TMI Blog2018 (10) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... clearance of crown corks” confirmed. It is pertinent to see that neither the mahazar or any subsequent statement or investigation conducted have given reasons for this inference. The show-cause notice alleges that the manufacturing activity was done by M/s. MCPL, without giving any concrete proof to the effect that M/s. MCPL had any facility to manufacture the same - Department did not issue any show-cause notice to M/s. WC. Even assuming that the Department has considered M/s. WC, a non-existing unit, the issue required to be investigated deeply whether such goods were manufactured at M/s. ECPL, this investigation was not conducted. Moreover, no SCN was given to M/s. ECPL alleging manufacture of crown corks that was ultimately alleged to have been cleared by M/s. MCPL in the name of M/s. WC. The SCN acknowledges the fact that M/s WC was started in 1983 and was functioning from the premises of M/s MCPL and was closed down in 1987. Shei Ananth Rao has stated that he has started the unit M/s WC again in 1991-92 from premises at Murgeshpalya. The Revenue has not taken any steps to come to a definitive conclusion as to whether the impugned crown corks were manufactured at M/s. MC ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... G-1 Register - demand on all counts upheld. Penalties on the M/s. ECPL and M/s. MCPL and various personal penalties - Held that:- Looking into the amount of duty confirmed on M/s. MCPL, we reduce the penalty imposed on M/s. MCPL from ₹ 5,00,000/- to ₹ 2,00,000/- and the penalty imposed on Shri Prasanth Hegde, from ₹ 2,00,000/- to ₹ 1,00,000/- - We do not interfere with the penalties imposed on M/s. ECPL. However, looking into the role of various persons involved, we find that penalties imposed on Shri Mahesh Hegde (E/1174/2005) and Shri K. S. Dilip (E/1175/2005) are harsh - It was brought on record that Shri Mahesh Hegde used to sign differently in different documents and the same was confirmed by Government Examiner of Questioned Documents. However, it is not clear as to any criminal proceedings have been initiated against him - As far as the instant proceedings are concerned, nothing was brought on record to show that as to how they were benefitted by the alleged evasion by M/s. MCPL or M/s. ECPL, to substantiate the penalties levied on them, hence, we set aside the penalties. Appeal allowed in part. - E/1173 - 1176/2005-DB & E/1183/2005-DB - Final ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e statutory bodies like Sales Tax, KEB, Small Scale Industry and Central Excise Department could identify the existence of M/s. WC at Murugeshpalya, Bangalore. Therefore, it appeared that it is a fictitious unit. The customers of so-called M/s. WC like M/s. Kali Aerated Works, Madras and M/s. Balaji Bottlers, Madras stated that Shri K. R. Sridhar was also undertaking marketing / job orders for M/s. WC. Shri K. R. Sridhar is the Sales/Marketing Manager of M/s. MCPL. The job cards, details of stock, sales, status of different brands, and invoices of M/s. WC revealed that all such brands have been cleared from the premises of M/s. MCPL. (vi) Mr. Roney D Souza and Shri Renuka Prasad admitted that they have maintained such records of M/s. WC. A Kutcha paper found in File No.6 confirmed the transactions made by the personnel of M/s. MCPL but the sales were reflected in the sales register of M/s. WC. (vii) In view of the above, it appeared that PP caps/crown corks were produced and have been cleared from the premises of M/s. MCPL under the invoices of M/s. WC, all with an intention to supress true production and to evade payment of duty. (viii) Mr. Ullas Hegde in his statement d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 173Q. (v) Imposing penalties on various persons under Rule 209A. 3.1. The show-cause notice (SCN) was adjudicated by the Commissioner of Central Excise vide Order No.75/1997 dated 6.11.1997. The appellants have preferred an appeal before this Bench on the plea that the department proceeded to club clearances of a private limited company and a proprietorship without even giving show-cause to the Proprietor; principles of natural justice were not followed and effective hearing was not given to the party; the plea taken by the party for allowing cross-examination was not allowed. On an appeal filed by the appellants, this Bench vide Final Order No.335 to 340/2003 dated 5.3.2003 have remanded back the case to the adjudicating authority to examine all the issues afresh and to pass an order in accordance with law on providing an effective hearing to the party. In the de novo proceedings against the CESTAT s Final Order dated 5.3.2003, the Commissioner vide Order-in-Original No.11/2005 dated 22.9.2005 has again confirmed the duty and penalty on the appellants. Aggrieved by this order, the appellants have filed the following appeals before this Bench. Appeal No. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ELT 375 (Raj.) (viii) Standard Motors Products (I) Ltd. vs. collector: (ix) LMP Precision Eng. Co. vs. Collector: 1994 (70) ELT 580 (T) (x) Prabhat Dyes and Chemicals: 1992 (62) ELT 469 (T) (xi) Jagjivandas Co. vs. Collector: 1985 (19) ELT 441 (xii) Swastik Eng. Works vs. Collector: 1992 (62) ELT 313 (T) (xiii) Vivomed Labs (P) Ltd. vs. Collector: 1991 (53) ELT (T) (xiv) Pimpri Gases vs. Collector: 1990 (49) ELT (T) (xv) Cardcure Eng. Co. vs. Collector: 1996 (86) ELT 35 (xvi) Rang Udyog : 1990 (83) ELT 648 (T) (xvii) CCE Rajkot vs. Chandan Chicory Factory Industries: 1998 (103) ELT 670 (xviii) R. Venkatachalan vs. CCE, Chennai: 2000 (115) ELT 192 (xix) D.M. Gears Pvt. Ltd.: 2002 (48) RLT 768 (xx) CCE vs. Japan Mannequin Co.: 1999 (108) ELT 138 (xxi) CCE, Bombay vs. Libra Industries: 1999 (107) ELT 348 (xxii) Alpha Tayo Ltd.: 1994 (71) ELT 689 (T) (xxiii) Swastik Engineering Works: 1992 (62) ELT 3113 (T) (xxiv) Superstar Another: 2003 (54) RLT 175 (Tri.-Bang.) (xxv) Sri Andal Co. : 2003 (56) RLT 77 (Tri.-Chennai) 4.2 Mr. N. Manivannan, Superintendent of Central Excise during cross-examina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Commissioner has not relied upon any depositions where buyers have stated that they have placed orders on M/s. WC only. The learned Commissioner has given a finding that since scrap of aluminium and tin were found in the premises; they must have manufactured crown corks. This is a clear example of presumptions and assumptions. Commissioner has confirmed reversal of MODVAT credit of ₹ 83,935.86 on the ground that the appellant had irregularly availed credit on aluminium sheets which were used for clandestine manufacture and removal of PP caps. This was solely based on the statement of store keeper Mr. Roney D Souza. 4.8. Commissioner has erred in finding that Shri Anantha Rao has given statement only to absolve Shri Prasanth Hegde and Shri Ullas Hegde. M/s. MCPL have clearly explained that the Managing Director of M/s. MCPL was not aware of the activities carried out by Shri Anantha Rao. Shri Anantha Rao carried his own business with the help of a few personnel of M/s. MCPL. Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Hegde stated that he handed over signed cheque book to Shri Anantha Rao and permitted him to conduct transactions in Catholic Syrian Bank on their behalf. Later, he changed version saying that the plot in Murugeshpalya belonged to his brother Shri Santhosh Hegde and was leased-out to Shri Anantha Rao. During 1991-92 to 1993-94, the debits and credits of M/s. WC in the Bank were to the order of ₹ 66 lakhs, however, no payments for raw materials or to any statutory bodies or any statutory levies, bills, etc., are noticed through this Bank. (ii) Shri Prasanth Hegde, Chairman of M/s. MCPL and M/s. ECPL vide his statement dated 4.5.1994 has accepted that records of M/s. WC and M/s. ECPL were found in the premises of M/s. MCPL; M/s. MCPL have undertaken job work for M/s. ECPL; neither permission was undertaken nor Central Excise procedure was followed; Duty was not paid on samples cleared; M/s. WC was working in the same premises and w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 card No.16 on 17.7.1993 in M/s. WC s name. It was also found on page 16 of M/s. ECPL register. (x) Shri K. R. Sridhar was the marketing person who was also working for M/s. WC. Personnel of customers of M/s. WC like M/s. Balaji Bottlers, M/s. Kali Aerated Waters placed orders on Shri Sridhar only. 6. The Authorised Representative submitted that the evidences submitted by the learned counsel for the appellants purporting to prove the existence of M/s. WC were nothing but the statements and investigations conducted by the department. The KEB only confirmed an electricity connection being established at Murugeshpalya. However, most of the electric consumption for the most period was nil. Shri Anantha Rao s claim that he has worked mostly on the locally hired generators is only an afterthought. The visit by the Central Excise Officers to the unit revealed that the unit was closed and no machinery worthwhile was found ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i 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 Rao was created only as a dummy. (viii) Material pertaining to M/s. ECPL was more often then not has been off loaded in M/s. MCPL only. 7.1. Whereas, the defence of the appellants was on the following lines. (i) M/s. WC was, in fact, an existing proprietorship concern as is evidenced by the electricity connection and other statutory recognition given by authorities. (ii) As held in various judgments by Courts and Tribunals, the clearances of a limited company (private or public) cannot be clubbed as they have independent existence. (iii) M/s. MCPL have no facility for manufacture of crown corks as submitted by them during the investigation and during the proceedings before lower authorities and as confirmed by Shri Manivannan, Superintendent during the cross-examination; therefore, when there is no manufacturing facility it cannot be alleged that crown corks are manufactured and cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 assessee s premises, I confirm the duty of demand raised in the show-cause notice with regard to manufacture and clearance of crown corks . It is pertinent to see that neither the mahazar or any subsequent statement or investigation conducted have given reasons for this inference. The show-cause notice alleges that the manufacturing activity was done by M/s. MCPL, without giving any concrete proof to the effect that M/s. MCPL had any facility to manufacture the same. As contended by the appellants, department did not issue any show-cause notice to M/s. WC. Even assuming that the Department has considered M/s. WC, a non-existing unit, the issue required to be investigated deeply whether such goods were manufactured at M/s. ECPL, this investigation was not conducted. Moreover, no show-cause notice was given to M/s. ECPL alleging manufacture of crown corks that was ultimately alleged to have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rom 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 the effect that the unit was closed and no machinery appeared to be available inside was on the basis of the officers peeping through a window. It was well within the powers of the officers to brake open the lock and to carry investigation in detail and to record the proceedings in a mahazar, which was not done. On the contrary, the appellants have produced various correspondences between M/s. WC and the bankers and have also brought on record the fact that the payments by customers of M/s. WC were made into the Bank accounts of M/s. WC. On this count also, the appellants have a case. 7.5. Coming to the financial dealings, the investigation could establish the suspicious transactions only to the extent of ₹ 4,00,000/- on 24.6.1993 and ₹ 1,00,000/- on 23.8.1993, which was deposited/withdrawn in the Bank accounts of M/s. MCPL by M/s. WC or Shri Anantha Rao t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) on aluminium tin and wad scrap clandestinely removed. (iv) ₹ 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 ₹ 83,936/- (i.e., ₹ 72,987.71 + ₹ 10,948.15). 7.8. It was alleged that M/s. ECPL have availed MODVAT credit on 88.637 MT of tin sheets during the period 1991-92 to 1993-94. We find that the appellants could not produce any proof to sustain that credit was correctly availed by them with the help of any statutory or private records maintained either at M/s. ECPL or at M/s. MCPL. Therefore, we find that M/s. ECPL are required to pay MODVAT credit of ₹ 3,57,314/- (i.e. ₹ 3,27,131.15 BED + ₹ 30,182.90 SED) wrongly availed by them on goods which were not utilised in their factory. 7.9. We find that the adjudicating authority has imposed penalties on the M/s. ECPL and M/s. MCPL and various personal penalties. Looking into the amount of duty confirmed on M/s. MCPL, we reduce the penalty imposed on M/s. MCPL from ₹ 5,00,000/- to ₹ 2,00,000/- (Rupees Two Lakh Only) and the penalty imposed o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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