2015 (9) TMI 356 - SC - Central Excise

Clandestine manufacturing and removal of goods - dummy job work units - fictitious invoices showing much lower quantities/value than the actual - tribunal had set aside the demand - Held that - On going through the order of the Tribunal we find that the prime reason given by the Tribunal in support of its order is that there is hardly any evidence on record to prove the allegations made against the two respondents herein. We find this to be totally erroneous. We have already reproduced the material which was relied upon by the Commissioner in his order. It is for this reason that some of the discussion from the order of the Commissioner is extracted as well - Decision of tribunal reversed - Demand confirmed - Decided in favor of revenue.

Summary

Issues involved:
1. Allegations against M/s. Satyam Technocast and M/s. Prince Time Industries based on a show cause notice.
2. Whether clearances of excisable goods were made on fictitious invoices.
3. Whether M/s. Satyam Technocast could be considered the manufacturer of excisable goods.
4. Clubbing clearances of M/s. Satyam Technocast and Pioneer Hardware for SSI exemption.
5. Duplication of duty demand for the same consignment.

Issue 1: Allegations based on show cause notice
The show cause notice alleged that M/s. Satyam Technocast and M/s. Prince Time Industries were operated by Sh. Someshbhari Satishbhari Malik, directing all activities. Details collected during a search revealed lack of maintenance of job work and production records, with acceptance of the existence of bogus firms. The Order-in-Original passed by the Commissioner addressed various issues, including the clearance of goods on fictitious invoices showing lower quantities.

Issue 2: Fictitious invoices and manufacturing status
The Commissioner found that clearances were made on fictitious invoices showing lower quantities, rejecting M/s. Satyam Technocast's defense of being traders only. The finding was based on statements and evidence indicating M/s. Satyam Technocast as the manufacturer of excisable goods.

Issue 3: Clubbing clearances for SSI exemption
The issue of clubbing clearances of M/s. Satyam Technocast and Pioneer Hardware for SSI exemption was analyzed. Evidence showed a merger of operations and ownership, leading to the conclusion that both units belonged to Sh. Somesh Malik, justifying the clubbing of clearances.

Issue 4: Duplication of duty demand
The Commissioner addressed the duplication of duty demand for the same consignment, where goods were cleared under fictitious invoices and actual records. The final duty calculations were detailed, including the clearance values, deductions, and duty liabilities for 2001-02 and 2002-03.

Judgment Analysis:
The Tribunal set aside the Commissioner's order due to insufficient evidence, but the Supreme Court disagreed, reinstating the Commissioner's findings. The Court highlighted the reliance on material presented by the Commissioner and dismissed the argument of including job work values from independent firms. The appeals by the respondents were allowed, restoring the Commissioner's orders without costs.