2017 (3) TMI 1205 - AT - Central Excise

SSI exemption - dummy units - appellant have fraudulently floated fictitious firms to suppress the actual manufacturing activity - Held that - the impugned order is self-contradictory - It is clearly recorded, in more than one place that Shri Veekay Auto Accessories was controlling the day to day activities of the fictitious firms floated by the owner, to suppress the manufacture and thereby to evade payment of central excise duty. However, in the conclusion, no duty has been confirmed against the said appellant - there is ambiguity and confusion in the findings recorded by the Original Authority - The cross examination sought for by the appellants have not been commented upon and discussed in the impugned order. Regarding the appeal filed by M/s. Newon Seat Covers, we note that except for the statements recorded from the proprietor to the effect that the firm was established on the direction of Shri V.K. Arora, who gave design and style and also supplied packing materials for packing AVON brand seat covers manufactured in her premises. Except for this statement, there is nothing on record to establish that the appellants were all throughout engaged in the manufacture of seat covers with brand name of another person - appeal allowed. Regarding the appeal by M/s.Vibhor Enterprises, the appellants did not produce any supporting evidence regarding the specific date of receipt of die for the manufacture of branded goods. In absence of such evidence, no reliance can be placed on the assertion by the appellant to exclude a part of their clearance for duty liability. Not knowing the excise provisions for duty liability is not a factor for setting aside the duty demand. Accordingly, we find no merit in the appeal by M/s.Vibhor Enterprises - appeal dismissed. Appeal disposed off - decided partly in favor of appellants.

Summary

Issues:
Allegations of central excise duty evasion against trading entities dealing with branded goods, ambiguity in findings, principles of natural justice violation, duty liability determination, confiscation of goods, penalty imposition, cross-examination denial, delay in order issuance, legal infirmities in the order.

Analysis:
1. Allegations and Proceedings: The judgment involves three appeals against an order alleging central excise duty evasion by trading entities dealing with "AVON" branded goods. Investigations revealed fictitious firms manufacturing branded items to evade duty, leading to proceedings against several parties, including manufacturers and trading entities. The central issue is the duty liability determination and the confiscation of goods valued at ?45,51,129.

2. Principles of Natural Justice: The appellant challenged the order on grounds of violation of natural justice principles, citing denial of cross-examination and a significant delay in order issuance. The judgment highlighted the importance of adhering to legal provisions and principles of natural justice, emphasizing the need for fair procedures in such cases.

3. Ambiguity in Findings: The judgment identified contradictions in the order's observations and findings, particularly regarding the responsibility for duty payment. The confusion arose from attributing liability to individual manufacturers while also implicating the trading entity for creating fictitious firms. The lack of clarity and contradictory conclusions rendered the order legally unsustainable.

4. Confiscation and Duty Liability: The judgment scrutinized the confiscation of goods and duty liability determination. It emphasized the necessity of establishing the actual manufacturer liable for duty payment and criticized the appropriation of funds against fictitious firms. The legal infirmities in the order, including ambiguity and lack of clarity, led to the decision to set aside the order.

5. Penalty Imposition: The appellant contested the penalty imposition under Rule 26 of the Central Excise Rules, arguing that the requirements for penal action were not met. The judgment highlighted the need for fulfilling the legal criteria for penalty imposition and criticized the inconsistent findings in the order.

6. Individual Appeals Analysis: The judgment analyzed each appellant's case separately, considering the evidence presented and the specific circumstances. While allowing the appeals of some entities due to lack of corroborative evidence or procedural irregularities, it dismissed others for failing to provide sufficient supporting evidence or compliance with excise provisions.

7. Conclusion: The judgment concluded by allowing some appeals while dismissing others based on the detailed analysis of the issues raised, emphasizing the importance of legal clarity, procedural fairness, and adherence to natural justice principles in excise duty cases.

This comprehensive analysis of the judgment addresses the multiple legal issues, procedural irregularities, and substantive considerations involved in the central excise duty evasion case, providing a detailed overview of the tribunal's decision and reasoning.