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Kedia Castel Delteon Industries Ltd. Versus Commr. of C. Ex., Raipur

2016 (3) TMI 474 - CESTAT NEW DELHI

Clandestine removal of capital assets from the factory - duty demand - Whether a demand can be demanded from the appellant as manufacturer of the capital goods found in their factory at the time of visit? - Held that:- 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 t .....

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e 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 to fabricate the impugned capital goods. We also note that the duty can be demanded from a manufacturer of the goods as it is a factum recor .....

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ichandran, Member (T) Shri B.L. Narsimhan, Advocate, for the Appellant. Shri Pramod Kumar, Joint CDR, for the Respondent. ORDER [Order per : Ashok Jindal, Member (J)]. - The appellant are in appeal against the impugned orders. The main appellant, M/s. Kedia Castel Delleon Industries Ltd., (KDR) is manufacturer of Rectified Spirit, Extra Natural Alcohol and Indian made Foreign Liquor. These final products do not attract central excise duty but during the period 1995-96, it was noticed by the Depa .....

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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 .....

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tain excisable goods on the basis of the invoices forming part of the scheme for acquiring working capital and steel structures and removed the same without payment of duty. He submits that three firms viz. M/s. T.S. Engineering Works, (TSE), M/s. Sigma Industrial Works (SIW) and M/s. Standard Traders and Engineers (STE) created by the appellant in order to raise working capital to meet day-to-day expenses. The said working capital was raised by acquiring lease/hire-purchase companies. The finan .....

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these invoices were raised only for the purpose of raising working capital and not for any 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 str .....

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transactions between the firms and the appellants are bogus transactions and on the basis of those transactions, the appellant claimed depreciation before the income-tax authorities which have been denied. Therefore, as there was no physical assets found in existence which was claimed to be purchased from the finance received from the front firms, the demand is not sustainable. He further submits that as Income Tax Appellate Tribunal has also observed that the assets in questions were non-exist .....

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Works fabricated fermentation tanks in the factory of the appellant. In that case, contractors are the manufacturers of the goods, therefore, the duty cannot be demanded from the appellant. To support to his contention, he relied upon on the decision of the Tribunal in the case of AFL Pvt. Ltd. v. CCE, Mumbai-II reported in 2013 (295) 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 th .....

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tal goods were not found in their factory, therefore, the charge of clandestine removal of the said goods has been proved. Further, he submits that the fermentation tanks, etc., which were found installed in their factory have been manufactured by the appellants themselves by engaging contract labours, therefore, duty has rightly been demanded from the appellant and consequently, the penalties were rightly imposed. 4. Heard the parties. Considered the submissions. 5. We find that from .....

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rst issue, we find that it is alleged against the appellant that they have got financed by the dummy and benami Units created by them and they have procured raw materials for manufacturing of capital goods and they have manufactured as the said capital goods were not found at the time of visit in their factory. Therefore, it is alleged that the appellant have removed the said capital goods clandestinely. In fact, it is admitted fact by the Revenue that the appellant has procured capital goods on .....

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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 not arise. With these observations, we set aside the demand of ₹ 4,41,10,056/- against the appellant. 7. With regard to demand of ₹ 1,11,67,833/- on account of ca .....

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apital goods. We also note that the duty can be demanded from a manufacturer of the goods as it is a factum record that the impugned goods have been fabricated on job work basis by the contractors, therefore, as per the Central Excise provision, the appellant cannot be the manufacturer of the said goods. In that case, the duty is to be demanded from the contractor and not from the appellants. Same view has been taken by the Tribunal in the case of AFL Pvt. Ltd. v. CCE, Mumbai-II (supra), wherein .....

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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 .....

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