TMI Blog2022 (10) TMI 93X X X X Extracts X X X X X X X X Extracts X X X X ..... e and cannot be faulted with. It is also not in dispute that the no appeal against this order dated 09.01.2002 was filed by the revenue and other co-noticee in the show cause notice i.e. Shri Jayant Shirwadkar and Mrs H S Shirwadkar. In result the proceedings against these two co-noticees have become final and cannot be reopened by the Commissioner in de-novo proceedings as per the order of tribunal remanding the matter back to original authority in the appeals filed by M/s UCSSPL and Shri Shrikant Shirwadkar. Also in absence of the appeal by revenue against this order the order has acquired finality and Commissioner cannot have passed any order beyond the order passed by his predecessor. In view of this fact, the Commissioner order imposing penalty on Shri Jayant Shirwadkar cannot be sustained and the penalty imposed on Shri Shrikant Shirwadkar cannot be in excess of the penalty imposed by this order. Appeal filed by the Appellant 1 against the imposition of penalty under Rule 173 Q (1) is partly allowed to the extent of restricting the penalty imposed under this Rule to Rs 1,80,000/- - Appeal filed by Shri Jayant Shirwadkar (Appellant 2) against the penalty imposed by the C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (1) of the Rules. However I give option of payment of redemption fine of Rs. 10.00.000 only) in lieu of the said confiscation to M/s Utramatix Computer Support Systems Pvt. Ltd. This order is issued without prejudice to any other action that may be taken under this Act or any other Act for the time being in force within India. 1.2 For ease of reference we refer the appellant in Appeal No E/995/2012 as Appellant 1, in Appeal No E/996/2012 as Appellant 2 and in Appeal No E/997/2012 as Appellant 3. 2.1 Appellant 1 is engaged in the manufacture of Split Air conditioners falling, under Ch. Heading 8512 of Central Excise Tariff Act, 1985.The goods manufactured by the assessee are supplied mainly to DOT, MTNL AIR. 2.2 On the basis of intelligence gathered by the departmental officers, that the Appellant had floated two dummy units viz. M/s Shrikant Refrigeration Co. (in short SRC) and M/s Excel Technology (in short ET) at the same premises, the factory premises of the assessee was visited and statements of certain persons were recorded as part of investigations. It appeared that the assessee had floated the dummy units with intent to avail inadmissible exemption and ben ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logies (in short ET), under Rule 209A of the Rules. h. Land, building, plant, machinery, material etc. should not be confiscated under Rule 173Q(2) of the Rules 2.5 Further para 5 of the show Cause Notice stated as follows: 5. And Shri Shrikant Shirwadkar, Director of M/s UCSSPL., Shri Jayant Shirwadkar, Partner of the said dummy unit i.e. M/s Excel Technology and Mrs H S Shirwadkar, Director of M/s UCSSPL Partner of the said floated unit i.e. M/s Shrikant Refrigeration Co are hereby called upon to show cause to the same authority within thirty days of the receipt of this notice as to why personal penalty should not be imposed on them under the provision of Rule 209A of the Rules. 2.6 The SCN was adjudicated vide Order in Original NO.42/CEX/2001 dtd. 09.01.2002. recording findings as follows: i) The extended period was not invokable so far as the clearances of M/s Ultramatix Computer Support System were considered, since the classification list w.e.f 1994 was finally approved by the jurisdictional Asstt. Commissioner, holding therein that the goods manufactured by M/s Ultramatix were classifiable under Chapters sub heading 8415.00 as parts attracting duty @30%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ugned goods) instead of considering exemption Notification No.75/87-CE dated 01.03.1997. The Adjudicating Commissioner has also dropped part of the demand relating to the allegation of clearance of Air conditioners as parts as time barred. 3. We find inconsistency in the impugned order as he has held one part of the demand as time barred whereas he has confirmed duty demand for the other part. We also find that the Show-Cause-Notice was issued under provisions of Section 11A of the Act read with erstwhile Rule 9 (2) of the Central Excise Rules, 1944 while assessments over provisional and we do not find any reference to the final assessment in the order. It is surprising that while deciding whether the demand is time barred or not, the Adjudicating Commissioner has not checked the fact whether the assessments were provisional. 4. We also find that the Excise Authorities have issued 3 Registrations for 3 different applicants in respect of the same premises. No action appears to have been taken against such irregularity. In view of the inconsistencies and lacunae in the impugned order, we set aside the same and remand the matter for fresh adjudication to the lower authority ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 20.02.2006 remanded the matter to Commissioner for de novo adjudication. In the remand proceeding, the Commissioner vide impugned order imposed penalty of Rs.2,00,000/- on the appellants, Rs.1,00,000/- on Mr. Shrikant Shirwadkar, Director of the appellants and Rs.50,000/- on Mr. Jayant Shirwadkar, Partner of ET. The Commissioner also imposed fine of Rs.10,00,000/- in lieu of confiscation on the appellants. In remand proceeding cannot impose the penalty and fine beyond the amount of penalty and fine imposed in the first round of litigation. Appellants cannot be put in worse off situation merely because they filed appeal against the confirmation of demand, penalty and fine, as have been held in the following decisions: Jaysawal Neco [2015 (322) ELT 561 (SC)] Su. Jewels Exim Pvt. Ltd. [2010 (253) ELT 713 (Bom.)] Servo Packaging Ltd. [2016 (340) ELT 6 (Mad.).] Turnover of SRC and ET cannot be clubbed in the turnover of the Appellants, for the reason that: Separate registrations granted to SRC and ET have not been revoked. The Commissioner in para 6.10 of the impugned Order has held that the officer had correctly granted registration as three ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll such different entities are being owned by same person. In the present case, the Directors of the appellants company is partner in SRC but the same is in their individual capacity. B.S.B.K. Engineers Pvt. Ltd. [2015 (320) ELT 172 (T)] JC Shah [1978 (2) ELT J317 (SC)] D.S. Doors [2020 (371) ELT 863 (T)]. The department erred in clubbing the clearance of private limited companies which are legally separate and have all through been recognized separately by the Central and State authorities. Kindly refer: Circular No. 6/92 dated 29.5.1992 Spacetech Equipments Structurals [2019 (8) TMI 147 CESTAT] LD Industries [2003 (157) ELT 459 (T)] Tapsya Steels (P) Ltd. [2004 (174) ELT 108 (T)] NMS Babu [2006 (198) ELT 528 (T)] Unicure Remedies Pvt. Ltd. [2005 (185) ELT 257 (T)]. In the present case, SRC and ET had taken the premises on rent as per the rent agreement. SRC and ET had accordingly paid the rent to the Appellants. Further, the Appellants sold the goods to MTNL and received the consideration and the said consideration was paid to SRC and ET for the goods supplied by them. The money exchanged for genuine transactions canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the decisions relied upon by Commissioner in the impugned Order is not applicable to the facts of the present case. Appellant 1 should be allowed the benefit of MODVAT Credit of Rs.2,35,038 as available on the inputs procured by SRC/ET during the period under dispute if it is held that the benefit of SSI exemption would not be available to SRC and ET. Siddhartha Tubes Ltd. [2006 (193) ELT 3 (SC)] Mahavir Aluminium Ltd. 2007 (212) ELT 3 (SC). Appellants submit that the sale price mentioned in invoice is cum-duty price and admittedly the Appellants have not recovered any duty from the customers. Hence, turnovers of Rs, 15.00 Lacs each of SRC/ET should be considered as cum duty price reduced by the applicable excise duty to arrive at the correct sales price. This submission is fully supported by the Explanation to Section 4 of the Central Excise Act inserted with effect from 14.05.2003 by Finance Act, 2003. Maruti Udyog Limited [2002 (49) RLT 1 (SC)] Indian Plastic Industries [2007 (210) ELT 534 (T)] Reliance Industrial Products [2010 (260) ELT 312 (T)]. The department was well aware about the facts and the transactions of the appel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of M/s UCSSPL and others that these units had cleared 7 units each of complete air-conditioners. This is evident from the invoices issued in the name of these units. The decisions they relied upon are not relevant as explained below Reliance is placed on following decisions in the support of impugned order. Supreme Washers (P) Ltd. [(2003 (151) E.L.T. 14 (S.C.))]; British Scaffolding India Pvt Ltd [(2014 (313) E.L.T. 87 (Tri. - Del.)] held affirmed by the Hon ble Apex Court as reported in Euro Scaff (India) (2015 (323) E.L.T. A124 (S.C.)]; Box Carton India Pvt. Ltd. [2008 (228) E.L.T. 85 (Tri. Del)] affirmed as [2010 (255) E.L.T. A13 (S.C.)). Sunsuk Industries [2018 (16) G.S.T.L. 469 (Bom.)] Alpha Converting Machines Pvt Ltd [2018 (364) E.L.T. 141 (Tri. Ahmd Sri Vivekananda Industries [(2017-TIOL-3694-CESTATMAD Chirag Electronics [(2014-TIOL-2327-CESTAT-DEL] Himgiri Plastics and others [2017 (357) E.L.T. 153 (Tri. - Del.)] affirmed as reported at [2018 (360) E.L.T. A137 (S.C.)]. Libra Engineering Works [2016 (339) E.L.T. 610 (Tri. - Ahmd.)); Shree Rubber Works [2010 (250) E.L.T. 384 (Tri. - Ahmd.)] Modern Engineering Plas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... I find that regarding short payment of duty due to misclassification of the products manufactured by M/s UCSSPL, the original adjudicating authority felt that the classification list of M/s UCSSPL, which was provisionally approved under Rule 9B, was finally approved by the Divisional Asstt. Commissioner on 27.08.1999, followed by corrigendum dtd. 10.09.1999. The said classification list for the goods manufactured by M/s UCSSPL was finally approved holding the product as parts of Air-conditioners'. However, the classification lists filed by other units, alleged to be dummy units, were pending final approval. As such, I find that the original adjudicating authority had rightly held that extended period could not be invoked on the demand for the goods manufactured by M/s UCSSPL. However, the provisional assessment requested for the goods manufactured by M/s SRC M/s ET were pending finalization. In this regard, I do not find any fresh grounds or reason to differ with the stand taken by the original adjudicating authority. In doing so I draw sustenance from the Hon'ble CESTAT's decision in case of M/S Lamifab Papers Ltd. V/s Commissioner of Central Excise Customs, Aur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to the department about the factual position thereby sought wrong benefit of SSI exemption under 75/87 dtd. 1.3.1987 by floating two dummy units viz. M/s Shrikant Refrigeration Co., and M/S Excel Technologies. This conclusion is supported by the relevant portions of the statements recorded of some of the persons associated with M/s UCSSPL as well as with other two dummy units which are quoted as under: Quote: Statement of Shri. Jayant Shirwadkar, Partner, in M/s SRC, dtd. 18.02.1975: We were having a unit in Bhosari viz. Ms Ultramatix Systems Pvt. Ltd. engaged in manufacture, installation commissioning of air-conditioning package units. We were not sure whether we should carry out the business in UCSSPL or USPL as collaborators agreement and the other things were uncertain. In 1994, after Budgel, we were not sure on which company the collaboration to be entered and in which unit the activities to be conducted after collaboration. This was because of drastic change in excise structure. We started planning to form partnership Co. Viz.. Ms Shrikant Refrigeration Co. having as partner Mrs. H.S. Shirwadkar and Mr. Jayant Shirwadkar; and Ms Excel Technology Corp. having p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her find that Shri. Dilip Yendole , in his statement dated 17.2.1995 stated that the stickers as 'ULTRAMATIX' are affixed on the goods manufactured and cleared by these units. In this regard I find that in view of Explanation III inserted in Notification: 75/87-CE dtd.1.03.1987 by way of Notifn. No.11/94-CE dtd. 1.3.1994, exemption contained in this notification shall not apply to the specified goods bearing brand name, symbol, monogram, code number, drawing number etc. 6.8. I find that the two aspects taken into consideration by the then Commissioner, earlier adjudicating authority while passing the Order in Original No.42/CEX/2001 dtd.09.01.2002,are: a. Clearance of the goods manufactured and cleared by M/s UCSSPL claiming to be parts of all conditioner, of which the classification was approved. Hence the demand on this account was dropped. b. Proposed change in classification of the goods as air conditioning system on the basis of new facts emerging out of investigation conducted and clubbing of the two dummy units floated by the assessee. On the basis of evidence on record the demand to this extent was confirmed. 6.9. Regarding mention of provisional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ses as independent of each other having separate exit/gates, though the exit for Parmar Industrial Estate, where these three units are located, was common. Further, provisions of erstwhile Rule 174 (3) (4) stipulated that 'if there are more than one premises requiring the registration he shall obtain separate registration. certificate for each of the premises and every registration certificate granted shall be in specified form and shall be valid only for the premises specified in such certificate'. From the evidences on record I find that the officer did not err while issuing separate registrations to the units in question on the basis of the documents produced at the material time. However, from the facts on record, it becomes evident that the three separate registrations were taken by Shirwadkar family ! with sole malafide intention to avail SSI benefit under Notification 75/87-CE dtd. 01.03.87. 7. M/s Ultramatix have submitted their defense along with a number of case laws supporting their contentions. 7.1. Assessee have argued that clearances of partnership firms cannot be clubbed with clearances of private limited company while denying turnover based exemp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ned i.e. Shri Shrikant A. Shirwadkar and his wife Smt. Hema S. Shirwadkar are the Director of M/s UCSSPL Smt. Hema S. Shirwadkar and Smt Anjali Jayant Shirwadkar are the partners in M/s SRC and Jayant V. Shirwadkar Smt. Indumati A Shirwadkar are the partners in M/S ET. Goods manufactured by the three units are the same viz Split Air Conditioning Systems and labour, machinery all is common. As such in view of the facts on record and in view of para 4 of Board's said circular, I have no hesitation in concluding that M/s SRC M/s ET were nothing but extension of M/s UCSSPL. These facts are accepted by the Director Partners of the company and other office bearers of the companies (reference- para 64 supra) Hence while deciding as to whether M/s UCSSPL were entitled for SSI benefit, it is essential to take into consideration the turnover of the said three manufacturers. For the reasons stated hereinabove assessee's argument that clearances of partnership firms cannot be clubbed with clearances of private limited company does not hold water and hence cannot be acceded to 7.1.4. M/s UCSSPL have also placed reliance on Supreme Court's decision in case of Supreme Washer (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he argument that M/s SRC Ms ET were in existence before Ms UCSSPL was created and all the three units had three separate Central Excise Registrations. While weighing this contention it is imperative to consider various facts of the case. The documents on record show that the registrations were issued to M/s SRC M/s ET on 05.05.1994 and to M/s UCSSPL on 05.08.1994. From the Central Excise Registration Certificates obtained by these units, bearing Registration No. 1002040567 (M/S UCSSPL), 1002040550 (M/s SRC) 1002040549(M/s ET) it is seen that the goods intended to be manufactured by M/s UCSSPL, M/s SRC Ms ET. As mentioned in the certificate are 'split type air conditioner' and the propose customers are shown as MTNL/DOT Hospitals. I further find that Shri. Shrikant A. Shirwadkar in his statement dtd.23.02.1995 has deposed that Ms UCSSPL were engaged to Job work activity under erstwhile Rule 57F(2) of Central Excise Rules 1994 for M/s Ultramatix System Pvt.Ltd. Bhosari (in short USPL) since 1990-91 till Aug.1994. In Aug. 1994 Ms UCSSPL took Central Excise Registration for taking up manufacturing activity on its own. He has further deposed as under: 'i. As a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... created temporary separate premises in such form which could easily be removed and converted into one premises. The units being registered as SSI, there were restrictions on the visit of departmental/ jurisdictional officer. As such there was no means to find out the factual position in routine course. The visit of the preventive officers was based on specific information received. And during this investigation it was revealed that the so called three units did not have separate premises as shown at the time of obtaining registration. 7.2.3. From the foregoing discussions it is established beyond doubt that the two M/s ET were dummy units created by M/s UCSSPL with malafide intention of availing benefit of Notifn ./75/87-CE dtd.1.3.87. 7.3. Common office staff are no ground for clubbing : Assessee have not denied that the office and staff of the units in question was common. They have tried to defend their point on the basis of case laws. However, after going through the citations produced by the assessee I find that the ratio of these judgments cannot be applied in the instant case since facts of these cases are different from the case in hand e.g. in case of M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... S ET for and on behalf of M/S UCSSPL. 7.5 Excel Technology and Shrikant Refrigeration not controlled By Ultramatix : The Directors and owners of the three units were of one family and closely related to each other and mutuality of interest is well established by the facts on record. As such, I find that the business was owned by one family with intent to avail turnover based SSI exemption under Notifn. 75/87- CE dtd. 1.3.87 and ratio of Tri. Mumbai in case of M/s Navarang Art Printers V/s Commissioner of Central Excise, Mumbai 2010(251)E.L.T.267(Tri.-Mumbai)] is squarely applicable when Tribunal has held that the very fact that same factory was used and shown as manufacturing unit by different units and the fact that two units actually had partners who were husband and wives and the third unit was limited company with two wives as directors, coupled with the fact on record, shows that the other two units were dummies and in reality the activities were carried out by main two partners. 7.6. SCN not issued to other Firms: Ms UCSSPL have put forth that SCNs are not issued to M/s SRC Ms ET and it is settled law that the Show Cause Notice is required to be issued to all unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nto for the said activity and the invoices of two dummy units, were in the name of M/s UCSSPL who in turn supplied the goods to end customers. I find that assessee's argument regarding department blowing it hot and cold at the same time by holding that the two units manufactured the same products as that of main unit, has no force in it. M/s SRC M/s ET were dummy units floated by M/s UCSSPL for meeting the huge demand of their customers while availing turnover based benefit of Notifn.75/87-CE. M/s SRC M/s ET being units only on paper, the product split air-conditioner manufactured by these units further strengthens department's stand. The goods actually manufactured for and on behalf of M/s UCSSPL were shown as manufactured by M/S SRC M/S ET, i.e. the dummy units for availing benefit of Notifn.75/87-CE dtd.1.3.87 as amended. In view of this discussion, I find that the demand for the element of suppression of facts is not hit by limitation and is sustainable in law. Ratio of Hon'ble Supreme Court decision, in similar issue, in case of Box Carton India Pvt. Ltd V/s Commissioner [2010(255)E.L.T. A13 (SC))] is squarely applicable here. Hon'ble Supreme Court, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 75/87-CE dtd. 1.3.87 as amended. The partners in these dummy units were immediate family members of the Director of M/s UCSSPL. As such the SCN issued invoking provisions of Sec.11A, demanding duty on 14 units of split air conditioning systems is sustainable and M/s UCSSPL is liable for penal action under Rule 173Q of Central Excise Rules. Also, the Director of the said company and partners of the two dummy units have rendered themselves liable for penal action under Central Excise Rules. 8.1 I find that while computing the demand, 15 units of air-conditioners are taken into consideration. However, invoices for 14 units of air-conditioning systems are available on record and duty on these 14 units works out to be of Rs.18,00,000/- and invoice for one unit valued at Rs.2,25,000/- could not be traced. As such I hold that duty of Rs. 1,35,000/- on one unit is not demandable. 8.2 I also hold that provisions of Sec.11AB Sec.11AC cannot be invoked in this case since these provisions were made applicable from Sept. 1996, whereas the period covered in the SCN is from Sept. 1994 to March 1996. 4.3.1 Appellants have challenged the findings of fact recorded in the impugned or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anchas that under one big shed certain components, wires and cables were lying on various iron racks and in wooden cupboards files were kept. There was no markings, separations, partitions to show that three different units exists there, there was no different gates for these three factories. Stickers bearing the text MADE IN INDIA BY ULTRAMATRIX IN TECHNICAL COLLABORATION WITH R.C. CONDIZIONATORY -ITALY were also found in the premises. Shri Yendole has admitted the panchnama as correct. There was no complaint from the Appellants against the panchanama. The Appellants claim that they were having a different electrical connection is incorrect inasmuch as UCSSPL had no power to sublet the premises. No photograph is annexed to the Appeal memo. Further what is required is a separate electrical bill to show that M/S ET and M/s SRC were having different electrical connections. Common staff at Pune is admitted. No consideration was given for use of machinery. Since all the goods concerned were admittedly manufactured in the premises of M/s UCSSPL using their machinery and employees, M/S UCSSPL are the actual manufacturers of these goods and they have to pay duty thereon. 4.3.4 As all ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The case of the appellants in the show cause notices is that the stainless steel containers in which the said oil was imported were banned, that the stainless steel containers were deliberately camouflaged by painting them to resemble mild steel containers, and that this was done with a view to enabling their clearance. A clearance order under Section 47 obtained by fraudulent means such as this (if it, in fact, be so) cannot debar the issuance of a show-cause notice for confiscation of goods under Section 124. Fraud, if established, unravels all. An order under Section 47 obtained by the employment of fraudulent methods does not have to be set aside by the exercise of revisional powers under Section 130 before the ill-effects of the fraud can be set right by initiation of the process of confiscation of the fraudulently cleared goods under Section 124. Hon'ble CESTAT in the case of Samsung India Electronics Ltd. [2014 (307) E.L.T. 160 (Tri. - Del.)] held 14. If a party makes representations which he knows to be false and injury ensues therefrom although the motive from which the representations proceeded may not have been bad is considered to be fraud in the ey ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court in this country can allow any benefit of fraud to be enjoyed by anybody as is held by Apex Court in the case of Chengalvaraya Naidu reported in (1994) 1 SCC I : AIR 1994 SC 853. Ram Preeti Yadav v. U.P. Board High School and Inter Mediate Education (2003) 8 SCC 311. 17. Evidence Act does not insist on absolute proof for the simple reason that perfect proof in this imperfect world is seldom to be found. That is why under Section 3 of the Evidence Act, a fact is said to be proved when, after considering the matters before it, the Court either believes it to exist or considers its existence so probable that a prudent man ought, under the circumstances of the particular case, acts upon the supposition that it exists. This definition of proof does not draw any distinction between circumstantial and other evidence. Preponderance of probability comes to rescue of Revenue and Revenue is not required to prove its case by mathematical precision. Thus, if circumstances establish that there is high degree of probability that a prudent man ought to act on the supposition that there was design to secure fake, false, forged or illegitimate DEPB scrip to clear imports duty free in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. 22. Applying the aforesaid principles of law, in these appeals, when material evidence gathered by Revenue remains uncontroverted, adjudication findings sustain. Accordingly appellants fail to succeeded on merit and on the fact and circumstances of the cases. It can unambiguously be held that there was deliberate mis-declaration of the description of goods exported and DEPB scrips were fraudulently obtained. Use of such non est scrips to discharge import duty against subsequent imports covered by the five appeals of the appellant company is recoverable with penal consequences of law. 4.3.9 Such documents which were obtained fraudulently by suppressing the facts cannot be taken as valid defence. It is also pointed out that in the present case the contract against which all the supplies were made was made by the Appellant 1 and the goods were cleared after putting the sticker MADE IN INDIA BY ULTRAMATRIX IN TECHNICAL COLLABORATION WITH R.C. CONDIZIONATORY -ITALY . This sticker clearly declares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.C. 22 H.L.] was pronounced in 1897; and indeed, it has always been the well recognised principle of common law. However, in the course of time, the doctrine that the corporation or a company has a legal and separate entity of its own has been subjected to certain exceptions by the application of the fiction that the veil of the corporation can be lifted and its face examined in substance. The doctrine of the lifting of the veil thus marks a change in the attitude that law had originally adopted towards the concept of the separate entity or personality of the corporation. As a result of the impact of the complexity of economic factors, judicial decisions have sometimes recognised exceptions to the rule about the juristic personality of the corporation. It may be that in course of time these exceptions may grow in number and to meet the requirements of different economic problems, the theory about the personality of the corporation may be confined more and more. 13. In Life Insurance Corporation of India v. Escorts Ltd. Ors. [(1986) 1 SCC 264], this Court again considered this question and said : While it is firmly established ever since Salomon v. A. Salomon Co. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e company as a citizen for the purposes of Article 19. In CIT v. Sri Meenakshi Mills Ltd. [AIR 1967 SC 819], the corporate veil was lifted and evasion of income tax prevented by paying regard to the economic realities behind the legal facade. In Workmen v. Associated Rubber Industry Ltd. [(1985) 4 SCC 114], resort was had to the principle of lifting the veil to prevent devices to avoid welfare legislation. It was emphasised that regard must be had to substance and not the form of a transaction. Generally and broadly speaking, we may say that the corporate veil may be lifted where a statute itself contemplates lifting the veil, or fraud or improper conduct is intended to be prevented, or a taxing statute or a beneficent statute is sought to be evaded or where associated companies are inextricably connected as to be, in reality, part of one concern. It is neither necessary nor desirable to enumerate the classes of cases where lifting the veil is permissible, since that must necessarily depend on the relevant statutory or other provisions, the object sought to be achieved, the impugned conduct, the involvement of the element of the public interest, the effect on parties who may be aff ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ple to hold as to when corporate veil should be lifted or if on doing that, could it be said that the assessee and the buyer are related persons. That will depend upon the facts and circumstances of each case and it will have to be seen who is calling the shots in both the assessee and the buyer. When it is the same person the authorities can certainly fall back on the third proviso to clause (a) of Section 4(1) of the Act, to arrive at the value of the excisable goods. It cannot be that when the same person incorporates two companies of which one is the manufacturer of excisable goods and other is the buyer of those goods, the two companies being separate legal entities, the Excise authorities are barred from probing anything further to find out who is the person behind these two companies. It is difficult to accept such a narrow interpretation. True that shareholdings in a company can change but that is the very purpose to lift the veil to find out if the two companies are associated with each other. Law is specific that when duty of excise is chargeable on the goods with reference to its value than the normal price on which the goods are sold shall be deemed to be the value prov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Exemption, a question arises as to whether they are to be treated as separate entities or units owned by the same person, for the purpose of SSI Exemption. 7.1.1 While a company is a legal person entirely distinct from its shareholders, in terms of Apex Court s Judgment in case of Income Tax Commissioner, Madras v. Meenakshi Mills, Madurai, reported in AIR 1967 Supreme Court 819, in certain exceptional cases, the court is entitled to lift the veil of corporate entity and to pay regard to the economic realities behind the legal fa ade and that the court has powers to disregard the corporate entity if it is used for tax evasion or to circumvent the tax obligation. Same view has been taken by the Apex Court in cases of :- (a) Calcutta Chromotype v. Collector of Central Excise, reported in 1998 (99) E.L.T. 202 (S.C.) = (1998) 3, SCC-681; (b) Subra Mikharjee another v. Bharat Cooking Coal Ltd., reported in (2000) 3 SCC-312; and (c) Delhi Development Authority v. Skipp Construction Co. (P) Ltd., reported in (1996) 4 SCC-622. The Apex Court in the case of Associated Rubber Industry Ltd., reported in 1986 (157) ITR-77 (S.C.), relying upon its earlier judgment in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of MACL has not been seriously disputed. Apart from that, the cylinders were brought on lease by MACL from another concern and were subleased to the three companies. The cylinders bore the name of MACL. If the three companies had separate standing as contended it could not be explained why they could not get the cylinders directly from the lessors on lease basis and the need for introducing MACL as the lessee and then the three companies becoming sub-lessees. As noted by the Commissioner, entire receipts were paid as lease amount to MACL. Here again, the under-valuation aspect assumes importance. While the supply by MACL to three companies was Rs. 0.50 per unit, the sale price by the three companies was Rs. 5 per unit. It is on record that accounts were kept by common staff and marketing was done under the supervision of a person who belongs to the same group of concerns. The amounts have been collected by an employee of MACL. The so-called Directors of the companies were undisputedly employees of MACL. Almost the entire financial resources were made by MACL. The financial position clearly shows that MACL had more than ordinary interest in the financial arrangements for compan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ar No. 6/92, dated 29-5-1992, had remanded the matter to the Tribunal for examining the applicability of this circular, since this circular being contrary to the law laid down by the Apex Court in the case of Income Tax Commissioner, Madras v. Meenakshi Mills, Madurai (supra), M/s. Calcutta Chromotype v. CCE (supra), Delhi Development Authority v. Skippe Construction Co. (P) Ltd. (supra), Associated Rubber Industry Ltd. (supra) and CCE v. Modi Alkalies Chemicals Ltd. (supra), has no existence in law, the Appellant s plea for decision of this matter on the basis of Board s Circular No. 6/92-C.E. is not acceptable. 7.1.3 Thus, if there is evidence on record to prove that a particular person, whether natural or juristic, has comprehensive financial and management control over several entities and is the actual beneficiary of their activities, the clearances of the factories owned by these entities are to be clubbed for the purpose of determining their eligibility for SSI Exemption by treating them as the units of only one manufacturer, even if those units are owned by different public limited companies, private limited companies or partnership firms. If on clubbing their cleara ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orization. (5) The raw material procurement is not only procured from the same source and under a common sales tax registration number in the name of SFP, but it has also been found that on numerous occasions, the raw material procured in the name of SFP was actually received in the premises of BCI. (6) On several occasions, BCI has written to his customers offering to supply corrugated boxes through SFP. BCI vide letter dated 24-9-01 had intimated to Maruti Udyog Ltd. that they have a stock of 5335 boxes which can be supplied through their associate concern SFP in which case they would not be charge with excise duty. Similarly, BCI vide their letter dated 14-3- 2000, intimated M/s. JCT that since 16% excise duty has been imposed on corrugated boxes, they can supply the corrugated boxes through their sister concern SFP, which is an exempted SSI unit and M/s. JCT was requested to issue a purchase order in the name of SFP. This letter to JCT had been signed by Shri S.K. Gandhi on behalf of BCI though on paper Shri S.K. Gandhi was supposed to have nothing to do with BCI. 5.1 The explanation given for Shri S.K. Gandhi of SFP signing without any authorisation from BCI, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t is not necessary to invoke clause 2(vi) 2(vii) of exemption Notification No. 8/99-CE and corresponding clauses of successor notifications just because these clauses have been invoked, the demand of duty does not get vitiated. 6. It has been pleaded that some the officers had visited the units on 27-3-03 and the SCN had been issued on 1-9-04, for demand of duty for short paid duty for the period from 1-8-99 to 31-3-04, the duty demand for the period from 27-3-03 to 31-7- 2003 is time barred and in this regard, the reliance has been placed on the Tribunal judgment in the case of Nizam Sugar Factory v. CCE reported in 1999 (114) E.L.T. 429. However, this judgement does not help the appellant as in this case, it has been held that the date of knowledge of the departmental officers in respect of clandestine removal of goods/suppression of facts is not relevant for the purpose of computing the period of five years and the date for this purpose is the relevant date as defined in Section 11A(3). Civil Appeal against this order dismissed as reported at [2010 (255) E.L.T. A13 (S.C.)). 4.4.5 Hon'ble Bombay High Court has in case of Sunsuk Industries [2018 (16) G.S.T. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 (364) E.L.T. 141 (Tri. - Ahmd.)] held as follows: 10. We have gone through the rival submissions. We find that the entities namely, M/s. Alpha Converting Machines Pvt. Ltd. (1997), M/s. Alpha Flexible Machinery (2002) and M/s. Alpha Convert Machines Industries (2003) came into existence in different years. They also have separate registrations with Ahmedabad Municipal Corporation and Sales Tax Authorities. Revenue has however, relied on the facts that during the search, it was found that all the units were using common premises and common machinery. The material was flowing from one unit to another freely and no separate records for raw materials issued for production were being maintained. The power connection were common for all the entities. When, however, Sh. Rajan David was asked to produce the bills of the machinery purchased, he could not do so on the pretext that the machineries were old. In his submission dated 7-1-2008, he admitted that he uses the machines for manufacture of the goods irrespective of its ownership. He also admitted that he issued raw material of production as per requirement and that factory shed belong to him and no payment of rent towards use of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the appellant have not been able to produce any document showing purchase of machinery by the units namely, M/s. Alpha Flexible Machinery and M/s. Alpha Convert Machines Industries. In his statement dated 7-1-2008 Sh. Rajan David admitted that all the machines are being used commonly and that factory shed belong to him and no rent was being recovered. He had also failed to explain the transfer of funds from one entity to another. In these circumstances, the only conclusion that can be reached is that it was one factory and M/s. Alpha Flexible Machinery and M/s. Alpha Convert. Machines Industries are not manufacturers as they do not possess any machinery or premises of their own. All the transactions of all the 3 entities were being made by Sh. Rajan David. The buyers also knew only Sh. Rajan David. In these circumstances, the only conclusion that can be reached is that there was only one factory belonging to M/s. Alpha Converting Machines Pvt. Ltd. which came in existence in 1997. Thereafter entities namely, M/s. Alpha Flexible Machinery and M/s. Alpha Convert Machines Industries were created on paper without any manufacturing facility to show clearances and to avail small scale b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue SCN for all three entities is bad in law, he relied on the decision of Hon ble High Court of Calcutta in case of Diamond Scaffolding Co. (supra) and decision in the case of East India Cotton Manufacturing Co. Ltd., 2003 (160) E.L.T. 1165 (Tri.-Del.) to assert that the clearances cannot be clubbed without issuing notice to all the entities. As against this, Ld. AR has relied on the decision of Hon ble Apex Court in the case of Gajanan Fabric Distributors while remanding the matter back to Collector, Hon ble Apex Court observed as follows : 2. We find, after having heard Learned counsel, that it is necessary to remand the matters to the Collector to consider the entire case afresh. The principal factor that leads us to this conclusion is the finding of the Collector, upheld by the Tribunal, that the seven units which are the appellants before us are only a corporate facade although registered with the various authorities with a view to camouflage their actual identity and thereby avail of the exemption which, otherwise, would be inadmissible to them . The Tribunal failed to give due attention to the fact that the Collector had confirmed, in the sum of Rs. 11,84,708.51, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d no other major machineries were used by them. Further, it is also seen that the raw materials purchased by one unit has been diverted to other unit and the wages of the workers are paid by other units. These specific allegations in SCN have not been adequately explained by the appellant. It is seen that Shri R.P. Pandian was dealing with the bank transaction of other units as is evidenced by the deposits, withdrawals etc. Similarly, the orders for purchase of raw materials for all units were made by Shri R.D. Pandian. These facts point out to the strong inference that the appellant unit is the main unit and the other units are only dummy units created for the purpose of evading central excise duty by suppressing the value of clearances. 8. The fact that all the three units are situated at one place which is separated by passages; that all the four units belong to the same family members; that account of one unit is seen reflected in the account of another unit; that the raw materials are used in common or being diverted to the other unit; the use of machineries commonly by all the four units as well as the workers in all the four units being the same; the conclusion reached ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icipated in the entire modus operandi and she as Director allowed M/s. CPMPL to knowingly and willingly provide cover by pretending to be as SSI manufacturer though they did not have any infrastructure for doing so. So liability of Ms. Hemlata Parasher to Penalty is not questionable. 4.4.9 In the case of Himgiri Plastics [2017 (357) E.L.T. 153 (Tri. - Del.)] tribunal held that 5 .We have heard both the sides and perused the appeal records. The tax liability of HP as confirmed by the original authority is mainly on the ground that HPC though shown as having legal existence is nothing but creation to avoid Central Excise duty by availing ineligible SSI exemption by HP. It is seen that HP are engaged in the manufacture of lay flat tubing and bags of plastic. HPC are engaged in the manufacture of master batches and fillers. It is an admitted fact that all the activities of HPC are looked after by Shri Jogineder Kumar Talwar and Shri Sanjeev Kumar Talwar, Partners of HP. Further, it has been brought out during investigation that HP and HPC do not have separate arrangement for keeping raw materials and finished goods and these are stored in common premises only. It is also re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n handled/controlled by him. The officers during the course of investigation also recorded the statements of buyers who equivocally stated that for the purpose of purchase of finished goods, invariably they contact Shri Asgarali A. Siddiqui, and the goods were sent in the invoices of M/s. Accurate Engineers. The proprietress Smt. Halimakatun A. Siddiqui, in her statement admitted that she was a housewife and not involved in the management of the business of manufacturing/selling of industrial valves. Analysing these uncontradicted evidences, we do not harbour any doubt that even though M/s. Accurate Engineers, on record, a separate unit, but, its day to day function and management was handled by Shri Asgarali A. Siddiqui, proprietor of M/s. Libra Engineering Works and his wife Smt. Halimakatun A. Siddiqui has lent her name as proprietress of the firm. In other words, for all practical purposes, the management/control of the business of manufacture and sale has been handled by Mr. Asgarali A. Siddiqui, proprietor of the Appellant. In these circumstances, we do not find any error in the order of the authorities below in clubbing the clearance value of both the units for the financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he course of investigation and relied upon by the authorities below in their impugned order. We find that there is enough evidence to uphold the findings against the appellant. We, accordingly, find no justification to interfere in the orders passed by the authorities below confirming demand and imposing penalty upon all the appellants. 4.4.12 In the case of Modern Engineering Plastics Pvt [2009 (243) E.L.T. 289 (Tri. - Chennai)] tribunal held- 4 . We find that there was no clear-cut demarcation between the factory of MEPP and that of EPI whose proprietrix was the wife of the Managing Director of MEPP. Further, raw materials for the manufacture of finished products had been stored in a single room without any identification as to which one belongs to MEPP or EPI. There was only one electricity connection for both the units. It was claimed that a submeter had been installed but, such plea is only an after thought which has rightly been rejected by the lower authorities. EPI also had not purchased cutting machine, oven, winding machine and welding torches which were the machinery absolutely necessary for the manufacture of FRP/PVC tanks, vessels, pipes and fittings etc. as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... floated by MEPP, to gain undue benefit under the SSI exemption notification. 5 . We are also in agreement with the finding that MEPP was guilty of suppression. The argument that they were under the bona fide belief that the other two units were independent units merits rejection, as they have not been able to explain the basis of such belief. The plea that RT-12 returns were being filed regularly by MFE and EPI, and hence clearance by the two units was within the knowledge of the department is rejected for the reason that this is a new plea which was not raised either in the reply to the Show Cause Notice or in the appeal before the lower appellate authority and such plea has not been raised even in the present appeal and the plea also remains unsubstantiated. Therefore, MEPP s intention to evade payment of duty is clearly evident and invocation of the proviso to Section 11A of the Central Excise Act, 1944, for the purpose of demand of duty for the extended period is justified. For the same reason, penalty upon MEPP is also warranted. 4.5.11 CESTAT has in the case of Honey Biscuits Company [(2019-TIOL-1240-CESTAT-CHD)] held: 19. From the facts and discussion ab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices. Chief Manager of the bank and also Sh Montoo admitted that they were operating three accounts each by S/Sh Montoo and Jai Prakash. Hence, we are not convinced by the contention that the entire operation was handiwork of Sh. Montoo only without involvement of Sh. Jai Prakash. 22. It has also been contended that there was no mutuality of interest in the business of any of the separate units and control of appellant M/s. HBC was with Sh. Montoo as only Managing Partner. We find that mutuality of interest is established in as much as that the accounts relating to purchase of raw material / sales of finished goods were commonly maintained. Goods sold from both the units were entered in common slips and payments received were entered in common slips/ledgers. The proceeds were deposited in six benami accounts, three operated by Sh.Montoo and other three by Sh.Jai Prakash. The control of the units thus was with both Sh Montoo and Sh Jai Prakash. 23. It has also been argued that the clubbing of value of clearance of M/s. HBC with M/s. HCW was not proper as it was set up in year 1983 and M/s. SFPL was registered as SSI unit. We find that in July, 1992, the unit of M/s.HBC cam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... als and the other goods was reflected in the daily private/kacha reports which was prepared by the various employees of the Noticee no.1 2. Such reports were further submitted to the office of Sh. Montoo who was partner in Noticee No.1 3. Likewise Shri Arvind Sharma (Manager), Tek Singh, Gate Keeper Supervisor of Noticee No.1 and Sh. B.P.Sharma, Supervisor of Noticee No.2 have admitted this fact that they had entered the receipt of the various raw materials in their daily private/kacha reports and were not entered in the statutory records. It was further admitted by them and also Sh.Montoo, Managing Partner of Noticee No.1 that entries in the reports were made on the basis of the actual receipt of the raw materials. Biscuits and sweets were manufactured out of above said unaccounted raw materials. The daily stock/production/clearance accounts were maintained by Sh. Lakhwinder Singh, Supervisor of Noticee No.1 and B.P.Sharma, Supervisor of Noticee No.2. They used to prepare a daily stock report regarding Biscuits and sweets respectively and send the same to the office of Sh. Montoo in the evening. It is thus observed that the manufacturing activities of Noticee Nos.1 and 2 wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 25. Taking into account the modus operandi, as elaborated hereinbefore and the outright fraud committed by the appellant with bogus invoices, vitiated account books and benami bank accounts, we find that the penalty has been correctly imposed by the adjudicating authority. 4.4.13 Hon'ble Supreme Court judgment in the case of Satyam Technocast [2015 (322) E.L.T. 789 (S.C.)] held as follow: 5 . Next issue which concerns us is issue No.VI : - whether clearances of M/s. Satyam Technocast and Pioneer Hardware could be clubbed for the purpose of SSI exemption? The findings on this issue read as under :- M/s. Pioneer Hardware Industries was a partnership firm which was dissolved on 16-7-2001. Shri Somesh Malik was a partner in this firm and was managing its affairs. The firm was dissolved by Dissolution Deed dated 16-7-2001. As per this Dissolution Deed, the business of M/s. Pioneer Hardware Industries including its assets and liabilities, were to be taken over by Shri Somesh Malik who is also the proprietor of M/s. Satyam Technocast. The evidence on record shows that Shri Somesh Malik continued to raise invoices in the name of M/s. Pioneer Hardware Industries ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cluded the value of job work which is got done from such outsiders only on the ground that the respondents firms could not produce any document which could not give any particulars of the jobs that were got done from the said parties. 4.5.1 Appellants have challenged the impugned order on the ground that show cause notice in the present case has been issued only to Appellant 1, the two units which have been said to be dummy were not made party to the show cause notice. For this they have relied upon the following decisions: Alpha Toyo Ltd. [1994 (71) ELT 689(T)]: The issue considered by the tribunal in this case as stated in para 1 of the said decision is as follows: In these set of appeals, a common question of law and facts arises, hence they are taken up together for disposal as per law. The short question that arises for our consideration in these appeals is as to whether the clearances of all the five units can be clubbed on the basis of interest free loan granted by the M/s. Alpha Toyo Ltd. to other four units and also in view of similar financial assistance among the other four units, notwithstanding the fact that all the five units are independently incorp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of certain manufacturing processes. The failure to issue the show cause notice to one of them would show non-application of mind on part of the authorities. As a consequence, the show cause notice must be held to be bad in law. From the above it is evident that this is a case wherein their both the units had a separate corporate entity. However from the examination of evidences on record in the present case nothing has been found at the material time when the goods were cleared. All the documents which have been produced showing registration with various authorities are dated much after the time of clearance. If these separate units came into existence they had come into existence much later. A fact which has been admitted in the statements recorded. Hence this decision is distinguishable. Ramsay Pharma [ 2001 (127) ELT 789 (T)] Para 1 of the order reads as follows: The above appeal arises out of the order of the Commissioner of Central Excise, Allahabad who has confirmed a duty demand of Rs. 21,21,385/- upon the appellants herein who are manufacturers of PP medicines falling under CET Sub-heading 3003.10, by denying them the benefit of SSI Notification 175/86 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that department has taken different stand on the status of Rama Industries therefore the proceedings have become bad in law we are constrained to set aside the impugned order on this ground above in the light of the judgments relied by the ld. Counsel in the case of CCE v. Madan Lal; CCE v. Supreme Electrical Appliances and Dawn Fire Works v. CCE (supra). 15. We are also agreeable with the ld. Counsel s argument that the department was fully aware of the existence of the Rama Industries and that it had been receiving RT 12 returns and Rama Industries was maintaining separate registration under various legislation and their registration have been checked by the Inspectors, Superintendents and Assistant Commissioners of Central Excise. Therefore it follows that the department had full knowledge of the existence of Rama Industries and in that view of the matter, suppression of facts for invoking larger period is not sustainable and the demands are timebarred and requires to be set aside on this ground also. In view of the fact that the department has not issued show cause notice to Rama Industries and has proceeded to hold that Meera and Rama Industries to be one and the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtners in the dummy units were part of the proceedings and they had complete opportunity to plead their case in response to show cause notice. As per the Section 18 of the Partnership Act, 1932, a partner is the agent of the firm and issuance of a notice to a partner is as good as issuing the notice to the firm. Thus the issuance of the show cause notice to partners has not caused any prejudice to any of the four notice or the present three appellants. Appellants all along had knowledge as to what case they were required to meet during adjudication and they have not shown that they were in any way misled into taking their defence or were prejudiced by not issuing the notice in the name of firm. 4.5.3 CESTAT in the case of V.K. Thampi [1988 (33) E.L.T. 424 (Tribunal)] observed 9 . . Even under the Partnership Act, a notice to a partner who habitually acts in the business of the firm of any matter relating to the affairs of the firm operates as notice to the firm. It is not a mere question of constructive notice or inference of fact, but a rule of law which imputes the knowledge of the agent to the principal, or, in other words, the agency extends to receiving notice on b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Machines Pvt Ltd [2018 (384) ELT 141 (T-Ahmd)] tribunal observed: 14 . Ld. AR had argued that demand can only be confirmed against the entity which is not dummy entity as held by Hon ble Apex Court. He argued that in these circumstances, issue of SCN to all entities would be of no avail. He further argued that all 3 entities were represented by Sh. Rajan David and thus there was no violation of principles of natural justice as notice was issued to Sh. Rajan David. We find force in the argument of Ld. AR. The entire argument of Revenue is based on the fact that only one entity has factory/machines and other two are creations on paper to avoid payment of tax. In these circumstances, recognition of separate existence by issue to SCN would have run counter to the allegation that they are dummy. Moreover, we find opportunity was given to Sh. Rajan David to defend and he was authorized signatory of all entities. In these circumstances, we do not find any merit in appeal and the same is dismissed. 4.8.7 Hon'ble Delhi High Court in the case of ITC Ltd. [2014 (036) STR 0481 (Del.)] held that: 17 . When we examine the Show Cause Notice, we have to take into considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... General Rules for interpretation of Central Excise Tariff Act, 1985 2(a) Any reference in a heading to goods shall be taken to include a reference to those goods incomplete or unfinished, provided that, the incomplete or unfinished goods have the essential character of the complete or finished goods. It shall also be taken to include a reference to those goods complete or finished (or falling to be classified as complete or finished by virtue of this rule), removed unassembled or disassembled. 4.6.2 The Appellants claim that when air conditioning plants not capable of being taken to market and sold as such and transportable only in dismantled condition, air conditioning system as whole not dutiable. They relied upon two case laws viz. Blue Star Ltd. v. Commissioner (2002 (143) E.L.T. 391 (Tribunal)] and Carrier Aircon Ltd. v. Commissioner [2003 (154) E.L.T. 710 (Tribunal)]. 4.6.3 The Appellants admittedly manufacture only Split Air Conditioners and themselves classified under Ch. heading 8512 of Schedule to C.Ex. Tariff Act, 1985. They had cleared these goods under C.Ex. invoices as stated in earlier paras. When a marketable commodity such as Split Air Conditioner come ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ame labels of the manufacturer. All the parts and components were numbered for a particular TV set and have clear identifiability which as observed by Apex Court will take away the goods from the classification as parts . They will be classified as identifiable television receivers only. One more important aspect which adds to the strength of the case for Revenue is that the very same materials were cleared by the appellant for export classifying the same as television receivers under CETH 8528. They have claimed higher export benefits. When these items are cleared for their other satellite units for final assembling and marketing they have claimed classification as parts. Such dual approach for the same set of items is not tenable. This clearly strengthens the case of the Revenue for classification under CETH 8528. 9 . We note that the impugned order dated 4-3-2014 covering the period 1-4-2002 to 30-4-2003, examined this issue in great detail. It is recorded that the show cause notice specifically brought out the fact that CTV sub-assembly and CTV chassis were actually a complete TV sets in unassembled/disassembled form and also that they have all the essential characteri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 6 is decided in the negative. Secondly, on the issue of applicability of Section 38A(c) and 38A(e) of the Central Excise Act, 1944, it is held that the Respondent would not be able to enjoy its protection because Section 38A(c) and 38A(e) are attracted only when unless a different intention appears . In the present case, the legislature has clarified its intent to not restore/revive the power of confiscation of any land, building, plant machinery etc., after omission of the provisions contained in Rule 173Q(2) w.e.f 12.05.2000. This intention of the legislature can be drawn out from the fact that power to confiscate any land, building, plant, machinery etc. after omission w.e.f. 12.05.2000 has not been introduced in the subsequent Central Excise Rules, 2001, Central Excise Rules, 2002 and Central Excise Rules, 2017. Additionally, this intent is also fortified by the fact that Rule 211 of the Central Excise Rules, 1944, inter alia, provided that anything confiscated under the Rules shall thereupon vest in Central Government, whereas Rule 28 of the Central Excise Rules of 2001, 2002 and 2017, which are pari materia to the earlier Rule 211 of the 1944 Rules, instead of the word ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 112 for non-imposition of penalty in case the credit has been taken wrongly prior to Finance Act, 2000 coming into force. If anybody had taken the credit wrongly, then they were not eligible for the same. However, taking of such inadmissible credit was not made punishable if the credit had been taken prior to the coming into force of Finance Act, 2000. In other words, in those cases there was a doubt or dispute regarding admissibility of Cenvat credit and if anybody had taken the credit wrongly, the credit was not admissible and had to be reversed; however, such availment of credit was held to be non-punishable, in view of the dispute involved. The facts in the present case are different and distinguishable. Rule 9 of the Customs Valuation Rules, 1988 existed in the statute from 1988 onwards, and the said rule provided for inclusion of costs and services incurred, if any, in the transaction value of the goods imported, if such costs and services were relatable to the manufacture of the imported goods and such costs and services were incurred in a place other than India. The said Rule 9 was very much in existence at the time of importation of the goods in the instant case and it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of duty, then, all such goods shall be liable to confiscation and the manufacturer, producer or licensee shall be liable to a penalty not exceeding the duty leviable on such goods or five thousand rupees, whichever is greater; (5) Notwithstanding anything contained in sub-section (3), the Central Government may make rules to provide for the imposition upon any person who acquires possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under this Act or the rules made thereunder , a penalty not exceeding three times the value of such goods or five thousand rupees, whichever is greater. Rule 173 Q (1) and 209 A of the Central Excise Rules,1944 read as follows: Rule 173 Q (1) Subject to the provisions contained in section 11AC of the Act and rule 57AH, if any manufacturer, producer, registered person of a warehouse or a registered dealer,- (a) removes any excisable goods in contravention of any of the provisions of these rules; or (b) does not account for any excisable g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... possession of, or is in any way concerned in transporting, removing, depositing, keeping, concealing, selling or purchasing, or in any other manner deals with, any excisable goods which he knows or has reason to believe are liable to confiscation under the Act or these rules, shall be liable to a penalty not exceeding the duty on such goods or ten thousand rupees, whichever is greater. The Central Excise Rules 1944 were superseded by the Central Excise Rules, 2001 by the Notification No 9/2001-CE NT dated 1st March 2001. The preamble to the this notification read as follows: In exercise of the powers conferred by section 37 of the Central Excise Act, 1944 (1 of 1944) and in supersession of the Central Excise Rules, 1944, except as respect things done or omitted to be done before such supersession, the Central Government hereby makes the following rules, namely:- Rule 25 of the Central Excise Rules, 2001 read as follows: 25. Confiscation and penalty.- (1) Subject to the provisions of section 11 AC of the Act, if any producer, manufacturer, registered person of a warehouse or a registered dealer, - (a) removes any excisable goods in contravention of an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alid and issued under the corresponding provisions of these rules. 4.7.3 Thus it is seen that the Rule 173 Q (1) and Rule 209A made in terms of rule making powers conferred under Section 37 (4) and 37 (5) of the Central Excise Act, 1944 continued to be there in the Central Excise Rules, 2001, and Central Excise Rules, 2002 as Rule 25 and Rule 26. Since these rules were not omitted but carried forward in the new rules the decision of the Hon ble Supreme Court in case of PNB, cannot be applied to the penalties imposed in terms of Rule 173 Q (1) and 209A. 4.7.4 In case of Castrol India Ltd. [2008 (222) ELT 408 (T)] following has been held: 20. As regards imposition of penalty . under Rule 209A, we find that penalty can be imposed under Rule 209A only if it is found that the concerned persons have dealt with the goods in any manner which they knew are liable to confiscation and in this case no goods have been held liable to confiscation and accordingly penalty under Rule 209A on these appellants cannot be sustained and is accordingly set aside. In the present case we find that the appellant 2 and appellant 3 were directly responsible for removing of the excisable go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se activity of manufacturing has been carried out in Excel Technology Corporation and Shrikant Refrigeration Co. the same was not paid to the Government. b. Shri Shrikant Shirwadkar, Director UCSSPL, in his statement dated 1/10/1996 admitted that they did not receive any consideration from M/s SRC and M/s ET for labour force and machinery utilized by these floated units belonging to M/s UCSSPL as there was no separate labour force and machinery belonging to M/s SRC and M/s ET. In his statement recorded on 5/5/1995 Shri Shrikant Shirwadkar further deposed that M/s SRC and M/ş ET manufactured air-conditioning systems which were cleared to M/s UCSSPL who in turn sold these systems to their end customers. Also payments were received by M/s UCSSPL from the end customers and M/s UCSSPL made payments to M/s SRC and M/S ET on cash basis throughout the year. He further informed that raw material payments were made directly by M/S UCSSPL. c. Shri Dilip Yendole, accountant and authorized signatory of M/s SRC in his statement dated 6/4/1995 stated that M/S SRC manufactured and cleared 7 Air-conditioning Systems to M/s UCSSPL. d. Shri Dilip Yendole, accountant and authorize ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rules, which was ordered to be released on RF of Rs 50,000/- in lieu of confiscation. It is also not in dispute that the no appeal against this order dated 09.01.2002 was filed by the revenue and other co-noticee in the show cause notice i.e. Shri Jayant Shirwadkar and Mrs H S Shirwadkar. In result the proceedings against these two co-noticees have become final and cannot be reopened by the Commissioner in de-novo proceedings as per the order of tribunal remanding the matter back to original authority in the appeals filed by M/s UCSSPL and Shri Shrikant Shirwadkar. Also in absence of the appeal by revenue against this order the order has acquired finality and Commissioner cannot have passed any order beyond the order passed by his predecessor. In view of this fact in our view the Commissioner order imposing penalty on Shri Jayant Shirwadkar cannot be sustained and the penalty imposed on Shri Shrikant Shirwadkar cannot be in excess of the penalty imposed by this order. Thus in our view Appeal filed by the Appellant 1 against the imposition of penalty under Rule 173 Q (1) is partly allowed to the extent of restricting the penalty imposed under this Rule to Rs 1,80,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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