TMI Blog2018 (4) TMI 1307X X X X Extracts X X X X X X X X Extracts X X X X ..... wear manufactured. Even none of the individual or entity has named Respondent as the person who got the goods manufactured on his behalf - The onus of proving that the Respondent is the manufacturer of the goods has nowhere been discharged the revenue. The show cause does not even show as to where the goods were manufactured and in which premises the actual physical activity of manufacture took place. There is no inculpatory statement of any person of the Respondent company that they themselves were manufacturing the goods in question. In order to show that there has been production of goods the evidences in the form of use of raw material, labour, machine etc has to be shown whereas in the present appeals none of such elements are present. Hence it cannot be said that the Respondents has produced the goods. The Respondents cannot be held liable for duty as no evidence of manufacture of footwear by them or on their behalf has been brought to the record - appeal dismissed - decided against Revenue. - Appeal No. E/2867,3163/2006, E/677,696,697,698/2007, E/87034/ 20 16 Cross-Objection No. 2 10/2007 in Appeal No. E/696/2007 - ORDER NO. A/85968-85974/2018 - Dated:- 10-4-2018 - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue submits that the statements of office bearers of the Co-operative who are shown to have cleared goods to the Respondents were re corded wherein they stated that the Society did not produce any footwears, but only purchase bills were given to the Respondents to show purchase sales. The Cheque payments received from the Respondent were encashed and after deducting 2% to 3% commission, the balance money was returned to the Respondents. The actual manufacturers of the goods are the Respondents and they were routing the same through co-operative society to claim exemption from payment of Central Excise duty under Notification No. 198/9 7 CE dt.28.08.1997 and Notification No. 88/88 CE dt.01.03.1998. He relies upon the statements of office bearers of the society that the sale/ purchase shown were paper transactions and majority of members are bogus. He submits that some of the office bearers stated that the footwear was received by the society from different places other than society. The labels/ stickers bearing the brand name of the Respondent were put on footwear. Some of the office bearers stated that there is no manufacturing of footwears. The adjudicating authority has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... made in the name of society. Bogus bills were raised by the society and against these bills payments were made by cheque by M/s MSL. Shri Bashir Inamdar, Secretary of Jai Hind in his statement stated that the footwear were received by the society from different places other than members of society. The labels/ stickers of Metro were put on these footwears. They did not purchase any raw material or leather and the society was controlled by Shri Rafique Malik and others of Metro shoes. That Smt. M.Z. Kerawala, Chairperson of Jai Hind and Jai Bharat in her statement stated that she has been carrying on manufacturing activity in her personal name since 1984 and has been supplying readymade footwear to the society. That societies were doing only billing business without supplying any footwear. Shri Zameruddin N. Shaikh, Supervisor of the manufacture unit of Smt. M.Z. Kerawala in his statement stated that he was looking after the quality, cutting of leather, designing and overall supervision of the unit; that raw material was supplied by one of the workers Shri D. Machekar and was also received from M/s Faith International Ltd. That there were 5 7 stitching machines, one heating chamber ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the reasons for having extra members was that according to society rules, an individual cobbler, labour payment should not exceed ₹ 30/35,000. So if an individual cobbler manufactures footwear worth ₹ 1 Lakh, his amount had to be divided a mong 3 to 4 members, for this reason the society had to have bogus members. These bogus members were created to avoid paying income tax . He submitted that from the above it is quiet evident that the so called genuine members were mere hired labourers. They were not actual manufacturer of the goods. They were jobworkers only. They manufactured footwear on behalf of Metro. In other words the Metro are deemed manufacturer. In terms of definition of manufacturer, a person who employs hired labour in the production or manufacture of excisable goods is the manufacturer. In other words the jobworker is not the manufacturer if he is in the nature of hired labour. The facts and circumstances of the case clearly show that the Metros and the Dawoods got the shoe manufactured from undisclosed and unidentified sources under the cover of various leather co-operative societies by employing hired labourers and cleared the same without payment of ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cturer for the purpose of central excise law in view of absence of evidence. That the SCN and the revenue in its appeals has vaguely alleged that the Respondents got the goods manufactured from some persons but no name/identity of these some persons was given. No evidence to indicate that the Respondent companies supplied raw material or had any supervisory control over such persons is brought out in SCN. The revenue has failed to pinpoint the actual manufacturers who brought the excisable goods into existence. The responsibility and onus to prove that the manufacturing activity took place is on the department and no concrete evidence is in SCN regarding the persons who manufactured the goods, the manufacturing premises, the plant machinery used for manufacturing, procurement of raw materials, use of power, etc to sustain the allegation. The revenue has failed to conclusively establish the case on the basis of evidence brought out in SCN that the Respondent undertook any manufacturing activity. No evidence has been relied upon in the SCN which can show that the Respondents got the goods manufactured from any other persons by supplying the raw material and the shoe s were rout ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Rafique Malik of Metro which clearly shows that the various independent karigars manufactured the goods in question. In addition the goods were also sourced from M/s Ashok Footwear, M/s Tata Exports Ltd., M/s K.H. Shoes, M/s Tej Enterprises, M/s Walker (India) Ltd., M/s Liberty Enterprise etc. This conclusive ly establish that the Respondents were only trader in goods. He submitted that the statements of Shri Bashir Inamdar, Secretary of Jaihind Society, Statement dt.02.196 of Shri Rajesh N. Pilaji, Clerk, Jaihind Society, statements of Mrs. M.Z. Kerawala, f ormer chairperson of Jaihind Society and member of Jai Bharat Society, Statement dt.27.01.97 of Shri Amar R Dhus, Proprietor of R.K. Enterprises, statement dt.30.01.97 of Shri Ashok Jauni, Proprietor of Ashok Footwear has been relied upon by adjudicating authority which clearly shows that the Respondent only traded in footwear manufactured by the others. He also relies upon the cross examination of Shri Ashok Jauni, Smt. M.Z Kerawala, Shri Zameruddin Sheikh and Shri Rajesh Pilaji. He also submitted that the Mumbai Police also conducted investigation and their letter states that the genuine cobbler members of these societies w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l assistance in the form of loans. The cheques were received by the societies from the respondents which were encashed by the office bearers of the societies and after deducting commission, the cash was returned to shop owners. Some of the office bearers has their own manufacturing premises. In case of Dawood shoe s and Samurai footwear we find that the goods were shown to have been purchased from Jeevan Vikas Co-operative society Ltd. Samta Charmudhyog Co-operative society Ltd. and Jai Hind Sahakari Charmotpadak Sangh ltd. Some goods were also purchased from M/s Tej International, M/s Tej Sales, M/s Track Shoes and M/s Shoe Trade. In case of M/s Joy shoes, Shri Aziz Javeri, Partner had stated that they were purchasing footwear from small individual cobblers and whole sale dealers. However they purchase bills from various co-operative societies. Cheques were issued in the name of concerned society for the amount shown in purchase bills. The said cheques were encashed by the Society and then the money was paid to cobblers who manufactured the goods. We find that the director of M/s Dawood shoes in his statement has stated that the goods were purchased from the aforesaid societies af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that even the revenue in the Show Cause Notices alleged that the manufacturers are some agencies and that they are unidentifiable. In such a case when the revenue has failed to show any involvement of Respondents in manufacture of footwear, in that case there is no reason to raise demand against the Respondents. Further the sales tax, income tax assessments clearly shows that the Respondent did not undertake any manufacturing activity. Even the police enquiry conducted shows that the societies were genuine and had some genuine members. In the whole investigation it is nowhere appearing that the Respondents purchased any raw material or leather for getting the footwear manufactured. Even none of the individual or entity has named Respondent as the person who got the goods manufactured on his behalf. The onus of proving that the Respondent is the manufacturer of the goods has nowhere been discharged the revenue. The show cause does not even show as to where the goods were manufactured and in which premises the actual physical activity of manufacture took place. There is no inculpatory statement of any person of the Respondent company that they themselves were manufacturing the goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is required to be discharged by the Revenue by production of sufficient and tangible evidence. On careful examination, it is found that with regard to alleged removals, the department has not investigated the following aspects: (i) To find out the excess production details. (ii) To find out whether the excess raw materials have been purchased. (iii) To find out the dispatch particulars from the regular transporters. (iv) To find out the realization of sale proceeds. (v) To find out finished product receipt details from regular dealers/buyers. (vi) To find out the excess power consumptions. 13. Thus, to prove the allegation of clandestine sale, further corroborative evidence is also required. For this purpose no investigation was conducted by the Department. 14. In the instant case, no investigation was made by the Department, even the consumption of electricity was not examined by the Department who adopted the short cut method by raising the demand and levied the penalties. The statement of so called buyers, namely M/s. Singhal Cement Agency, M/s. Praveen Cement Agency; and M/s. Taj Traders are based on memory alone and their statements were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue is entitled to consider and have regard to the installed capacity of the factory, raw material utilization, labour employed, power consumed and such other relevant factors as may be deemed appropriate. In Triveni Rubber and Plastics v. Collector of Central Excise, (Supra) the Supreme Court has held: On a reading of Rule, we cannot agree that the officer empowered by the Collector or the Collector cannot determine the normal production unless all the factors mentioned in the Rule are present simultaneously. The Rule does not say so nor is it capable of being so interpreted . 8. In Triveni Rubber, the Supreme Court has not laid down that the normal production can be determined only on the basis of energy consumed ignoring all other factors. All that the Supreme Court has said is that for determining normal production all factors mentioned in Rule 173-E need not be present simultaneously. In a given case, where the accounts are fabricated the figures of raw material consumed or labour employed are not available it may not be possible to consider all the factors mentioned in Rule 173-E for determining the production. In such a case, figures of energy used may be conside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent heat loss consumption of the furnace oil alone was not sufficient to estimate the production of C.T.D. Bars. The Tribunal has considered the admission of the respondent 1 before the Settlement Commission about the removal of the goods contained in the first show cause notice for which a duty of ₹ 11,06,430/-has been imposed with a fine of ₹ 3,00,000/ -. Counsel for the Revenue was not able to point out that there was any admission regarding the alleged clandestine removal of any larger quantity than the one shown in the first show cause notice. The respondent 1 has not admitted clandestine removal of C.T.D. Bars as alleged in the addendum/corrigendum show cause notice. The burden of proving clandestine removal as alleged in the addendum show cause notice was on the appellant which has not been discharged. The Tribunal, as the last fact finding authority, has held that the clandestine removal alleged in the addendum show cause notice was not proved. The view taken by the Tribunal is clearly a possible view of facts and there is nothing on record to show that the Tribunal has ignored or failed to take into consideration any relevant fact or that the view of the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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