TMI Blog2002 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of redemption fine of Rs. 4.4 lakhs, bank guarantee of Rs. 3.62 lakhs have been encashed and appropriated towards the redemption fine of confiscated goods. Plant and machinery have also been directed to be confiscated in respect of Meera Industries and Rama Industries under Rule 173Q and 209 of CE Rules. However, granting the appellant to redeem the same on payment of fine of Rs. 1 lakh. The allegation against the appellant is that they are manufacturers of the products of pressure pans, pressure cookers registered with the Central Excise department and were availing the benefit of SSI exemption under the said notification. They were fixing brand name "SEETHA". The firm comprised of partners of Mr. K.R. Balachandran and Mrs. B. Kousika w/o of Mr. K.R. Balachandran. 2.M/s. Rama Industries, another firm, which according to the appellant is an independent firm with separate constituents of partners comprising of Mr. K.R. Babu and Mrs. B. Nithya, w/o. Mr. K.R. Babu registered with the Central Excise department and manufacturing pans, pressure cookers with brand name of "RAMA" and availing benefit under SSI notification. 3.Two show cause notices were issued on 28-12-99 and 12-6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - arisen due to the valuation to be made under Section 4A. 7.The facts of the case are set out in detail in the two show cause notices and it will be superfluous to repeat them all over again. However, the facts and allegations of the two show cause notices, in brief are as follows :- (i) On a thorough search conducted at the premises of Meera Industries on 1-7-1999 and 3-7-1999, it was found that no Central Excise records were available in the factory for verification; (ii) It was informed that another company name, Rama Industries was also manufacturing excisable goods within the said premises; (iii) the stock of excisable goods valued at Rs. 5,09,670/- available could not be correlated as no Central Excise records were available in the factory and hence, the stocks were detained; (iv) Some of the rooms were locked and no keys were available with the staff of the Unit and hence those rooms were sealed. (v) On the same day (1-7-1999), another group of officers visited the registered office of the Unit at Mylapore, Chennai-4 where Shri K. Balachandran, Partner of Meera Industries was present. He also did not produce Central Excise recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in his letter dated 19-8-99 that the Frying pan and lid had come in a single carton; (xii) Dealers from various places have also stated that they have received 'Seetha' brand LPG stoves from Rama Industries; that, 'Rama' range of products from both Meera Industries and Rama Industries; (xiii) The registers/documents requested from Seetha Industries were submitted by them in piecemeal and that too mostly in photocopies. The final set of documents were handed over by them on 10-12-99 only, after prolonged and repeated requests; (xiv) Shri K.R. Balachandran, after recording the statement, produced RG 1 Register for the years 1998-99 and 1999-2000 as well as RT 12 returns for the years 1998-99 and 1999-2000. Perusal of RG 1 register appeared to reveal that they are neither authenticated nor inspected by any Central Excise officer. Further perusal of RT 12 returns produced clearly shows that they were not submitted to Range Officer, as they did not bear the acknowledgement of the Range Officer. (xv) Statement from Shri K. Sankar, Partner of M/s. Balaji Graphics, Thiruvanmiyur, Chennai was recorded on 22-10-99. He has stated therein that they have been supplyi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra Industries M/s. Rama Industries 1. Exist in their own premises Exist in leased premises for which rent has been paid 2. Separate Electricity meter Separate Electricity meter 3. Separate entrance Separate entrance 4. Separate set of machineries Separate set of machineries 5. Separate set of tools and dyes Separate set of tools and dyes 6. Separate SSI Unit Separate SSI Unit 7. Independent ST Registration Independent ST Registration 8. Separate ISI Certificate (F) Separate ISI Certificate 9. Registered under Factories Act and periodically inspected Not coming under the purview of Factories Act. 10. Separate ESI Registration Not coming under the purview of ESI. 11. Separate PF Registration Not coming under the purview of PF. 12. Separate IT Registration Separate IT Registration 13. Separate set of employees (as they covered by ESI, PF and Factories Act interchanging of workers is impossible) Separate set of employees 14. Separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (109) E.L.T. 204 (Tri.); (c) Suvik Electronics Private Ltd. v. Commissioner of Central Excise, Ahemadabad - 1999 (107) E.L.T. 457 (Tri.); (d) Sri Ganga Nagar Bottling Company v. Commissioner of Central Excise, Jaipur - 1999 (107) E.L.T. 645 (Tri.); (e) Commissioner of Central Excise, Meerut v. Gopal Soap Industries - 1999 (111) E.L.T. 876 (Tri.); (ix) that to the absence of statutory records, they were kept under lock and key and therefore could not be produced to the Officers; but subsequently produced by them; (x) that Shri R. Soundar and Shri M. Manoj are relatively new and not qualified and competent enough to answer the queries; (xi) that all the brand names and all the products are mentioned in the advertisements and product literature is ill-conceived and such mention in literature under the invoice, advertisement, etc., has no relevance; (xii) that the Frying Pan manufactured by them was not capable of functioning as Pressure Cooker; (xiii) that the Seizure is illegal and therefore the questions of confiscation and mandatory penalty under Section 11AC of Central Excise Act, 1944 and Rule 173Q of Central Excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Industries only and bills and transactions were created as if there were two manufacturing-facility-owned-firms. (b) He has relied the deposition of Shri K. Sankar of Balaji Graphics who deposed that he supplied labels to both "Seetha" and "Rama" and received payments on those label supplies from Rama Industries. He has noted that such honouring of one firm's bills by another firm clearly shows cross-funding. He noted that many buyers of products have confirmed the inter-changing of supplies and bills between two firms and therefore he proves that there is financial flow back and cross-funding. (c) He has noted that M/s. Meera Industries has become liable not because of common partners between two firms but basically because the other firm did not exist on manufacturing goods in reality. It was M/s. Meera Industries who manufactured goods appearing with brand name "Seetha". (d) He also held that mutuality of interest between two firms and cross-funding of flow back are proved in this case by investigation taken up from the bills which is of Meera Industries. (e) He has also noted that all the production of Rama Industries were made by Meera Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t and has not accepted the pleas raised by the appellant. (i) He has noted in Para 18.7 that the case in hand is not a case of mere failure on the part of Meera Industries in not paying duty but it is a well planned and orchestrated act on the part of the partners of both Meera Industries and Rama Industries in evading the duty due. This schemed to float a firm on paper by name Rama Industries, misdeclared it to be a manufacturing firm, suppressed the fact of manufacture of all goods by Meera Industries and they wanted to promote both 'Seetha' and 'Rama' brand names by defeating the law, that is, the SSI exemption notification by cornering unintended duty exemption. He has noted that the buyers of Meera Industries have also gone on record stating that they used to receive the goods both under the Meera Industries and Rama Industries bill heads showed the cross-funding between the two firms. He has noted that such planned evasion with an intent of Meera Industries to evade payment of duty is proved. On account of this reason he has confirmed the duty demand and has also imposed penalties and has also confiscated the plant and machinery and granted redemption on payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he units were independently functioning. Rama Industries was in existence from 1990 and the Department had acknowledged the RT 12 returns, and even had inspected the premises of both the units which were located separately. Both the units had been filing income-tax returns and also sales tax returns and maintained separate registers under various legislations. They had separate plan and factory plan which have been approved. The said plan had been filing with the department and the department had acknowledged the receipt of the same. There is a rental agreement in respect of both the units. They had been having separate profit and loss accounts and separate dealings. Goods manufactured by both the units are different and have different brand names. Further we notice from the records that Rama Industries was issued with a letter dated 20-8-90 by Superintendent of Central Excise, Range III 'C'. Madras-III Division directing them to file the details pertaining to SSI certificate and details regarding the same, brand name certificate, xerox copies of invoices for the goods received from Ambala (Mixie Parts), turn over details for the financial year 1989-90. The Rama Industries by their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isters maintained under Central Excise Act and has been inspected and seen by the Departmental officers. The Rama Industries has been separately located with separate lease deed and unit has been manufacturing different items namely LPG domestic gas stoves while Meera Industries had been manufacturing domestic pressure cookers and pans. The item being different the brand name is also different and the evidence on record here shows that Meera Industries could not have used the brand name of Rama Industries as the product of the Rama Industries is different. Be that as it may it is fundamental principles of natural justice that when these enormous evidences were examined at the time of inspection and the department was aware of the existence of Rama Industries then it was incumbent to have put the Rama Industries to notice. The violation of issue of show cause notice to Rama Industries has vitiated the proceedings. However we notice that the department in the show cause notice had alleged that Meera Industries were using brand name of Rama Industries and made themselves ineligible for the benefit of notification, while the Commissioner in the impugned order has proceeded to hold besi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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