TMI Blog2019 (11) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... ing from the premises. In the present Appeals, the issues are only with M/s Bentex Control Switchgear Company. The declaration submitted by the Appellant on 17 March, 2010 for claiming exemption from excise duty in terms of the exemption notification mentions that the Appellant intends to manufacture four items namely, Motor Starters, KWH Meters, Miniature Circuit Breakers and Change Over Switches. The Appellant, however, claims that it started commercial production of Motor Starters only prior to 31 March, 2010 and it did not start commercial production of KWH Meters. Miniature Circuit Breakers and Change Over Switches. To claim the benefit of the exemption notification, it was imperative for the Appellant to have substantiated that the new industrial unit set up by the Appellant had commenced commercial production on or after 7 January, 2003 but not later than 31 March, 2010. The main submission of the Appellant to substantiate that the commercial production started before 31 March 2010 is issuance of the invoices on 19 March, 2010 and the courier receipts. According to the Appellant, this fact is sufficient to prove that the commercial production started prior to 19 March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Appellant. Learned Counsel for the Appellant could not satisfy that the requirement of the 2004 Rules had been satisfied. Penalty - suppression of facts or not - HELD THAT:- Penalty that has been imposed upon the Appellant has also been assailed by learned Counsel for the Appellant. The Commissioner (Appeals) has recorded a categorical finding that there was suppression of vital facts with an intention to evade payment of central excise duty by availing the benefit of the exemption notification, even though it had not started commercial production prior to 31 March, 2010 and it is only when a verification was carried out that the correct facts came to the light of the Department - This finding is based on a report submitted by the inspecting team that went for verification of the declaration made by the Appellant. The declaration was found to be false. It cannot be, therefore, be urged that the Appellant had no intention of evading payment of duty as a false declaration was deliberately made. Appeal dismissed. - Excise Appeal No. 52199 of 2015 With Excise Appeal No. 52200- 52202 of 2015 of 2015, Excise Appeal No. 51337 of 2016, Excise Appeal No. 51903 of 2016 - Fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6. The date of six show cause notices, the period of dispute, the duty, the penalty, the date of Appellate order and the date of Order-in-Original have been specified in the following chart: SCN No. Date Period of dispute Duty Penalty Appellate Order Original Order First 06.07.2011 April, 2010 to Jan. 2011 ₹ 444052/- ₹ 444052/- 25.02.2015 30.09.13 Second 03.04.2012 Feb.2011 to Sept. 2011 ₹ 899874/- ₹ 899874/- 25.02.2015 30.09.13 Third 11.10.2012 Oct. 2011 to June, 2012 ₹ 1571750/- ₹ 1571750/- 25.02.2015 30.09.13 Fourth 23.07.2013 July, 2012 to March, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all apply only to the following kinds of units, namely:- (a) new industrial units set up in areas mentioned in Annexure-II and Annexure-III, which have commenced commercial production on or after the 7th day of January, 2003 but not later than the 31st day of March, 2010; (b) industrial units existing before the 7th day of January, 2003 in areas mentioned in Annexure-II, but which have undertaken substantial expansion by way of increase in installed capacity by not less than twenty-five percent, on or after the 7th day of January, 2003, but have commenced commercial production from such expanded capacity, not later than the 31st day of March, 2010. 3. The exemption contained in this notification shall apply to any of the said units for a period not exceeding ten years from the date of publication of this notification in the Official Gazette or from the date of commencement of commercial production, whichever is later. 4. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Excise Act, 1944 [Excise Act]. The gist of the statement of Gopal Sharma is as follows : (i) M/s Bentex Control Switchgear Co., B-2 Khasra No. 10, Dev Bhoomi Industrial Estate, Village Bantakheri, Roorkee filed its declaration on 17.03.2010 to claim exemption from whole of Excise duty under Notification No. 50/2003-CE dated 10.06.2003. (ii) The unit is a partnership firm having 4 partners viz. namely Sh. Satish Chopra, Sh. Kapil Chopra, Sh. Rahul Chopra and Sh. Karan Chopra. (iii) The unit has been sanctioned 50 HP (70KW) power load from UPCL Roorkee. (iv) The unit filed the declaration to manufacture (a) Motor Starter (b) KWH Meter (c) MCB and (d) Change Over Switches. (v) As on date (18.04.2010) the unit has not manufactured any KWH Meter, MCB and Change Over Switches. (vi) Regarding manufacture of Motor Starter, the unit procures assembly components and steel boxes duly labeled as B-63 to 65/3, Naraina Indl. Area, Phase-II, New Delhi. The unit joins these assembly parts into steel box fitted with switches and pack in their packing cartons. (vii) The officers found the packed boxes manufactured at B-63 to 65/3, Naraina Indl. Area, Phase-II, New Delhi, mar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpendent witnesses was also drawn by the officers on spot to substantiate the above findings. A stated of Shri R.S. Kalia, Plant Incharge of above factory was also recorded. In the light of the above, it is apparent that M/s Bentex Control Switchgear Co. B-2, Khasra No. 10, Dev Bhoomi Industrial Estate, Bentakheri, Roorkee, Distt. Haridwar do not qualify for the exemption under the Notification No. 50/2003 dated 10.6.2003, as claimed by them under the Declaration dated 17.03.10. You are, therefore directed to opt for the central excise registration and clear excisable goods on payment of appropriate Central Excise duty (as applicable) under the procedures and provisions of Central Excise Law. (emphasis supplied) 14. The Appellant sent a communication dated 4 May, 2010 in response to the aforesaid letter mentioning therein that the main unit in the name of M/s Bentex Control Switchgear Company is situated at B-63 to 65/3, Naraina Industrial Area, Phase-II, New Delhi and the present unit was only an additional unit. The said plant and machinery were purchased sometimes in the month of February and March, 2010. It was also stated that since the main unit was manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Karan Chopra All residing at 47, Anand Lok, New Delhi-110049. (iv) The declaration was filed on 17.03.2010. (v) The raw material used in manufacturing are Copper strips, CRC Sheets, Brass Sheet, PCB Meter Card, SM Counter, Meter Body Set, Current Transformers and Thermo Bio-metal Strips etc. and the final products are Motor Starter, KWH Meter, Miniature Circuit Breaker, Change Over Switches/main switches. (vi) Process flow chart will be provided within 3 days. (vii) The photo copies of the plant machinery duly procured, will also be provided. (viii) Copies of the acknowledgement duly filed before DIC Roorkee as on 20.02.2008 have been provided. (ix) Copy of Sealing Certificate of Electricity Load will be provided within 3 days. (x) At the time of verification, there were 37 workers including one supervisor and at present there are 53 workers and 7 other staff Attendance sheet will be provided. (xi) Plant head is Mr. Ram Swaroop Kalia, Production Manager is Mr. Ram Ji Lal Uppadhyay, H.R. Manager Mr. Gopal Sharma has left the unit and in his place Mr. Amit is working. (xii) They recorded the commercial production in RG-1 dated 19.03.2010 and made the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mercial production. (ii) The party vide its statement dated 18.04.10 admitted the fact that due to illiterate labour they have loaded SKN marked labels and carton marked B-63 to 65/3 Naraina Industrial Area, Phase-II, New Delhi-110028. The same labels were affixed on finished goods and packed in cartons by mistake. This shows that no production was actually carried out by the unit till 31.03.2010 and hence could not fulfill the condition as laid down under Notification No. 50/2003-CE dated 10.06.2003. (iii) The party filed its Declaration for the manufacture of Motor Starters, KWH Meter, Miniature Circuit Breakers; Change Over Switches/Main Switches whereas on verification as well as panchnama drawn reveals that there was not much equipments and machinery for manufacture of these various items. 17. In the reply filed to the show cause notice, the Appellant stated that the findings of the team visiting the factory were factually incorrect and the Appellant had correctly filed the declaration. It was emphasized that the Appellant had commenced commercial production of the goods before 31 March, 2010, which was the cut of date and that it had raised first commercial invoice ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried out before effecting clearance of the finished goods. This system is adopted in almost all the manufacturing units. A manufacturing unit engaged in manufacturing electrical goods such as motor starter, MCB Change Over Switches must be having QC checks at number of stages. In such circumstances, it does not seem credible that such large quantity of the products had been affixed with wrong plates/packed in wrong cartons without having been noticed during the course of the manufacturing processes . Further the party have not controverted the allegation that the said goods had been found in ready-to-sale condition. Thus the state in which these goods were found in their factory clearly indicates that they must have been subjected to the quality checks. The party have not come up with a plea that they have not been subjected to quality check at any stage. In the light of the aforesaid observations, I hold that the said goods had actually been manufactured by the party in their Delhi unit and, in order to avail the exemption they were brought in this unit in the garb of the raw material. (emphasis supplied) 19. The contention of the Appellant that it had kept the raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y. The benefit of cum duty was also not granted and nor the Appellant was found entitled to avail credit of duty paid on inputs and capital goods or credit of service tax. 23. As noticed above, the order dated 25 February, 2015 decided the four show cause notices. The other two show cause notices were decided by order dated 16 April, 2015. The four Appeals filed by the Appellant against the order dated 25 February, 2015 and the two Appeals filed by the Appellant against the order dated 16 April, 2015 were dismissed by the Commissioner (Appeals) by orders dated 25 February, 2015 and 4 February, 2016 respectively. The latter order dated 4 February, 2016 merely reiterates the findings recorded in the earlier order dated 25 February, 2015. 24. The Commissioner (Appeals) did not accept the explanation offered by the Appellant that it was by mistake of the labour that the packed cartons contained the brand SKN and the place of manufacture as B-63 to 65/3 Naraina Industrial Area, Phase-II, New Delhi since it was unlikely that this mistake would have gone unnoticed by supervisors, production staff/godown incharge, quality control and dispatch section. The Commissioner (Appeals) not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd, therefore, there was no requirement of using the Power Press Machine; (iv) The Appellant had employed workers and was paying electricity bill; (v) The benefit of the exemption notification could not have been denied to the Appellant merely because the Delhi address was mentioned in the packed cartons or on the labels fixed on the products as that was because of mistakes committed by the workers; (vi) It was necessary for the officers who went to the Roorkee unit for verification of the declaration made by the Appellant to have enquired from Gopal Sharma or Ram Swaroop Kalia about the presence of the raw material, but having failed to do so, the benefit of the exemption notification cannot be denied to the Appellant on the ground that the raw material was not available; (vii) The Appellant is clearly entitled to the Cenvat credit on inputs, capital goods and input service; (viii) The Appellant is also entitled to take the benefit of SSI exemption and cum duty price and; (ix) The Commissioner (Appeals) was not justified in imposing penalty upon the Appellant as it had not suppressed facts from the Department. 27. Shri R.K. Mishra, learned Authorised Represent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture Circuit Breakers and Change Over Switches. 30. To claim the benefit of the exemption notification, it was imperative for the Appellant to have substantiated that the new industrial unit set up by the Appellant had commenced commercial production on or after 7 January, 2003 but not later than 31 March, 2010. The main submission of the Appellant to substantiate that the commercial production started before 31 March 2010 is issuance of the invoices on 19 March, 2010 and the courier receipts. According to the Appellant, this fact is sufficient to prove that the commercial production started prior to 19 March, 2010 because in that case the invoices would not have been issued on 19 March, 2010 and nor the goods could have been dispatched by courier before 31 March 2010. This factual position cannot conclusively prove that the production of Motor Starters in the Roorkee unit started before 31 March, 2010. What was necessary for the Appellant to substantiate this claim was to have at least placed a document showing receipt of the goods by persons in whose favour the invoices had been raised and the receipt of money by the Appellant for supply of the said goods. Invoices can be rais ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... imperative for the Appellant, in view of the statutory provision to have intimated the Employees State Insurance Corporation and others but such documents have not been produced. 33. If the Appellant was actually manufacturing the Motor Starters, it would have raw materials but no raw material was kept in the premises of the unit. The contention of learned Counsel for the Appellant is that it was for the visiting team to have enquired this fact from the two senior officers present in the unit at the time of inspection, but since no information was sought, the Appellate Authority was not justified in holding that no raw material was kept in the unit. The submission is that it was, therefore, not necessary for the two officers of the Appellant to point out to the visiting team where the raw material was kept. This submission also cannot be accepted. The case of the Appellant is that it had commenced commercial production on 18 March 2010 and so it was necessary for the two senior officers of the unit present at the time of visit to have informed the officers of the Department that raw material was actually kept at a particular place. 34. The submission that raw material was br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iabad Shri N.K. Lohia Versus Commissioner of Central Excise Service Tax, Ghaziabad [ 2017 (8) TMI 583-CESTAT Allahabad ], the Tribunal found that that all the transactions had been properly recorded in the books of accounts maintained in the ordinary course of business and the returns filed with the Department. Evidence had also been filed regarding delivery of the orders. 38. In S.K. Rasps Files Pvt. Ltd. Versus Commissioner of Central Excise., Chandigarh-I [ 2015 (12) TMI 1619 CESTAT Chandigarh ], the Bench found that the Appellant had sold the goods against consideration. 39. These decisions do not help the Appellant for the simple reason that the Appellant could not substantiate its case that the goods sold through the invoices had actually been received by the persons in whose favour the invoices had been issued or payments had been received by the Appellant. 40. It is, therefore, not possible to hold that the Appellant had started commercial production of Motor Starters before 31 March, 2010. The Commissioner (Appeals), therefore, committed no illegality in denying the claim of the exemption notification to the Appellant. 41. Learned Counsel for the App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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