TMI Blog2016 (3) TMI 474X X X X Extracts X X X X X X X X Extracts X X X X ..... ocurement of raw materials/capital assets in the factory of the appellant does not arise. Consequently, the allegation of clandestine removal of these capital goods also does not arise. With these observations, we set aside the demand With regard to demand on account of capital goods manufactured by the appellant through labour contractors, we find that there was agreement between the contractors and the appellant wherein, the appellant were required to provide raw materials and electricity and the contractors have fabricated the capital goods at the site of the appellant and the appellant has paid job work charges to the contractors. As per agreement between the parties, the appellant has appointed labour contractors on job work basis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed as per Central Excise Rules. It was also found that the appellant set up various dummy and benami firms by showing the supply of the goods from these dummy units obtained lease/hire-purchase finance on such goods from various finance companies. The amount of lease/hire-purchase finance was routed through various bank accounts maintained in such dummy units and operated by the employees of the appellant. Therefore, it was alleged that such funds received through benami units were utilized for purchase of raw materials, inputs, components, parts, etc. and manufactured various excisable items viz. M.S. Receiver, Stroage Tanks, Fermentation Tanks, Principal Condensers, Multipass Purifier Condenser, Grain Grinding Mills, M.S. Cooker, etc. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny transaction of sale of the goods to the appellant. It is also his contention that the goods shown in the invoices were merely paper transaction and the same were accounted for in the books of accounts. Therefore, the Department has raised the demand on assessment that the appellant in their factory have manufactured the items in question is not sustainable. He further submits that in respect of various structural items and tanks got fabricated by the appellant from various independent contractors, therefore, demand from the appellant cannot be demanded for those items which have been got fabricated by the appellant from independent contractors. With regard to the erection of plant and machinery allegedly manufactured by them and clandest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... E.L.T. 211 (Tribunal-Mumbai). Therefore, he prayed that the impugned order is to be set aside. Consequently, the penalties are also not sustainable. 3. On the other hand, ld. DR submits that the allegation against the appellant is that they have manufactured and removed the excisable goods by engaging contractors as they have set-up three dummy units and showed supply of goods from these three dummy units, which were financed by the Finance Companies funds routed through the accounts operated by the employees of the appellant and used for purchase of raw materials for manufacture of the goods in their factory for and at the time of visit, these capital goods were not found in their factory, therefore, the charge of clandestine removal o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the appellant has entered into transactions with dummy units, therefore, invoices raised by these dummy units cannot be the basis for procuring capital assets in their factory. Moreover, the demands proposed to be raised by Revenue on the basis of the assumption and presumption without having any cogent evidence in support of their allegation. Moreover, Income Tax Department has investigated the matter thoroughly and by way of investigation, it was revealed that transactions between the dummy units and the appellants are non-existent, therefore, the question of procurement of raw materials/capital assets in the factory of the appellant does not arise. Consequently, the allegation of clandestine removal of these capital goods also does ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... annot be held that the contractors were actually hired labourers especially when the contractors have admitted having fabricated the goods for and on behalf of the appellants. Similarly, merely because the said fabrication was being done by the contractors as per the design and drawings of the appellants cannot be made a ground for holding that it is the appellants who had fabricated the goods. Therefore, it was held that the appellant cannot be held as a manufacturer. Same view was taken by the Tribunal in the case of Kerala State Electricity Board (supra) which has been upheld by the Hon ble Apex Court and in the case of M.M. Khambatwala (supra) the Hon ble Supreme Court held that the assessee having paid wages to the house-hold ladies ..... X X X X Extracts X X X X X X X X Extracts X X X X
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