2023 (12) TMI 950 - AT - Central Excise

Clandestine removal - paints and varnishes - manufacture of goods bearing the brand names REAL and NICE of another person - ineligible to grant SSI exemption - suppression of facts - extended period of limitation - HELD THAT - Apparently and admittedly there is no retraction to the admissions that appellants were engaged in clearances/sale of manufactured goods without proper invoices. The fact of having any assignment deed to have been executed in November 2010 was not brought to the notice of the investigation team at the time of search on 13.09.2011. The said assignment deed bears notarization of 24.11.2011 (as recorded by Commissioner (Appeals) in Para 9 of the order under challenge) i.e. the date after the searches were conducted in the appellant s premises. Thus there are no infirmity in the order of the adjudicating authorities below when the said assignment deed as is stated to have been executed in favour of M/s. Real Industrial Coating (Appellant No. 1) to be an afterthought. The department has been meticulous in checking the records about brand names/trade marks from the portal for the purpose as is maintained by Ministry of Commerce and Industry, Department of Industrial Policy and Promotion, Controller-General of Patent Designs and Trade Mark as recorded in Para 11 of the order under challenge. It is on record that during the period of investigation also the portal was still recording Shri Gulshan Kumar Matta as the brand owner instead of Shri Rambaksh Matta of M/s. Real Industrial Coating - there are no infirmity with the findings of authorities below that the brands REAL and NICE were the brands of a different person/third party than the manufacturer in the present case i.e. M/s. Real Industrial Coating was not the owner of these brands - the said exemption has rightly been denied to the appellants. It is also observed that all the appellants herein while being examined during the investigation have admitted that the goods in question were cleared without the cover of proper invoices. 40% of the goods thereof were sold and purchased on kacchi parchis. The said kacchi parchis were recovered from all the premises as were searched during investigation and were taken on record as relied upon documents. Those documents are held to be the sufficient corroboration to the said admission of the appellants which apparently has never been retracted - The appellants have failed to produce any document which may corroborate the authenticity of the assignment deed of 27.11.2010. No evidence is produced to falsify the website extracts - there are no reason to differ when these admissions have been accepted as the sufficient proof of appellants alleged guilt - In the light of the said admission the present becomes a case of suppression of fact, fraud and collusion. Hence, the department has rightly invoked the extended five years period of limitation. The show cause notice is dated 09.07.2015. The period of limitation (2 or 5 years, as the case may be) has to reckon from the relevant date, as is apparent from Section 11A(1)(a) and Section 11A(4) of Central Excise Act. As per Section 11A(3) of Central Excise Act, the period for issuing show cause notice shall be computed from the date of receipt of information to Central Excise Officer, about payment of duty, in writing, which shall be the date of filing returns - there are no reason to differ from the findings of the adjudicating authorities below that the show cause notice is issued prior the relevant date for the said period. Hence, the order to that extent is also sustainable. The order under challenge is held sustainable - Appeal dismissed.

Summary

Issues Involved:
1. Ex parte order against appellants.
2. Demand of duty time-barred.
3. Admissibility of assignment deed.
4. Eligibility for SSI exemption.
5. Legality of demands and penalties.

Summary:

(i) Ex parte order against appellants: The adjudicating authority proceeded ex parte against Shri Ramchand Matta due to his failure to appear despite four opportunities for a personal hearing. However, Shri Rambaksh Matta, Shri Harish Kumar Matta, and Shri Gulshan Kumar Matta duly joined the proceedings.

(ii) Demand of duty time-barred: The adjudicating authority, relying on Section 11A of the Central Excise Act, 1944, determined that the relevant date for the impugned case is 10.07.2010. Since the show cause notice was issued on 09.07.2015, it falls within the five-year limitation period.

(iii) Admissibility of assignment deed: The assignment deed dated 27.11.2010, notarized on 24.01.2011, was held inadmissible by the adjudicating authority as it was not brought to the notice of the investigating team and was considered an afterthought.

(iv) Eligibility for SSI exemption: Due to the inadmissibility of the assignment deed, the sale of products under the brands 'REAL' and 'NICE' was considered third-party sales. Consequently, the value of these sales was excluded from the SSI exemption calculation under Notification No. 8/2003, and the benefit was denied.

(v) Legality of demands and penalties: The adjudicating authority, based on the non-retracted admissions of the appellants, confirmed that at least 40% of the products were sold on kacchi parchis without proper invoices. Hence, penalties were imposed. The Commissioner (Appeals) upheld these findings, stating that penalties were imposed under different provisions, negating the issue of double jeopardy.

Final Decision: The Tribunal found no infirmity in the findings of the adjudicating authorities. The assignment deed was deemed an afterthought, and the brands 'REAL' and 'NICE' were considered third-party brands. The SSI exemption was rightly denied, and the extended period of limitation was correctly invoked due to suppression of facts. The penalties imposed were upheld, and the appeals were dismissed.

[Order pronounced in the open court on 20.12.2023]