TMI Blog2005 (12) TMI 150X X X X Extracts X X X X X X X X Extracts X X X X ..... are not manufactured by them. Merely because the said goods are affixed with a label/sticker showing brand name Durian , which at the relevant time was not registered in their name, will not go to prove that the said goods have been manufactured and cleared by them. The said brand name being a famous one, could have been used by the dealer to increase their sales or to dupe the customers. No tests were conducted to find out as to whether the said sticker fixed at the back of decorative plywood found at the dealer's premises was identical to the one used by the appellants, further, it has been strongly contended that along with the search of the dealer's premises, their factory premises were also put to search and nothing incriminating was recovered therefrom. There was no excess or shortage of raw materials detected at the time of the visit of the officers. Similarly, no materials requisite for manufacture of decorative plywood was found in their factory premises, thus leading credence to their submissions that they are not engaged in the manufacture of decorative plywood at all. I find that Member (Judicial) has detailed the submissions of the appellants in para 8 of his j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... law relating to the above submissions have already been discussed in detail by Member (Judicial), I refrain from referring to the ratios of the same. On the other hand, I find that the ld. Member (Technical) have primarily held against the appellants on the ground that they have not been able to produce any duty paying documents before the lower authorities nor any duty paying documents were found during the search at any of the premises of the manufacturers or dealers. However, it is the appellant's stand that they are not manufacturing decorative plywood at all, in which case the question of presence and availability of duty paying documents does not arise at all. Thus, I agree with findings of ld. Member (Judicial) Shri Krishna Kumar and allow all the appeals. The papers may be sent to the original bench for recording the final order. In view of the above majority decision, the impugned order is set aside and the appeals are allowed. - HON'BLE KRISHNA KUMAR (J), C. SATAPATHY (T) AND ARCHANA WADHWA (J), MEMBERS For the Appellant : R.S. Kanoria, Director and Ashok Patil, Accountant. For the Respondent : Hitesh Shah, SDR and Sanjay Singhal, JDR. Order Krishna Kumar, Memb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ood at the dealers end and which were found without accompanying any Central Excise documents. Scrutiny of these stocks revealed that they were of Durian brand and were identifiable as belonging to the Appellants through the labels/stickers pasted on the reverse of the decorative plywood identifying the actual variety written/stamped on them, which also correlate with the product catalogue/pamphlets seized at the various dealers premises. It is also revealed during enquiry that the Appellants had issued trading invoices for these consignments mentioning the description therein as 'Veneer', rate per square meter, the quantity in square meters and the total amount including taxes, if any. The dealers had received the quantity of Durian brand decorative plywood from the factory of the main Appellants and these dealers had not received any Central Excise invoices for these consignments. The investigations reveal the modus operandi that the consignments of Durian brand decorative plywood had been received under the description, 'Veneer' and a private document called as chits were also used as part of transactions. This chits would show actual description of the variety, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed from their factory should not be demanded from M/s. Durian Industries Ltd. (d) Duty of Rs. 7,03,071.85 in respect of clandestinely manufactured and cleared from their factory should not be demanded from M/s. Palghar Plywood Products Pvt. Ltd. (e) Why Duty demand of Rs. 84,349/- on the goods seized from the dealers premises should not be demanded from M/s. Palghar Plywood Products Pvt. Ltd. (f) Interest @ 20% on the duty determined to be payable should not be demanded from the Main Appellants. (g) Penalty should not be imposed upon each of the Appellants as per the SCN. 7. In adjudication proceedings, the ld. Commissioner rejected the reply submission made by the Appellants and upheld the allegations and also accepted the evidences adduced by the department in the SCN and ordered payment of the duty and interest. The Commissioner also imposed penalties upon the Appellants and also have ordered payment of interest upon the manufactures above named: denied the Appellants the benefits of SSI Exemption claimed by them under Notification No. 1/93, dated 28-2-93 since they had crossed the exemption limit and ordered that they pay duty at tariff rate without availing SSI on the branded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd M/s. Kanti Plywood were dealing only in trading goods and did not purchase goods from them. In the case of M/s. Palghar Plywood (1), they contended that the absence of physical availability of the subject goods, the findings that they bore the brand name Durian was without any evidence. In this connection reliance on the statement of Shri Omprakash B Sahu Partner of M/s. Sahu Enterprises has been placed erroneously to hold as, there is also evidence on record to show that the plywood processed/manufactured from such semi-finished plywood were affixed with Durian Brand. Shri Sahu in his statement admitted that what they received without the cover of duty paying documents under such chits and later on covered up by trading bills of Veneers were in fact decorative Veneered plywood of Durian Brand-------. This statement was in connection with the goods seized at their premises and they are not veneers. They are claimed to be repressed plywood and it was never acclaimed of the appellant as to those goods to be veneer. Therefore this seizure will not substantiate the findings that there was a seizure of goods covered under the subject trading bills and delivery chits. g. The appellant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of locally purchased veneer, the same has been sold as second sales without sales tax. They have also given details of the trading activities to prove their contention that the demands are not on all the quantity of veneer traded by the appellants, which would itself admit that the department accepts that the appellants were trading in veneer. There is no reason arrived at in the order why the appellant should show trade in veneer not only to the subject dealers, there are several other dealers and their evidence has not been taken. Thus it was submitted that the appellants trading account, independent of manufacturing account and separately assessed to income-tax department and other statutory cannot be held to be of trading in manufactured decorative plywood. k. Appellants submit that duty is imposed on the presumption that the Veneers that were DP and was manufactured by them. They pointed out that Veneer was one of the raw material used in the manufacture of Decorative Plywood. All along they maintained a separate account for Veneer. No one will give the bill for Veneer that is raw material and collect money for veneer (raw material) and leave the rest amount to the dealers to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of transport of the unaccounted production from their factory to the dealers. Merely because the dealers have misused our bills relating to Veneer to cover up their unaccounted stock, it does not mean that they have manufactured and removed without accounting re-pressed plywood clandestinely. They also relied upon the Tribunal decisions in the following cases which have held that to uphold clandestine removals, the entire chain of circumstances must be established right from the consumption of excess raw material up to the transport of such unaccounted production: 1. Ganga Rubber Industries v. Collector [1989 (39) E.L.T. 650] 2. Kashmir Vanaspati v. Collector [1989 (39) E.L.T. 655] 3. Shree Packaging Corporation v. Collector [1987 (32) E.L.T. 94] p. They submitted that their purchase of Veneer was commensurate with the sale of Veneer as also our total productions of the goods deals with the total sales. There is no allegation that their total purchases of Veneer as shown and recorded in their balance-sheets were not correct. The balance-sheet is a statutory record as part of which returns filed with the various authorities like income tax etc...., it is therefore, submitted that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e finding that they bore the brand name Durian was without any evidence. t. Therefore the impugned Order alleging the clandestine removals of the goods which the appellant had never manufactured was not in accordance with law and deserves to be quashed and set aside. 9. We have carefully considered the rival submissions, and perused the case records. No cross-objections have been filed by the Respondent Commissioner. 10. We find that the issues that are required to be settled by us are as under :- (a) whether the main appellants had manufactured and cleared decorative plywood; Durian Brand decorated plywood without payment of duty to their dealers. (b) whether the main appellants and others were liable for penalty and interest payment etc. and (c) whether the seized goods are required to be confiscated. 11.We find that the entire case is based on trading bills, delivery chits and statements of dealers. 12. Notification No. 215/86, dated 27-3-1986, D.G. anti-evasion was declared as Chief Commissioner. This notification is still in force. Therefore, the show cause notices issued with the approval of D.G., C.E., intelligence is within jurisdiction. 13. The main appellants had filed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Samples drawn and to be tested were crucial to the case. In this regard, the Tribunal decision in the case of B.G. Plywood (I) Pvt. Ltd. [2001 (96) ECR 709 - Tri.] has held that where the samples, were not sent for testing, advertising material alone cannot be the basis for the purpose of classification. In this case, the advertising material in the shape of pamphlets etc. do not have evidentiary value unless it is supported by test results which proves that the goods seized at the dealers end were decorative plywood only and that to it must satisfy that these have been received from the factory of the main appellant. 17. We next take up the issue whether the appellants were engaged in the trading of Veneer. In the light of what we have noted above, that no stock of decorative plywood was found in the factory, the evidentiary value of the chits which were seized at the dealers end, is required to be discarded as there is no evidence of goods cleared from the factory without payment of duty and that the Department has failed in its attempt to prove clandestine removal of the decorative plywood from the factory. This being the case, we are inclined to agree with these appellants that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d is Rs. 14,98,291/- was proposed in the notice. It was also proposed to confiscate the goods on the grounds that they have been clandestinely removed. 22. Upon adjudication, the adjudicating authority has dropped the demand of duty on the goods that were admittedly in a semi-finished state in the factory premises as also some of the demand, which was not demanded in the notice but was worked out in the Annexure. The rest of the duty demand was confirmed on the grounds that none of the dealers could come up with duty paying documents and in some cases, the dealers admitted to have purchased them without any duty and there was admission on the part of the manufacturer of not having properly accounted for in the statutory records. Accordingly, the adjudicating authority confirmed duty amounting to Rs. 9,97,713/- on the manufacturer for having removed the same clandestinely without payment of duty 100% penalty under Section 11AC of the Central Excise Act, 1944 was also imposed. Interest under Section 11AB was also confirmed. As regards the proposal for confiscation, the adjudicating authority held that goods that are in semi-finished nature and for those goods, where notice was not se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remises without any duty paying documents and which were admitted for having purchased without payment of duty, the same were confiscated and allowed redemption on payment of fine. Penalty was imposed on the manufacturer, their Director and employees, as well as the dealer under Rules 52(A), 226, 9(2) and 209A of the Act. III. Appeal Nos. E/1024-1046/04, Mum arising out of Order-in-Original No. 33, dated 22-12-2003 25. M/s. Durian Industries Ltd. (hereinafter referred to as 'the manufacturer') is a manufacturer of Plywood of various grades falling under Chapter 44 of the Central Excise Tariff. Investigations were conducted with the dealers and the Company wherein some of the Decorative Plywood lying with some of the dealers was placed under Seizure. Subsequently, a Show Cause Notice dated 9-2-2000 was issued on the grounds that goods seized from the Dealers were those that were cleared clandestinely by the Manufacturer, that the goods supplied under regular invoices to the dealers were under-invoiced and that the Appellant having exceeded the limits specified in the SSI Notification and therefore SSI Benefit was not available to these clearances. Penalty was proposed to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cleared clandestinely by the Manufacturer, that the goods supplied under regular invoices to the dealers were under-invoiced and that the Appellant having manufactured branded goods and the SSI Benefit was not available to these clearances. Penalties were proposed to be imposed on the manufacturer as well as the dealers. Duty amounting to Rs. 7,03,072/- was demanded on the goods alleged to have been clandestinely removed and demand of duty amounting to Rs. 2,01,16,733/- was made on account of under-valuation of the goods in the notice. 28. Upon adjudication, the adjudicating authority has dropped the demand of duty demanded on the charge of under-valuation on the ground that there is no evidence to show that any testing was done on the goods to prove that the goods were other than repressed plywood and that proposal in the notice to value on the goods on the basis of the highest clearance prices had not basis in law and that plywood cannot be valued on the basis of thickness alone but on variety of factors determine the pricing. As regards Clandestine Clearance, the lower authority rejected the plea of the manufacturer that these were actually Veneers that were being traded by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e goods and therefore, I do not propose to interfere with the same. As such, I am of the view that these appeals require to be dismissed except for reduction in the penalty amounts as indicated above. I order accordingly. Sd/- (C. Satapathy) Member (T) dated 15-7-2005 30.The following difference of opinion is referred to the Hon'ble President in terms of Section 35D(1) of the Central Excise Act, 1944 read with Section 129C (5) of the Customs Act, 1962:- Whether the appeals have to be allowed setting aside the impugned orders as held by the Member (Judicial). OR The appeals have to be allowed partly reducing the penalties to the extent of 25% as held by the Member (Technical). Sd/- Sd/- (C. Satapathy) (Krishna Kumar) Member (T) Member (J) dated 21-7-2005 31. [Order per :31. Archana Wadhwa, Member, (J)]. - The matter has been referred to me as a third Member to resolve the difference between the ld. Member (Judicial) Shri Krishna Kumar and the ld. Member (Technical) Shri C. Satapathy. While Member (Judicial) has allowed the appeals, Member (Technical) has confirmed the demand of duty against the main appellants but reduced the penalty to 25% of the amount determined by the Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri Hitesh Shah, ld. SDR appearing for the revenue has drawn my attention to the observations made by the adjudicating authority and the evidence discussed by her. It has been strongly contended that majority of the dealers have disclosed the modus operandi adopted by the manufacturers appellants to clear the decorative plywood under the guise of trading of veneer. Decorative plywood was being cleared from the manufacturer's factory under private chits, which were being replaced subsequently by the trading bills. He has specifically drawn my attention to the statements of some of the dealers as discussed in the impugned order. 35. After having considered the submissions made by both sides. I find that Member (Judicial) has detailed the submissions of the appellants in para 8 of his judgment, from (a) to (t). A reading of the same would show that the manufacturing appellants have categorically denied having manufactured decorative plywood at all. I find a lot of force in their submission that in the absence of any test or investigation having been conducted by the revenue to link the decorative plywood found at the dealer's premises with the appellants manufacturer or to link ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
