9911796707
TMI Blog2002 (8) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... The Commissioner has examined in great detail the evidence on record and in the seized records the admissions made by the appellant's employees and their witnesses to arrive at the conclusion that the appellant had manufactured components for T72 cooling system at M/s. Universal Radiators Ltd. (URL) apart from regular type radiators. As per the statement of Shri M. Manickam, Purchase Assistant of M/s. SPT had instructed not to account for under Central Excise records about the manufacture of T72 cooling system at the second premises of M/s. SPT that they were taking Modvat credit on the materials received at the second premises of M/s. SPT that of the manufacture of components for cooling system; that raw materials were never brought to M/s. URL-I; that the delivery challans were prepared at the second premises of M/s. SPT in the name of M/s. URL-I and the same were prepared to give an impression that the inputs were sent from URL-I to M/s. SPT, wherein the materials received directly on the second premises of M/s. SPT were from the suppliers. 3.The Commissioner also noted the corroborative evident in another statement given by Shri B. Venkatachalam and R. Ram Kumar, authorised si ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... charge; that Shri G.R. Sundararajan, Store Clerk was incharge of receiving, issuing and despatching the raw materials and components for T72 cooling system; that he had read the statement of Shri G.R. Sundararajan and had seen the delivery advice being prepared at the second premises of M/s. SPT; that he agreed with the fact that even though the raw materials were despatched from the second premises of M/s. SPT, the delivery advices were prepared as if the materials were sent from M/s. URL-I; that the delivery advice used at the second premises of M/s. SPT did not mention the true movement of goods between the job worker, M/s. SPT and M/s. URL-I. In his statement dated 23/24-8-96, Shri R. Ramkumar deposed, inter alia, that apart from regular type radiators, they manufacture special type of radiators called T72 cooling system at M/s. URL-I; that he had instructed Shri M. Manickam, the Purchase Asstt. not to account for in the Central Excise records about the manufacture of components for T72 cooling system at the second premises of M/s. SPT; that they were taking Modvat credit on the materials received at the second premises of M/s. SPT for the manufacture of components for coolin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d resorted to sub contracting; that as the cooling system was exempted, they had sub- contracted through small scale job workers who were in the exemption limit; that in order to monitor movement of raw materials and proceeded goods from the job worker, they had assigned M/s. SPT to be over all incharge of the operation for which M/s. SPT were paid; that most of the manufacturing activities were conducted only in the second premises of M/s. SPT; that M/s. SPT were not engaged in the processing of the goods; that the component of T72 cooling system could not be marketed or used for any other purpose other than in the manufacture of T72 cooling system, supplied to the Defence against their orders. In their letter SPT : CE. : dated 2-9-1996, M/s. SPT intimated that they had made a payment of Rs. 2.5 lakh under TR 6 challan No. 1 dated 2-9-1996 towards duty without prejudice to their right for show cause notice and necessitating adjudication orders. They further stated that they were an SSI unit eligible for concessional rate of duty and that all the goods were not manufactured by them in their premises and the same were actually manufactured by independent job workers who were eligib ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to M/s. URL-I. However, M/s. SPT had created records by preparing delivery invoices of M/s. URL maintained at the second premises of M/s. SPT, to show that the materials were sent to job workers from M/s. URL-I and the processed goods were returned to M/s. URL-I, to create an impression that independent job workers are eligible for SSI exemption. The fact of maintenance of records of M/s. URL-I at the second premises of M/s. SPT, receipt of raw material at M/s. SPT directly from the suppliers and receipt of processed goods directly from the job workers without bringing the same into M/s. URL-I and manufacture of components, had been admitted in the statement recorded from the Store Clerk and Project Engineer of M/s. URL-I deployed at M/s. SPT and by the authorised signatories of M/s. URL-I and M/s. SPT. Hence, it appears that M/s. SPT are the real manufacturers of components used in the manufacture of cooling system. From the letter dated 17-12-1976 of M/s. URL, and the letter-dated 29-10-1996 of M/s. SPT giving the cost construction of the component manufactured, it could be seen that M/s. SPT had received many unfinished/semi-finished parts. From the sub-contractors, after the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... same is demandable under Rule 9(2) of Central Excise Rules, 1944. M/s. SPT had also suppressed the fact of existence of their second premises and the manufacturing activity therein, wilfully from the knowledge of the department with an intention to evade payment of duty. Therefore, proviso to Section 11A(1) of Central Excise Act, 1944, appeared invokable for demanding duty over the extended period. 4.In view of the above allegations, the Commissioner came to a conclusion that there was suppression of facts of manufacture in the second premises and it was done wilfully with an intention to evade payment of duty. He rejected the plea that the statements were recorded in duress and they were not voluntary and they were after the issuance of show cause notice. He also rejected the plea that penalty cannot be imposed under Section 11AC as the said section was promulgated subsequent to the period in question. 5.We have heard Shri M. Venkataraman, Adv., for the appellant and Shri C. Mani, DR for the respondent. 6.Ld. Counsel reiterated the pleas raised by the appellant that M/s. SPT did not manufacture the goods. The goods were manufactured by M/s. URL to Army Supply Depots and parts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in 1992 (61) E.L.T. 352. He also pleaded that penalty under Section 11AC is not imposable as the Section was not in force and the issue is covered by the judgment of the Apex Court rendered in the case of CCE v. Elgi Equipment as reported in 2001 (128) E.L.T. 52. 7.Ld. DR read out the order and contended that the Commissioner has given his detailed finding and has clearly noted that the admissions were given voluntarily. There is a clear and cogent evidence which has been culled out by the department. He submitted that the Range Superintendent in his cross-examination clarified that manufacturing activity had taken place during their visit. However, he did not remember as to whether machines were there or not. This answer does not support the appellant in any way. He also submitted that the appellant had not filed declaration, classification list and hence larger period was invokable and penalty imposable. He further submitted that the benefit of notification was never claimed and as such it was not examined. 8.On a careful consideration of the submission made and after perusal of the entire order, we notice that the case has been build up on the basis of investigation. The depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 226 of Excise Rules and Section 11AC of the Act. The penalty under Section 11AC of the Act is not imposable in terms of the Apex Court judgment rendered in the case of CCE v. Elgi Equipment as reported in 2001 (128) E.L.T. 52 as during the period of violation the said proviso was not in force. Therefore the Commissioner has to re-adjudicate on the aspect of imposing penalty under Rules 9(2), 173Q and 226 after arriving at correct duty which is liable to be paid by the appellant. Insofar as the penalty of Rs. 5 lakhs on M/s. URL-I under Rule 209A is concerned this matter is required to be re-examined and the amount to be refixed after the quantum of duty is arrived at on the M/s. SPT. Insofar as the claim of benefit of notification under No. 174/87, dated 10-6-87 is concerned, it is clear that the notification is subject to following procedure sought out in the Chapter 10 of the CE Act. It was argued by the Counsel that non following the procedure under Chapter X of the CE Rules is only a procedural lapse. Ld. DR is justified in raising the plea that the appellant had not filed their claim seeking benefit of notification. However we notice that the Tribunal has allowed the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X
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