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2019 (11) TMI 721 - AT - Central ExciseSSI Exemption - Clubbing of clearances of six units - benefit of N/N. 08/03-CE dt.1.3.2003 - Dummy units - whether M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) are non existing and are dummy units of M/s. MWF? - HELD THAT - The claim of the appellants is that the Revenue has relied upon the inculpatory statements which were retracted. The claim of the revenue is that retraction have not reached to the office of Commissioner, therefore the retraction cannot be acceptable. But we find that some of the witnesses were called for cross examination, during the course of investigation and while drawing panchnama at the time of visit, these firms were found non existing as they were closed earlier and no sale were effected in the name of firms which itself shows that the firms were already closed by their respective proprietors/owners. Moreover, the documents placed before us show that these units having their independent existence and registered with various government departments that these units were separate units. There is no denial by the revenue in respect of the documentary evidences found during the course of investigation and placed on record - the documentary evidence will prevail over the oral statements recorded during the course of investigation. The clearances of the firms, namely, M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) cannot be clubbed with clearances of M/s. MWF - Consequently, no penalty can be imposed on the said allegation Whether M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI) and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s. SGFEPL) can be held dummy unit of M/s. MWF and consequently the benefit of exemption N/N. 08/03-CE dt.1.3.2003 can be denied and duty be demanded from them? - HELD THAT - All these units were found working during the course of investigation itself and machinery were installed. Moreover, the documents which have been found during the course of investigation, show that these units were separate manufacturing units and their clearance were the below the threshold limit in terms of Notification No.08/03-CE dt.1.3.2003 as amended - Moreover, the Revenue is confused, as one side, it has been alleged that these are dummy units of M/s. MWF and on the other hand, they are demanding duty separately from them. If, the Revenue alleged that these are dummy units of M/s.MWF then the duty is required to be demanded from M/s.MWF whereas the duty has been demanded from these unit which itself show that these units are independent units. Therefore, the department is confused and has concluded that these units are independent units from M/s.MWF and demanded duty from them by denying the benefit of Notification No.08/03-CE dt.1.3.2003. Whether the units are entitled to SSI Exemption or not? - HELD THAT - The clearances of these three units are below the threshold limit of SSI exemption Notification No.08/03-CE dt.1.3.2003 and the same has not been disputed by the Revenue while quantifying the duty and there is no allegation of suppression of clearance by these units - these units are separate and independent units and are entitled for the benefit of SSI exemption under Notification No.08/03-CE dt.1.3.2003 as amended during the impugned period. Therefore, no duty demand is sustainable against these three units. The sole allegation of the Revenue is based on the understanding that these units are of M/s. Mech-well Group and the same are controlled and managed by Shri Gaurav Gupta in the name of dummy units. Such allegation is not sustainable - The Revenue‟s case is based on the oral evidence by discarding the documentary evidence available on records during investigation. Oral statements have no evidentiary value against the documentary evidence available on record. The allegations made by the Revenue in the SCN are not sustainable - there are no merits in the impugned order - no demand is sustainable against the appellants. Consequently, no penalty is imposable on the appellants. Appeal allowed - decided in favor of appellant.
Issues Involved:
1. Whether M/s. Premier Castings (M/s. PC), M/s. Castech Industries (M/s. CTI), and M/s. Dynocast Industries (M/s. DCI) are non-existent and dummy units of M/s. Mech-Well Foundry (M/s. MWF). 2. Whether M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI), and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s. SGFEPL) can be held as dummy units of M/s. MWF and consequently, whether the benefit of exemption Notification No.08/03-CE dt.1.3.2003 can be denied and duty be demanded from them. Issue-wise Detailed Analysis: Issue 1: Whether M/s. Premier Castings (M/s. PC), M/s. Castech Industries (M/s. CTI), and M/s. Dynocast Industries (M/s. DCI) are non-existent and dummy units of M/s. MWF. 1. Documentary Evidence: - Various documents were found during the investigation indicating that M/s. PC, M/s. CTI, and M/s. DCI were registered with different government departments, engaged in domestic and inter-state sales, and had statutory registrations identifying them as separate entities. - The Tribunal noted that these documents were not denied by the Revenue and were examined during the hearing, showing that these units had independent existence. 2. Inculpatory Statements: - The Revenue's case was based on inculpatory statements, which the appellants claimed were retracted. The Tribunal observed that some witnesses were called for cross-examination and found the firms closed, indicating they were already shut down by their proprietors. - The Tribunal emphasized that documentary evidence should prevail over oral statements, citing the case of Philip Fernandes vs. CC, Airport, Mumbai-2002 (146) ELT 180 (Tri.-Mum). 3. Free Flow of Funds: - The Tribunal held that the free flow of funds between units and control by Shri Gaurav Gupta could not be a reason to club clearances or allege dummy units, referencing the case of Nova Industries Pvt. Ltd.-2015 (327) ELT 103 (Tri.-Del). 4. Conclusion: - The Tribunal concluded that the clearances of M/s. PC, M/s. CTI, and M/s. DCI could not be clubbed with M/s. MWF. Consequently, no penalties could be imposed on this ground. - It was noted that Shri Sunil Goel, proprietor of M/s. CTI, had passed away, and thus no proceedings survived against M/s. CTI. Issue 2: Whether M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI), and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s. SGFEPL) can be held as dummy units of M/s. MWF and consequently, whether the benefit of exemption Notification No.08/03-CE dt.1.3.2003 can be denied and duty be demanded from them. 1. Documentary and Physical Evidence: - During the investigation, machinery and documents were found indicating that M/s. IC, M/s. GI, and M/s. SGFEPL were operational units with installed machinery. - Panchnamas confirmed these units were working during the investigation, and their clearances were below the threshold limit for SSI exemption. 2. Contradictory Stand by Revenue: - The Tribunal noted the Revenue's contradictory stance: alleging these units were dummy units of M/s. MWF while also demanding duty separately from them. - If they were dummy units, duty should have been demanded from M/s. MWF, not the individual units. 3. Eligibility for SSI Exemption: - The Tribunal found that the clearances of these units were below the threshold limit of SSI exemption Notification No.08/03-CE dt.1.3.2003. - There was no allegation of suppression of clearances by these units, thus entitling them to the SSI exemption. 4. Conclusion: - The Tribunal held that M/s. IC, M/s. GI, and M/s. SGFEPL were separate and independent units entitled to SSI exemption. - No duty demand was sustainable against these units. Final Judgment: - The Tribunal concluded that the allegations by the Revenue were not sustainable, as the case was based on oral evidence disregarding documentary evidence. - The impugned order was set aside, and no demand or penalty was sustainable against the appellants. - The appeals were allowed with consequential relief, if any.
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