2017 (11) TMI 1389 - AT - Central Excise

SSI exemption - clubbing of clearances - dummy units - it was observed that in addition to the appellant unit, another unit in the name and style of M/s Siddhi Vinayak was also found to be operating, in the premises and manufacturing identical goods as the appellant - clandestine removal - Held that - when it is admitted that no other records have been maintained by the appellants and the figures contained in the computer printout has been admitted to be the details of clearances entered as per the directions of the partner, we are of the view that such figures have been rightly considered to be the value of clearances by the lower Authorities - charge of clandestine removal justified. Clubbing of clearances - Held that - In terms of the SSI exemption notification, for determining the value of clearances eligible for the concession, the values of clearances of different manufacturers from the same factory needs to be clubbed together - in spite of having separate identity in the form of partnership unit as well as proprietorship unit, M/s Siddhi Vinayak as well as M/s Riddhi Siddhi are in effect one single factory. This is confirmed from the fact that M/s Siddhi Vinayak has no separate machine for manufacture of the goods and shares the same electricity connection with M/s Riddhi Siddhi - clubbing of clearances justified. Confiscation - penalty - Held that - the department has not seized the goods allegedly cleared clandestinely - In the absence of goods, there can be no confiscation of the same and hence, the penalty of 9 lakh imposed in this regard is set aside. Appeal allowed in part.

Summary

Issues: Appeal against Order-in-Appeal, Duty demand based on computer printouts, Clubbing of clearances, Confiscation of goods, Imposition of penalty.

Analysis:
1. The appellant, engaged in manufacturing paper products, availed SSI exemption benefit. During a search operation, it was discovered that another concern, functioning in the same premises, was also manufacturing similar goods. The officers found goods being cleared without proper documentation or invoicing, leading to duty demand and penalty imposition.

2. The appellant argued that duty demand was solely based on computer printouts, lacking physical evidence, and no show cause notice was issued to the other concern found on the premises. Additionally, statements used as evidence were retracted, and the units were separate without common financial transactions.

3. The Revenue justified the charges based on admitted statements, stating that admissions do not require further proof. The Tribunal noted the common premises, shared resources, and lack of separate records or machinery for the two units. The computer printouts were acknowledged by the partners as accurate representations of clearances.

4. The Tribunal upheld the duty demand, considering the admissions and corroborative evidence from investigations. It concluded that the units effectively operated as one factory, sharing resources and producing identical goods, justifying the clubbing of clearances for duty calculation.

5. The lower authorities had ordered confiscation of goods and imposed a penalty, but as the goods were not seized, the penalty was set aside. The impugned order was upheld, partially allowing the appeal by setting aside the penalty imposed.