2015 (8) TMI 789 - HC - Central Excise

Denial of SSI exemption - Dummy unit - During inspection of assessee s premises it was found that there was one shed and only two machines were found completely in non-working condition. No electric connection was found nor any material or finished goods could be located - Facility created only to avail SSI exemption - Held that - Machineries, which were also examined in the presence of panch-witnesses, were not found in working condition. There was nothing to indicate that the labourers were engaged in carrying out the job work. It was a claim of one of the partners that directly from Suman Plywood Pvt. Ltd., the finished goods were being sent. The benefit of SSI exemption was claimed by a letter along with a declaration and that was explaining the process of plywood, however, on noticing that the partners were not the signatories, all these documents were held to be in the realm of ambiguity. There were many questions that the Tribunal found unanswered and many of the actions did not appeal to the reasoned mind. - both the adjudicating authority in order-in-original and the Tribunal have extensively dealt with the issues on the basis of entire gamut of facts which were presented before them. The Tribunal confirmed the view of the original adjudicating authority and set aside the reasonings of the Commissioner (Appeals). At the cost of reiteration, we hold that no illegality is found in such conclusion nor is there any perversity made out from the record, giving rise to any question of law. - Decided against assessee.

Summary

Issues:
1. Challenge to the order of the Customs, Excise & Service Tax Appellate Tribunal by the appellant.
2. Allegations of evasion of duty by creating a dummy firm.
3. Conflicting decisions by different authorities.
4. Questions of law raised by the appellant for consideration.

Analysis:

Issue 1: Challenge to Tribunal Order
The Tax Appeal was filed challenging the order of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) dated 04.06.2012. The appellant, a plywood manufacturer, was accused of using a dummy firm, M/s. Krishna Industries, to evade duty. The original adjudicating authority confirmed the duty demand, interest, and penalty against the appellant. However, the Commissioner (A) allowed the appeal in favor of the appellant. Subsequently, the CESTAT quashed the Commissioner's order, leading to the present appeal.

Issue 2: Allegations of Evasion
The Central Excise officials found discrepancies during a visit to the premises of both the appellant and M/s. Krishna Industries. It was alleged that M/s. Krishna Industries, a supposed raw material supplier, was a dummy firm created by the appellant to manipulate the value of clearances and avail SSI exemption. The Tribunal upheld the findings that M/s. Krishna Industries was a paper unit, and the partners were aware of its operations, leading to the evasion of duty.

Issue 3: Conflicting Decisions
The Commissioner (A) and the Tribunal had conflicting decisions regarding the liability of the appellant. The Tribunal based its decision on the evidence presented, including statements from partners and witnesses, machinery conditions, and financial transactions. The Tribunal found that the partners of M/s. Krishna Industries were involved in day-to-day activities and concluded that the firm acted as a dummy unit.

Issue 4: Questions of Law
The appellant raised substantial questions of law for consideration, including whether the Tribunal could consider new issues not part of the show cause notice, the correctness of the Tribunal's findings against the evidence, the validity of demanding excise duty from a job worker under a specific notification, and the alleged non-speaking nature of the impugned order. The appellant argued that the Tribunal ignored crucial evidence and affidavits supporting their case.

In conclusion, the High Court dismissed the Tax Appeal, stating that no question of law or perversity in the findings was evident. The Court emphasized that the Tribunal and original authority had thoroughly examined the facts and evidence. The Court found no grounds for interference and upheld the Tribunal's decision, affirming that the findings were based on the evidence presented and did not go beyond the scope of the show cause notice.