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2009 (10) TMI 320 - AT - Central ExciseSSI Exemption- Department took up investigation and search was conducted, records were seized and based on the records, the enquiry and investigation conducted as the follow up action, show cause notice was issued and the impugned order has been passed. As a result of investigation, it was revealed that (a) NAP had evaded Central Excise duty by mis declaring excisable goods as non-excisable goods in their sale document, (b) manufacturing and clearing of excisable goods in the name of two other companies namely M/s. Paramount Paper Products (PPP for short) and M/s. Rajdeep & Sons Pvt. Ltd. (RSPL for short) without disclosing to the Department, and (c) manufacturing and clearing of excisable goods on job work basis without paying any duty. Held that- claim of Modvat credit has been rejected on the ground that invoices were not produced but stated that invoice were actually produced. Thus set aside the order and matter remanded to the original authority.
Issues Involved:
1. Clubbing of clearances of NAP, PPP, and RSPL. 2. Financial flow-back between units. 3. Issuance of separate show-cause notices. 4. Penalty imposition under Rule 173Q. 5. Duplicate invoices. 6. Cum-duty value and Modvat credit. 7. Quantum of penalties on partners. Comprehensive, Issue-wise Detailed Analysis: 1. Clubbing of Clearances of NAP, PPP, and RSPL: The appellants argued that clubbing of clearances was incorrect due to the absence of financial flow-back evidence. The Tribunal found that the same factory premises were used by all three entities, indicating that NAP, PPP, and RSPL were essentially the same unit. The Tribunal concluded that the use of common factory premises justified clubbing under the small-scale industries exemption notification. 2. Financial Flow-Back Between Units: The appellants contended that financial transactions between the units were minimal and did not prove financial flow-back. The Tribunal, however, determined that the financial flow-back was one of the supporting evidences for concluding that PPP and RSPL were dummy units. The Tribunal noted that the partners' wives had no knowledge of the business, reinforcing the dummy unit argument. 3. Issuance of Separate Show-Cause Notices: The appellants argued that separate show-cause notices should have been issued to PPP and RSPL. The Tribunal dismissed this argument, stating that no demand was confirmed against the other two units, and issuing corrigendum fulfilled the principles of natural justice. 4. Penalty Imposition Under Rule 173Q: The appellants argued that the specific clause under Rule 173Q was not mentioned in the show-cause notice or the Order-in-Original. The Tribunal agreed, citing the Supreme Court decision in Amrit Foods, and set aside the penalty imposed under Rule 173Q. 5. Duplicate Invoices: The appellants pointed out that six invoices were duplicated in the show-cause notice. The Tribunal found this contention valid, noting the absence of evidence that supplies were made twice. This issue was remanded to the Original Adjudicating Authority for verification. 6. Cum-Duty Value and Modvat Credit: The appellants argued that the amount received should be treated as cum-duty value and claimed Modvat credit on inputs. The Tribunal agreed, noting that the Commissioner should reconsider these aspects and rework the turnover accordingly. This issue was also remanded for reconsideration. 7. Quantum of Penalties on Partners: The appellants contended that the penalties imposed were excessive. The Tribunal noted that since the duty demand would be reduced after considering cum-duty value and Modvat credit, the penalties on the partners needed to be re-quantified. The penalty on Ms. H.A. Joshi was also to be reconsidered during de novo adjudication. Conclusion: The Tribunal set aside the impugned order and remanded the matter to the Original Adjudicating Authority for verification of duplicate invoices, reconsideration of cum-duty value and Modvat credit, and re-quantification of penalties. The penalty imposed under Rule 173Q on NAP was also set aside.
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