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2018 (12) TMI 368 - AT - Central ExciseSSI Exemption - clubbing of clearances - it was alleged that M/s AAR Kay was manufacturing and clearing the goods from his factory on the bills of other units to remain within SSI exemption limit - Held that - If the clearances of M/s Mahalaxmi Engg Works are clubbed with the clearances of M/s AAR Kay then the total duty works out of ₹ 40,12,136/. The said demand of duty is to be considered as cum duty price. Therefore, the said benefit is to be given and after giving the benefit to the appellant, the demand of interest is to be calculated and adjusted against the said amount of ₹ 40.00 Lacs. If any amount is pending then the same is to be paid by the appellant within 30 days of the receipt of this order and in said circumstances, the appellant M/s AAR Kay is entitled for reduced penalty to 25% confirmed if the same is paid within 30 days of receipt of this order as per the proviso to Section 11AC of the Act. Clearances of M/s Harish Engg Works sought to be clubbed with the clearances of M/s AAR Kay - Held that - Shri Harish Mehendiratta in his statement as stated that is engaged in repairs as well as manufacturing of stone crushing machinery like jaw crusher, rotopactor etc, and having sufficient machinery in the manufacture of said goods i.e. two lathe machines, one shaper, one roller machine, one gas cutter and three chain pulleys in the factory. These facts have not been contraverted by any evidence by the Revenue. As M/s Harish Engg Works is having sufficient machinery to manufacture the goods in question and Shri Harish Mehendiratta have never stated that is not engaged in the business of manufacturing of stone crushing machinery, therefore, the said statement is having a piece of evidence to relied upon. Merely, rubber stamp and invoices were found in the premises of M/s AAR Kay is not sufficient to rely that M/s AAR Kay has used the invoices of M/s Harish Engg Works for clearance of their goods. Also, the buyers/sellers were not issued any show cause notice for aiding and abating the payment of duty, therefore, the statements of buyers/sellers are doubtful and can t be relied upon - the clearances made by M/s Harish Engg Works cannot be clubbed with the clearances made by M/s AAR Kay. Therefore, the demand of duty on that account is set-aside and no penalty is imposable on M/s AAR Kay and Shri Harish Mehndiratta for the clearances made by M/s Harish Engg Works. Demand sought to be confirmed on the clearances made by M/s DKV Enterprises alleging that the invoices of M/s DKV Enterprises have been used by M/s AAR Kay - Held that - There is no evidence on record to show that raw material purchased by M/s DKV Enterprises have been unloaded in the premises of M/s AAR Kay. Moreover, no evidence has been brought on record in support of the statement of Shri Vinay Batra that they have done any job work or fabrication work on behalf of the M/s AAR Kay. Merely, on the basis of the statement of Shri Vinay Batra clearances of M/s DKV Enterprises cannot be clubbed with the clearances to the M/s AAR Kay in the absence of corroborative evidence - the clearances made on the invoices of M/s DKV Enterprises can t be clubbed with the clearances made by M/s AAR Kay. Therefore, the demand of duty is sustainable on that account. Clearances of M/s Maa Laxmi Hardware Store sought to be clubbed with the clearances made by M/s AAR Kay on the basis of the statement of Shri Dharmendra, Shri Jitendra and Shri Anup Lohia supplier and one buyer M/s CHM Projects - Held that - The goods were transported by the vehicles arranged by him and not owned by him, we find that no statement of any owner of the vehicles or the drivers of the vehicles have been recorded to prove that the machines have been supplied by M/s AAR Kay or machines have been loaded from the premises of M/s AAR Kay. In fact, the driver of the vehicle is the person who can reveal the truth, but, the same has not been examined, therefore, the transporter s statement is not admissible evidence. With regard to the statement of Shri Ramesh Mehndiratta, we have dealt the same in the case of M/s Harish Engineering Works and same observations are to be taken here as it is - the buyers/sellers were not issued any show cause notice for aiding and abating the payment of duty, therefore, the statements of buyers/sellers are doubtful and can t be relied upon - the clearances made M/s Maa Laxmi Indt. Hardware Store cannot be clubbed with the clearances of M/s AAR Kay in the absence of any positive evidence on record. The charge of undervaluation has not been proved with tangible evidence. In that circumstances, the charge of undervaluation is not sustainable. Consequently, no redemption fine can be imposed on M/s AAR Kay Industries. Consequently, the redemption fine of ₹ 4.00 Lacs is set-aside. The allegation has been made of the undervaluation on the invoices cleared by M/s Harish Engg Works and Mahalaxmi Engg Works - Held that - As the clearances made by M/s Harish Engg Works cannot be clubbed with the clearances of M/s AAR Kay and all the clearances made by M/s Harish Engg Works remained with SSI exemption limit. Therefore, the charge of undervaluation on the invoice M/s Harish Engg Works is not sustainable. With regard to the three invoices issued by M/s Mahalaxmi Engg Works, we find that the charge of undervaluation has been made only on the basis of the statement of buyer Shri Ashwani Mehta, Proprietor of M/s Techno Crafts, but no evidence has been brought on record to prove that the said charge of undervaluation - the appellants were never confronted with the statement of Shri Ashwani Mehta to corroborate the charge of undervaluation and Shri Ashwani Mehta was not issued any show cause notice to allege aiding and abating the payment of duty, the statement of Shri Ashwani Mehta is doubtful and can t be relied upon. In that circumstances, due to lack of evidence on record, the charge of undervaluation is not sustainable. A penalty of ₹ 10,00,000/- has been imposed on Shri Sumit Mehndiratta which is on higher side - penalty reduced to ₹ 1,00,000/-. Appeal disposed off.
Issues Involved:
1. Clubbing of clearances for SSI exemption. 2. Use of invoices from other firms. 3. Confiscation and redemption fine. 4. Penalties imposed on individuals. Detailed Analysis: 1. Clubbing of Clearances for SSI Exemption: The appellants were accused of using invoices from four firms (Mahalaxmi Engg Works, Harish Engg Works, DKV Enterprises, and Maa Luxmi Hardware Store) to remain within the SSI exemption limit and evade central excise duty. The Tribunal found that M/s Mahalaxmi Engg Works was situated in the same premises as M/s AAR Kay, and thus, their clearances should be clubbed. The total duty liability, after allowing SSI exemption, was calculated to be ?40,12,136/-, and the appellant had already paid ?40.00 Lacs during the investigation. Therefore, the Tribunal ordered that the remaining interest and 25% penalty under Section 11AC of the Central Excise Act should be paid within 30 days. 2. Use of Invoices from Other Firms: The Tribunal examined the evidence regarding the use of invoices from Harish Engg Works, DKV Enterprises, and Maa Luxmi Hardware Store. For Harish Engg Works, it was found that the evidence (rubber stamp, invoices, and statements) was insufficient to prove that M/s AAR Kay used their invoices for clearance of goods. Similarly, for DKV Enterprises, the statements of Vinay Batra and Anup Lohia were not corroborated by any positive evidence, and thus, the clearances could not be clubbed. For Maa Luxmi Hardware Store, the statements of buyers and transporters were found unreliable, and no concrete evidence was provided to support the clubbing of clearances with M/s AAR Kay. 3. Confiscation and Redemption Fine: The Tribunal addressed the confiscation of Jaw Crushers seized on 20.04.2010, which was based on allegations of misdeclaration of size and undervaluation. The Tribunal found that there was no investigation conducted with the buyer to ascertain if any amount was paid over and above the invoice price. The appellant's defense that the order was placed eight months back and the price was lesser was not contradicted. Hence, the charge of undervaluation was not sustainable, and the redemption fine of ?4.00 Lacs was set aside. 4. Penalties Imposed on Individuals: The Tribunal reviewed the penalties imposed on individuals. The penalty of ?10,00,000/- on Shri Sumit Mehndiratta was deemed excessive and reduced to ?1,00,000/-. No penalty was imposed on Shri Harish Kumar, Proprietor of M/s Harish Engg Works, as the clearances made by Harish Engg Works could not be clubbed with those of M/s AAR Kay. Final Order: The Tribunal ordered the following: (a) Clubbing of clearances of M/s Mahalaxmi Engg Works with M/s AAR Kay, with cum-duty benefit and the remaining interest and 25% penalty to be paid within 30 days. (b) Clearances made by M/s Harish Engg Works, M/s DKV Enterprises, and M/s Maa Luxmi Hardware Store could not be clubbed with M/s AAR Kay. (c) No penalty on Shri Harish Kumar. (d) No redemption fine on the appellant. (e) Penalty on Shri Sumit Mehndiratta reduced to ?1,00,000/-. The appeals were disposed of accordingly.
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