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TMI Blog2018 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... losures (WC) and M/s. Emcee Crowns Pvt. Ltd. (ECPL) were found in the premises. M/s. Weldon Closures were shown to be functioning from 39/48, 12th KM, Kanakapura, Bangalore. M/s. Emcee Crowns was said to be functioning at Kunigal Industrial Area, Kunigal. (ii) Mr. Prasanth Hegde was chair person of both M/s. MCPL and M/s. ECPL and Shri K. S. Dilip was the Director, who was attending to the work of both the companies. Shri Hedge in his statement dated 4.5.1994 admitted that excisable goods were moved from one unit to another unit for further operations without following any Central Excise procedures. (iii) Enquiries revealed that M/s. ECPL were procuring tin from M/s. Tin Plate Company and the entire material were received at M/s. MCPL. However, M/s. ECPL have availed the MODVAT credit on the same. (iv) Shri Anantha Rao in his statement dated 25.7.1994 stated that M/s. WC is a small unit having their factory at 307, Murugeshpalya, Bangalore 17; they were manufacturing crown corks for supply of manufacturers of aerated waters in Bangalore and Tamil Nadu; their turnover was less than Rs. 30 lakhs; the sale bills carried the address 39/48, 12th KM, Kanakapura, Bangalore; he was u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... th Metal Printers, M/s. Encore Exports; payments were made by DDs; he had only used KEB power and rented generators from local people during February to June; he utilised the services of M/s. MCPL's employees; the records left over by him in the company were seized by the Central Excise. (x) Tin sheets allegedly belonging to M/s. ECPL were also found. These materials were received at M/s. MCPL premises under subsidiary gate passes/endorsed gate passes to M/s. ECPL and the consignments were addressed directly to M/s. MCPL and latter, diverted to Kunigal. M/s. ECPL had availed MODVAT credits and the diversion of such goods was not disclosed to the Department either by M/s. MCPL or M/s. ECPL. (xi) Shri Mahesh Hegde, Account Assistant has been handling the Central Excise records; he signed differently while handling correspondences of M/s. MCPL and M/s. WC, which was confirmed by the Government Examiner of Questioned Documents. 3. On completion of investigation, a show-cause notice was issued seeking - (i) Central Excise duty of Rs. 21,72,955.80 on the PP caps/ crown corks/scrap cleared without payment of duty and duty of Rs. 299/- on 2036 Nos. of PP caps found short from M/s. M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat he had punching machine, dye setting machine and tools necessary for manufacture of crown corks. He had supplied crown corks to M/s. Kali Aerated Water Works; M/s. Bangalore Soft Drinks and M/s. Karnataka Beverages. The buyers have confirmed that they have received goods from M/s. WC only. He submitted that as held by Tribunal in LD Industries: 2003 (59) RLT 154 clearance of limited companies cannot be clubbed with other firms. It is now well settled law that in the absence of common funding, mutuality of interest and financial flow back clearances of an independent unit cannot be clubbed. They relied upon the following cases: (i) Assistant Collector vs. Shri J. C. Shah: 1978 (2) ELT 317 (SC) (ii) Satyanarayan Textiles vs. Collector: 1989 (43) ELT 729 (T) (iii) CD Industrial Engineers vs. Collector: 1983 (14) ELT 1944-CEGAT (iv) Prima Control (P) Ltd. vs. Collector : 1994 (72) ELT 62 (T) (v) Padma Packages (P) Ltd. vs. Collector: 1997 (90) ELT 83 (T) (vi) Binod Kumar Maheswari vs. Collector: 1997 (90) ELT 83 (T) (vii) Renu Tandon vs. UOI: 1993 (66) ELT 375 (Raj.) (viii) Standard Motors Products (I) Ltd. vs. collector: (ix) LMP Precision Eng. Co. vs. Coll ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g Works: 1996 (86) ELT 229 (T) (ii) Renu Tandon: 1993 (66) ELT 375 (Raj.) (iii) Sprint Fresh Drinks: 199 (54) ELT 333 (iv) International Dye Stuff Manufacturing Co.: 1991 (53) ELT 85 4.5. It was alleged that goods supplied to M/s. Brooke Bond were manufactured in the name of M/s. WC, on the basis of a dairy maintained by Shri Armstrong. As a matter of fact, they were manufactured by M/s. WC and were sold to M/s. ECPL and eventually supplied to M/s. Brooke Bond. This was clear by the statement of Shri Dineshan the Assistant Manager of Brooke Bond. 4.6 The learned Commissioner erred in not considering the settled legal position that the goods lying in the factory cannot be confiscated when no attempt has been made to clear the same without payment of duty. He has relied upon the following case laws: (i) Southern Steel: 1979 ELT J402 (ii) New Polymer: 1995 (52) ELT 145 (iii) Katar Steel : 1997 (93) ELT 443 (iv) Cureworth India: 2000 (37) RLT 158 (v) Shanti Vrath: 1998 (99) ELT 154 (vi) Ratan Re-rollers Ltd.: 2001 (137) ELT 1169 4.7 The learned Commissioner has relied upon mostly the statements of personnel who are not produced for cross-examination. The learned Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oved to be cleared. 4.11. Hon'ble Tribunal vide its Final Order dated 5.3.2003 observed that all the submissions made by the appellants be considered, however, the Commissioner has ignored all the valid submissions. 4.12 A case was booked in 1987 by the Department on similar lines of clubbing clearances of M/s. MCPL and M/s. WC. It was ultimately dropped by CEGAT. 4.13 Lastly, the counsel submitted that, in case, the Tribunal decides that duty is payable by the appellants, cum- duty price may be allowed for payment of duty as held in in Maruti Udyog: 2002 (49) RLT 1 (SC). 5. The learned Departmental Representative has submitted that the case was made on the basis of concrete evidence and not on presumptions and assumptions. The demand pertains to 1991-1994. The statements of different persons are summarised as follows: (i) Shri Anantha Rao, in his letter dated 25.7.1994 claimed that his attendance in person was not necessary as advised by M/s. MCPL. However, latter, when he rendered his statement he brought in the story that he has started M/s. WC at Murugeshpalya as a partnership firm with Shri Ullas Hegde in 1991 but however, after few days it was dissolved. Shri Ullas Heg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iner of Questioned Documents has confirmed the handwriting in both the registers to be of the same person. (vii) Shri K. S. Dilip, Director of M/s. MCPL in his statement dated 27.6.1994 confirmed that the crown corks were printed and cut at M/s. MCPL but punching was done in M/s. ECPL. Movement of goods was without challans and without following procedures. Material belonging to M/s. ECPL was received at M/s. MCPL but not recorded anywhere. (viii) 8411 kg of tin sheets indented by M/s. ECPL under challans K821 dated 8.6.1993 and K595 dated 27.5.199 were found entry at No.76, of the stock book seized at MCPL. The same were issued to manufacture, under job card No. 52 for Torino Brand Crowns. However, enquiries with the customer revealed that said order was placed on M/s. WC. (ix) Similarly, production of PP caps supposed to be supplied to M/s. Gemini and Vorion Distilleries was mentioned in the production status registers of quality centre of M/s. MCPL. It was also found mention in the General Marketing File (at Sl. No.145) of M/s. MCPL and also in a kutcha paper found in File No.6. Similarly, entries relating to supply of PP caps to Kalyan Soft Drinks was mentioned in job car ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds of M/s. WC were deposited in the Catholic Syrian Bank but were withdrawn by the personnel of M/s. MCPL. Shri N.C. Joshi, Manager of M/s. MCPL in his statement dated 15.6.1994 has accepted that the amounts belong to Mr. Ullas Hegde, brother of Mr. Prasanth Hegde, the MD of M/s. MCPL. (iii) Shri Mahesh Hegde has maintained excise records of both M/s. MCPL and M/s. WC and he used to sign the different registers in a different fashion. This was confirmed by Government Examiner of Questioned Documents. (iv) Shri K. S. Dilip, Director of M/s. MCPL in his statement dated 27.6.1994 confirmed that the crown corks were printed and cut at M/s. MCPL but punching was done in M/s. ECPL. (v) Shri K. R Sridhar, Marketing person of M/s. MCPL was also working for M/s. WC. The customers of M/s. WC like M/s. Balaji Bottlers and M/s. Kali Aerated Waters, etc., have confirmed that they were in contact with Shri Sridhar only with respect to the purchase of crown corks from M/s. WC. (vi) No statutory authority has either confirmed or acknowledged the existence of M/s. WC. (vii) The bankers i.e., Catholic Syrian Bank recognised Shri Ullas Hegde to be the Proprietor of M/s. WC and Mr. Anantha R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r dated 3.31994 contains details of machinery and records seized and on being asked as to whether M/s. Metal Closures had infrastructure to manufacture crown corks, Shri Manivannan, Superintendent of Central Excise, stated categorically that there was no facility for manufacture of crown corks in M/s. MCPL. Similarly, we find that Shri M. B. Mammoo (now name officially changed as M.B. Mahmood), during cross-examination on 9.8.2005 stated that he did not remember as to whether he had conducted any investigation regarding the availability of infrastructure to manufacture crown corks at M/s. MCPL. We find that the Department has not sufficiently rebutted this claim by the appellants. In fact, we find that the Commissioner in the de novo adjudication order had cursorily mentioned that "the productivity status register and production register of the assessee's unit (M/s. MCPL) confirm the view that the crown corks were manufactured by M/s. MCPL, therefore, it can be inferred that though part of the activity like punching has been undertaken at M/s. ECPL and invoices were raised by M/s. WC, the crown corks cleared were manufactured at M/s. MCPL. Since the manufacture was done in the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as, the show-cause notice alleges that the crown corks have been manufactured in the premises of M/s. MCPL, the Order-in-Original talks of crown corks have been manufactured in the premises of M/s. ECPL. We find that the Department has not issued show-cause notices either to M/s. WC or to M/s. ECPL. Following the ratio of the judgment of the Tribunal in the case of Poly Resins (supra), we find that the assessee's contentions on this ground too are strong. 7.4. Moreover, we find that both the Karnataka Electricity Authority and Central Excise having jurisdiction over Murugeshpalya, did not come to the categorical conclusion that the unit by name M/s. WC did not exist there. Whereas, Karnataka Electricity Authority has only given that the premises had an electricity connection in the name of Shri E. Hanumantha Rao and have given certain details of electricity consumption from which it could only be inferred that the electricity consumption was less and infrequent. The statement of Shri Hanumantha Rao, stating that he had used generator sets was dismissed as an after thought without conducting any further investigation. Similarly, the findings of the Central Excise Department were to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sridhar, who was removed by them, cannot be relied upon. We find that such defence is not acceptable and does not answer the questions raised in the show-cause notice. As discussed above, the show-cause notice was able to bring out from various records and statement of the officers of M/s. MCPL that clandestine removal of PP caps and scrap has taken place. No entries have been made in the statutory records like RG-1 Register. We find from the records that M/s. MCPL are required to pay duty of Rs. 4,49,056/- as shown below: (i) Rs. 1,09,557/- (i.e., Rs. 96,913.30 BED + Rs. 12,643.75 SED) on clandestine removal of PP Caps. (ii) Rs. 2,25,386/- (i.e., Rs. 2,07,715/- BED + Rs. 17,671/- SED) on aluminium scrap clandestinely removed by them. (iii) Rs. 1,13,814/- (i.e., Rs. 1,10,900/- BED + Rs. 2,913.45 SED) on aluminium tin and wad scrap clandestinely removed. (iv) Rs. 299/- on 2036 Nos. of PP caps found short. 7.7. On the allegation of irregular MODVAT credit availed, we find that M/s. MCPL are required to pay MODVAT credit wrongly availed of Rs. 83,936/- (i.e., Rs. 72,987.71 + Rs. 10,948.15). 7.8. It was alleged that M/s. ECPL have availed MODVAT credit on 88.637 MT of tin sh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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