2017 (12) TMI 206 - AT - Central Excise

Penalty - clandestine removal - charges against the appellants are that two of the units (M/s Shri Girraj and M/s Alka Furnishures) do not have independent existence and their turnover has to be considered in the name of M/s Shri Girraj Jee Office Systems as no facility exist with M/s Alka Furnishures for manufacture of the furniture - Held that - Admittedly, the units are located in the same building owned by one of the family members. No rental arrangement or separation is on record. In the absence of manufacturing facility and record to support the claim that such manufacture is done by others including M/s Shri Girraj Jee Office Systems on job work basis, we have no reason to interfere with the order passed by the lower authorities. Unaccounted clearance of excisable items - Held that - large number of kachha parchies have been recorded during the search operation conducted by the officer in August, 2010 - the goods are excisable but duty on them was not paid. These aspects have been examined by the original authority who held on duty liability based on evidences gathered / recorded during investigation. The evidence recovered from the appellant during the course of investigation the lower authorities concluded that in the absence of admissible categorical evidence of such trading they will go by the explanation regarding turnover of excisable goods by the responsible person. We have no reason to deviate from such finding. Appeal dismissed - decided against appellant.

Summary

Issues:
- Determination of threshold exemption limit for excise duty based on turnover of manufacturing units.
- Allegations of clandestine removal of goods and non-payment of duty.
- Imposition of penalties under Rule 26 of the Central Excise Rules, 2002.
- Examination of evidence and findings by lower authorities.
- Clubbing of turnover for excise duty calculation.
- Manufacturing and clearance of excisable goods by the appellant.
- Unaccounted clearance of excisable items.
- Clearance of branded goods.
- Quantification of turnover including trading activities.
- Appeal against penalties.

Analysis:
1. The judgment dealt with multiple issues arising from five appeals against a common order of the Commissioner (Appeals), Delhi-I dated 14.02.2014. The appeals involved M/s Alka Furnishers Pvt. Limited, M/s Shri Girraj Office Systems, and penalties imposed on other appellants.

2. The primary issue revolved around determining the threshold exemption limit for excise duty by clubbing the turnover of M/s Alka Furnishers and M/s Shri Girraj Jee Office Systems. The appellant contended that the units were independent, holding separate registrations with statutory authorities, and challenged the clubbing of turnover.

3. Allegations of clandestine removal of goods and non-payment of duty were raised against the appellants. The lower authorities found discrepancies in the manufacturing units' operations, including unaccounted clearances and branded goods cleared without duty payment, leading to duty demands and penalties.

4. The legal counsel argued against the imposition of penalties under Rule 26 of the Central Excise Rules, 2002, highlighting the lack of substantial evidence supporting the Revenue's claims. The counsel also contested the inclusion of trading activities in the turnover for excise duty calculation.

5. The judgment extensively reviewed the evidence and findings by the lower authorities, upholding their decision based on the examination of documents, statements of responsible persons, and investigation outcomes. The lack of concrete evidence supporting the appellant's claims led to the dismissal of the appeals.

6. Regarding the manufacturing and clearance of excisable goods, the appellant failed to provide evidence supporting their claim of work done through job workers, leading to the affirmation of duty liability by the authorities.

7. The issue of unaccounted clearance of excisable items was supported by the recovery of numerous kachha parchies during a search operation, with the appellant's explanations deemed insufficient to refute the duty liability established by the original authority.

8. The clearance of branded goods, particularly to M/s Spark International, was acknowledged, although the appellant disputed the classification of all clearances as branded goods. The judgment noted the usage of M/s Spark International's brand name on the goods.

9. Ultimately, after thorough examination and consideration of all arguments and evidence, the Tribunal found no merit in the appeals, including those against penalties, leading to the dismissal of all appeals.