2017 (9) TMI 213 - AT - Central Excise

Demand of duty - Goods supplied to defence installation through National Co-operative Consumer Federation of India Ltd. (NCCF), Jammu - case of appellant is that the appellant was not engaged in the manufacturing of the goods. There was no machinery in the so called factory. He submitted that the goods were manufactured by Shri Ravi Gupta, M/s. Gee Industries, who supplied the impugned goods to NCCF, so they were not required to pay the duty - Held that - After perusal of the record, it appears that the goods were supplied to the defense establishment through the NCCF. The Director of the NCCF in his statement clearly stated that he had visited the factory and saw the manufacturing activity before placing the order to the appellant. The appellant has supplied the goods to NCCF as a manufacturer, and not as a trader. Payment was received through pay cheques and bills were raised as a manufacturer - It is seen from the NCCF record, that the appellant had manufacturing facilities during the relevant time and they had supplied the impugned goods, Ld. DR had already submitted that in due course the factory was dismantled and machinery loss sold. At the relevant time, the appellant was engaged in manufacturing of the impugned goods which were supplied to the NCCF as a manufacturer - demand upheld - appeal dismissed - decided against appellant.

Issues:
- Central Excise duty evasion for goods supplied to defense installation
- Allegation of non-payment of excise duty and penalty
- Dispute regarding manufacturing activities at the factory premises
- Impact of criminal proceedings initiated by CBI on the tax matter
- Appeal challenging the Order-in-Appeal No. 09/2011 dated 07.04.2011

Central Excise Duty Evasion for Goods Supplied to Defense Installation:
The appellant was engaged in manufacturing goods falling under Chapter 73 of the Central Excise Tariff Act 1985. The appellant supplied goods to defense installations through NCCF without registration with the Central Excise Department or payment of excise duty. A show cause notice was issued demanding duty of ?62,67,434 on the total value of ?5,52,61,532 under section 11A(1) of the Central Excise Tariff Act, 1985. The appellant contested this demand, leading to the present appeal.

Allegation of Non-Payment of Excise Duty and Penalty:
The appellant faced allegations of clearing goods to defense installations without paying central excise duty. The appellant argued that there was no manufacturing activity at their factory and that the goods were actually manufactured by another entity, with the appellant acting as a mere billing intermediary. The Department contended that the appellant initially accepted liability as a manufacturer but later retracted this statement, attempting to evade excise duty.

Dispute Regarding Manufacturing Activities at the Factory Premises:
The appellant claimed that they were not engaged in manufacturing the goods in question and that the machinery for manufacturing was not present at their factory. However, the Department presented evidence suggesting otherwise, including statements from NCCF officials and the presence of manufacturing facilities during the relevant period. The Tribunal found that the appellant was indeed engaged in manufacturing the goods supplied to NCCF.

Impact of Criminal Proceedings Initiated by CBI on the Tax Matter:
The appellant referenced a pending FIR lodged by the CBI in Jammu, seeking time to obtain the outcome of the FIR before the appeal was decided. However, the appellant failed to provide the requested information, leading to the Tribunal deciding the appeal on its merits. The Tribunal emphasized that the criminal proceedings initiated by CBI did not impact the tax matter being adjudicated.

Appeal Challenging the Order-in-Appeal No. 09/2011 Dated 07.04.2011:
The Tribunal, after considering the arguments from both sides and examining the evidence on record, upheld the Order-in-Appeal. It concluded that the appellant was indeed engaged in manufacturing the goods supplied to NCCF as a manufacturer, based on statements from NCCF officials and other evidence. The appeal filed by the appellant was dismissed, affirming the demand for excise duty and penalty.

This detailed analysis of the judgment highlights the key issues involved in the case, the arguments presented by both parties, and the Tribunal's decision based on the evidence and legal principles applied.

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