TMI Blog2017 (8) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... buting Companies) corroborates the stand of the appellants, as to manufacture, inspection and sale at the Roorkee unit - further, there is no test report brought on record by revenue in support of their contention that the appellant have not removed the Transformer- spares parts, but have removed complete transformer. Thus, the whole case of the revenue is based on presumption and assumptions, which falls flat, in view of the overwhelming documentary evidence - none of the persons whose statement was recorded have made an averment that the Transformer components have not moved from Sahibabad Ghaziabad unit to their Roorkee unit. The whole case of the revenue is based on presumption, which has not been corroborated, in view of overwhelming documentary evidences, on record - appeal allowed - decided in favor of appellant. - E/2537 & 2538/2012-EX[DB] - A/70779-70780/2017-EX[DB] - Dated:- 16-5-2017 - Mr. Anil Choudhary, Member (Judicial) And Mr. Anil G. Shakkarwar, Member (Technical) Shri Anurag Mishra, Advocate for Appellants Shri Rajeev Ranjan, Joint Commissioner (AR), for Respondent ORDER Per : Anil Choudhary These two appeals have been preferre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, 1944. 4. Shri Surendra Gupta, Chief Marketing Manager of M/s EIUL in his statement dated 20.08.2010 interalia, stated that- He is working as Chief Marketing Manager of M/s EIUL and in this capacity he is looking after marketing sales work of the company under the direction of Shri N.K. Lohia, Direector of M/s EIUL. He further stated that they are manufacturing power Distribution Transformers upto 10 MVA, 33 KV class and their main inputs are CRGO, Aluminum Conductors, Copper Conductors, M.S. Steel, Transformer Oil, CRCA, etc. Their main customers are UPPCL its discoms, MSEDCL, Orisa State Electricity Board, etc. He further stated that they have got some work done on job-work basis from their sister's company M/s Jyoti Udyog Ltd., situated at Loni Road Mohan Nagar (UP) M/s East India Udyog Ltd. also situated in Mohan Nagar (UP). From M/s Jyoti Udyog Ltd., they got parts or complete transformer manufactured by them on job work basis, for which they supply raw materials on job-work challans. As regards their unit at Arthala, they got Tank Radiator fabricated on job work basis. They under take manufacturing of complete transformer on job work basis on behalf of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rmers, they fix the name plate of M/s EIUL on the transformers manufactured by them on job work. Thereafter, the transformers are being sent to M/s EIUL on Challan/transfer invoice. 7. Another statement of Shri S.P. Singh, Testing Engineer of M/s Jyoti Udyog Ltd. Mohan Nagar, Ghaziabad was recorded on 20.08.2010, he interalia, stated that- He is working in this unit for last 03 months and looking after the work of testing of transformers. Earlier he was working in M/s EIUL and received salary from M/s EIUL. For manufacturing of transformer, MS sheets are cut in shape and fabrication of tanks are done. CRGO sheets are cut and assembled. Coiling is prepared using insulated wire of Copper or Aluminum. Coil assembly is fitted in the transformer tank. Ceramic bushings are fitted and filled with transformer oil. Thereafter the serial number is punched on transformer and name plate is fixed on the transformer. They manufacture complete finished transformer which are cleared after testing from their unit to M/s EIUL. All the raw materials except tank are sent from M/s EIUL and MS sheet in cut mold shape are sent by M/s EIUL, Mohan Nagar. All the documents/records for clearing th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t L.T. fitting/Connection testing. After receiving the materials from the store, (I) first they start winding of wire/strips for the coils on winding machine. Then core coil assembly of wire/strip coils manually. Then ovening of core coils connection completed in Ovens (II) for Tanking, M.S Sheet/Slat/Flat are cut into sizes and mold. Then welding of parts and testing of tanks (III) for Radiator-CRCA Cutting, pressing and then welding and testing of Radiator (IV) for Lamination cutting-Roll cutting as per sizes. Then Annealing of cutting sizes in Annealing furnace. After completion of above various process stages, transformer is complete and sent for testing in the testing department. After testing, inspection of transformer is done by Inspecting Authority of Electricity Board. After Inspection, the Board forwards dispatch advice for dispatch of goods and then transformers are cleared from the factory. He also demonstrated the copy of one challan No. 544 dated 20.12.07 issued by Ghaziabad unit for removal of transformers manufactured by them on job work for Roorkee unit (as sample) and stated that parts of transformers shown on the said bill were complete transformer and manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion, availability of raw materials dispatch of finished goods. He stated that all the raw materials are received from M/s EIUL, Ghaziabad through Challan. They manufacture complete transformers of the capacity of 10KVA to 250KVA for M/s EIUL and removed from the factory to M/s EIUL as per their direction. Some time they also clear the goods directly from their unit to customers, if the truck driver comes to their factory along with the documents issued for clearances from M/s EIUL. In case of sale of transformer directly from their premises, name plate serial number of transformer is also received from M/s EIUL, Sahibabad, Ghaziabad. 13. Factory premises of M/s EIUL, Salempur Rajputan Industrial Area, Roorkee and M/s EIUL Lakeshwari Bhagwanpur, Roorkee were also visited on 16.09.2010. At the time of visit various records maintained by the said units were examined and some records which appeared relevant for further scrutiny were also resumed under Panchnama dated 16.09.2010 statements were also recorded of concerned persons found available under Section 14 of the Act. 14. In the statement recorded from Shri Sudhir Kumar Chauhan, Incharge of M/s EIUL Salempur Rajputan I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctor of M/s Jyoti Udyog Ltd. Mohan Nagar, Gaziabad. In compliance of summon, Shri N.K. Lohia appeared on 05.10.2010 and statement of Shri N.K Lohia was recorded under Section 14 of the Act, who, interalia, stated that- He looks after overall working of the company in particular the financial side. The other three directors are not actively involved in the functioning of the company. He is Chairman of the Board of directors looking after/supervising all the activities at different section of the company. They have total five units situated at- (1) 145 G.T. Road, Sahibabad, Ghaziabad (Commodity-Transformer). (2) 120 Anand Industrial Estate, Mohan Nagar (Commodity-Tanks Radiators for Transformers) (3) 1088, Salempur Rajputan Industrial Area, Roorkee (Commodity-Transformer) (4) 144, Lakshwar Industrial Area, Bhagwanpur, Roorkee (Commodity-Transformer) (5) 148 158 Raipur Industrial Area Roorkee (Commodity-ACSR AAAC Conductor) Financial accounts of all the units are maintained at their Head office at 145 G.T. Road, Sahibabad Ghaziabad. All the raw materials are purchased by Head office of all the units. They placed order for major materials on com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lan. Challans are invariably made by them for all kind of removal. As far as Gate Pass shown to him, it was stated that the same appears to be their internal documents, which is made along with other documents. 17. In compliance of summons statement of Shri Harsh Gupta, Director of M/s Jyoti Udyog Ltd., Ghaziabad was recorded on 18/11/2010, who interalia, stated that- M/s Jyoti Udyog Ltd., was doing manufacture, fixing of transformer on job work basis and have also manufactured their own Transformers for direct sales. They are doing job work only for M/s East India Udyog Ltd. Sahibabad, Ghaziabad. They are manufacturing complete transformer on job work for the said unit. They do not dispatch the goods directly to customers of M/s EIUL. However, in a few instances on verbal instructions of M/s EIUL, in case of emergency situation with customers of M/s EIUL, that is Electricity Boards, they have dispatched Transformers to customers from their premises. In such cases, the documents covering the consignment that is invoice, challan, GR, etc. were prepared by M/s EIUL and handed over to the transporter. Further, stated that they have not done any job work for M/s EIUL, Salempur Rajpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 24 Nos. 1920 Ltrs. 72 Nos. 72 Nos. Every Tank Sl. No. contains 12 HT Coils + 3 LT Coils_1 Core Assembly + 3 Fittings 80 Ltr Oil The items are fitted/immersed in oil It further appeared that- (i) The aforesaid so-called semi-finished parts of the transformer as a whole represents complete Transformers and the numbers of complete Transformers are multiple of number of tanks. Further, it is apparent from the description given on the right corner of the challan that all the items mentioned in the challans are cleared from the factory duly fitted in the transformer tank and immersed in the transformer oil. In other words, it appears that M/s EIUL, Ghaziabad had not cleared the parts of the transformer but cleared only complete Transformers against the said challans. However, they have deliberately shown clearance of such Transformers in the guise of semi-finished parts of Transformers. (ii) Shri Sushil Sharma, Marketing Head of M/s EIUL in his statement dated 20/08/2010, have stated that they had manufactured complete Transformers on job work for their Roorkee unit during 200 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hibabad, Ghaziabad unit, which had manufactured the goods on behalf of the Roorkee unit was liable to pay Central excise duty on the said goods. Accordingly, the duty was proposed more fully detailed in Annexure-A to the SCN, for Transformers manufactured valued at ₹ 14,37,39,040/- involving excise duty of ₹ 2,17,77,102/- for the said period 2007-08 and 2008-09, holding the appellant unit (Sahibabad, Ghaziabad) was liable to pay duty which they have not paid under the facts and circumstances. It further appeared that M/s EIUL Sahibabad, Ghaziabad unit have violated the provisions of Rule 4, 5, 6, 8 and 11 of Central Excise Rules, 2002 and have suppressed the facts from the Department with intent to evade Central Excise duty and as such for recovery of the said amount extended period of limitation is invokable. Accordingly, show cause notice proposed demand of ₹ 2,45,41,600/- including demand of ₹ 27,64,498/- for the period 2009-10 and 2010-11 on the similar grounds with further proposal that the amount already deposited by GR-challans amounting to ₹ 1,00,00,000/- should not be appropriated towards the proposed demand along with interest and further pen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ghaziabad unit, wherein it was processed and the components of the transformer manufactured and thereby transferred to the Roorkee unit, under proper invoices/challan raised. Not a single test report is brought on record by the revenue that what was removed from the Sahibabad, Ghaziabad unit were not the components and parts of the transformer, but was a complete Transformer. The whole case of revenue is based on presumptions and assumptions, ignoring the facts on record and simply relying on some vague statements of some employees, which have got no evidentiary value in the eyes of law. Moreover, the Chairman of the company Shri N.K. Lohia in his statement under Section 14 have categorically stated that they manufacture at the Sahibabad, Ghaziabad unit, components and parts of the of the transformer under job work for their Roorkee unit and accordingly, they clear the components and parts to the Roorkee unit. The said Roorkee unit after receiving the components and parts of the transformer conducts the finishing work of final assembly and testing, which is the most important activity for completion of manufacture. Thereafter, on completion of the manufacture, such transformer fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2007 08. Further, under the head operating, and other expenses manufacturing and maintenance job and labour charges are shown at ₹ 2,77,456/- and further the Roorkee unit has disbursed salaries and bonuses amounting to ₹ 38,59,448/-. The Department found sufficient number of workers, as there is no case of the Department that their Roorkee unit was having insufficient number of workers to complete the manufacturing of Transformers. The learned Counsel have also drawn our attention to various Quality Testing Reports issued by the buyers. From the sample of such reports, we find, in the report dated 13th of May 2010 issued by Paschimanchal Vidyut Vitran Nigam Ltd., Meerut, regarding inspection and testing of 100 numbers 25 KVA 11/0.433 KVA, 3 Star rating distribution transformers against purchase order dated 22/06/2009, as amended by purchase order dated 21st December 2009, states that Assistant Engineer, Meerut, PVVNL, tested at your works at Roorkee Uttarakhand on 13th of May, 2010, wherein you offered the following material for inspection and testing vide your site offer letter dated 13th May, 2010. He further states that the 100 numbers of such Transformers were avai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue. Further, such statements recorded during investigation cannot be relied upon without the witnesses being examined in the course of proceedings, as provided by Section 9 D of the Central excise Act. We further find that all the transactions are properly recorded in the books of accounts maintained in the ordinary course of business and the returns filed with the Department. We further find that the documentary evidence speaks for itself that the Sahibabad Gaziabad unit received raw material on behalf of the Roorkee unit and thereafter, manufactured components and parts of Transformers and removed the same on proper challans to the Roorkee unit and there is available on record, proper evidence of transportation of such goods to the Roorkee unit. Further, we find that there is evidence on record of the manufacturing process being completed at Roorkee unit, expenses being debited in the books of accounts, availability of required personnel little unit and thereafter inspection and sale of the Transformers, including delivery from the Roorkee unit. The evidences on record, particularly the inspection report and delivery order issued by the respective buyer (Electricity distributing ..... X X X X Extracts X X X X X X X X Extracts X X X X
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