2017 (12) TMI 444 - AT - Central Excise

Clandestine manufacture and removal - suppression of facts - Revenue has alleged that during the disputed period SI failed to account the entire raw materials purchased and used such unaccounted raw materials in the manufacture of CTVs which were clandestinely removed to trading unit M/s AEPL without payment of Excise Duty - Held that - All the three firms viz M/s SI, M/s BE and M/s AEPL belonged to the same family and are controlled and run by Shri Vinod Kumar Garg as well as Shri K. M. Garg. Both of them are partners in M/s BE as well as M/s SI and are also directors in M/s AEPL. It is not difficult to see that all the three firms are managed and run as one single enterprise - Raw materials such as CPTs, sub assemblies etc have been shown as procured by M/s AEPL and also M/s BE through four fictitious firms who had their own bank accounts but did not have any physical presence. All the addresses were found fictitious. This clearly evidences the fact that the raw materials have been procured clandestinely by M/s AEPL. It stands admitted by Shri K.M. Garg, Director, M/s AEPL that these fictitious firms did not have any manufacturing facility and that the raw materials procured by M/s AEPL were only to make CTVs and further that the goods made by M/s BE and M/s SI were sold through M/s AEPL. M/s AEPL had got CTVs manufacture by M/s SI and M/s BE and sold to various dealers. The raw materials were procured through fictitious firms and utilized the same in the manufacture by M/s SI as well as M/s BE. The documentary evidences further reveal that such raw materials as well as CTVs were not properly accounted. The claim made by the appellant that M/s BE was only manufacturing black and white TVs but were repairing colour television is not borne out by the documents recovered during search. The documentary as well as oral evidences of the case support the allegation of clandestine manufacture and clearance by M/s SI and M/s BE - appeal dismissed - decided against appellant.

Summary

Issues:
Appeal against Order-in-Appeal No. 47-51/2006 dated 04/07/2014.

Analysis:
The Tribunal, in a second round of litigation, addressed the issue of remand to the Commissioner (Appeals) as per the provisions of law. The Tribunal highlighted that the Commissioner (Appeals) does not possess the power of remand post the amendment to Section 35A in 2001. Therefore, the impugned order remanding the matter was set aside, and the case was remanded to the Commissioner (Appeals) for appropriate action in accordance with the law.

The impugned order confirmed the demand of Central Excise duty against M/s Bharti Electronics and M/s Synotech International, along with penalties imposed on the firms and an individual. The case involved a search conducted in the premises of these firms, revealing clandestine activities related to manufacturing and clearance of color televisions without duty payment. Various fictitious firms were used for procurement and sale activities, leading to the imposition of duties and penalties.

The evidence against M/s Synotech International included discrepancies in accounting for raw materials and manufacturing activities, indicating clandestine removal of goods without duty payment. Similarly, evidence against M/s Bharti Electronics showcased irregularities in stock, procurement, and sales activities, pointing towards clandestine manufacturing and sale of goods without proper duty payments.

The Tribunal considered arguments from both sides, ultimately concluding that M/s AEPL, a trading firm, was involved in clandestine activities related to manufacturing and sale of goods bearing specific brand names through M/s Bharti Electronics and M/s Synotech International. The interconnection between these firms, controlled by the same family members, was evident from the recovered evidence, leading to the dismissal of the appeals and upholding of the impugned order.

In the detailed analysis, the Tribunal examined the documentary and oral evidence, emphasizing the coordinated efforts of the involved entities in clandestine manufacturing and clearance of goods without proper duty payments. The Tribunal found no merit in the appellant's claims and upheld the impugned order based on the comprehensive assessment of facts and records presented during the proceedings.