking the extended time period and impos .....

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..... ve 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 device to avoid tax because M/s Shiva Industries accepted their proprietary interest in the property of Shiva Textile Mills. The Order-in-Original also confirms this allegation in the show-cause notice. It was alleged by the Revenue that before the formation of M/s Shiva Industries, the partnership firm had partners namely, M/s Shiva Industries, a proprietory concern and M/s Shiva Industries, partnership firm both having processing and weaving knitting facilities respectively. But complete facts 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 invokin .....

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..... Interconnected undertakings', it has been sought to establish that the colourable device was created to avoid the payment of tax. Be that as 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, we find 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 weaving and knitting facilities owned by part .....

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