9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 830 - AT - Central ExciseSSI Exemption - clubbing of clearances - Clandestine Removal - principles of mutuality of interest - evasion of Central Excise duty by clearing the goods in the name of other units - suppression of sales turnover of M/s.VPPL - it is also alleged that M/s.VPPL though raised invoices showing discount being passed on to the customers, have not actually passed on any such discount and have suppressed the value of actual clearances - admissible evidences - HELD THAT - In an allegation of clubbing of clearances, the main unit would have several other units (as dummy units) and the clearances of main unit would be diverted or accounted as clearances of the dummy units. In the present case, the department does not allege that goods produced by M/s.VPPL were accounted as clearances of the other units. So also, there is no allegation that raw material was purchased and accounted in the name of the small units and thereafter used for manufacture of goods by M/s.VPPL. The main documentary evidence relied by the department is the computer printouts obtained from Income Tax Department as well as from the hard disc of the CPU seized from the factory premises of VPPL. The Ld. Counsel for appellant has argued that such computer printouts cannot be relied upon as evidence as the required procedure under Section 36B of the Central Excise Act, 1944 has not been complied by the department. Sub-section (2) of Section 36B provides that the document seized should be accompanied by a certificate which states that the computer printout containing the statement was fed into the computer during the period over which computer was used regularly to store or process information etc. and it should contain a certificate that throughout the said period computer was operating properly. Such procedures have not been complied - The Hon ble High Court of Delhi in the case of CCE DELHI -1 (NOW PRINCIPAL COMMISSIONER OF GST DELHI NORTH) VERSUS JINDAL NICKEL AND ALLOYS LTD ORS. 2019 (11) TMI 122 - DELHI HIGH COURT held that provisions of Section 36B of Central Excise Act, 1944 are mandatory and to be complied with before admitting the said printouts as an evidence. In the present case, it is found that the department has not complied with Section 36B of the Central Excise Act, 1944 while retrieving the data from the hard disc. The provision does not say that if the documents are sent to Central Forensic Laboratory, Hyderabad, it would become admissible. Further, such documents have been compared with the photocopies of the printouts sent by the Income Tax Department to the Central Excise investigating officers. Such documents cannot be relied for confirmation of duty, when obtained without following the mandate under Section 36B of the Central Excise Act, 1944 - on perusal of records, there is no documentary evidence to show that two sets of invoices have been recovered by the department. The department has relied upon the statement of Accounts Manager Shri Gopinath. In absence of examination/cross examination his recorded statement is of no evidentiary value. Clubbing of clearances - principles of mutuality - HELD THAT - For clubbing the clearances, the department has to establish mutuality of interest, flow back of funds between the main unit and the alleged dummy units. For this, the department has to produce evidence that the main unit was purchasing raw material through the dummy units and also removing the finished products manufactured by them through the dummy units. It also has to be established that the dummy units do not have any existence or facilities for manufacture of goods on their own. Such evidences are absolutely absent in the present case - Merely because Shri V.Arumugasamy, his son and family members were partners in the different units cannot be a ground to say that there is mutuality of interest. Thus, the department has been able to establish sufficient grounds for clubbing the clearances of each unit or for confirming duty against all the 6 units. Allegation that M/s.VPPL has not passed on the discount to their customers and has thus suppressed their actual sales turnover - HELD THAT - It is the case of the department that the sales ledgers of the customers show that they have paid to the appellants amounts including the discount. It is not convincing how the department has been able to rely upon the sales ledgers of such customers and totally discard the entries in the sales ledger of the appellants. At the cost of repetition, it has to be stated that comparison is made with the computer printouts which have already been held to be inadmissible in evidence. Thus, the department has failed to establish the allegations for confirming the duty that the appellant has not passed on the discounts to their customers. The demand cannot sustain - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Alleged evasion of Central Excise duty by M/s. VPPL through clandestine clearances and suppression of sales turnover. 2. Alleged non-passing of discounts to customers, resulting in suppressed sales turnover. 3. Admissibility of computer printouts as evidence under Section 36B of the Central Excise Act, 1944. 4. Clubbing of clearances of different units and treating them as a single financial entity. Issue-wise Detailed Analysis: 1. Alleged Evasion of Central Excise Duty by M/s. VPPL: The primary allegation was that M/s. VPPL evaded Central Excise duty by clearing goods in the name of other firms and suppressing their actual sales turnover. The investigation was based on specific intelligence, and searches were conducted at various premises, resulting in the seizure of incriminating documents and electronic devices. The show cause notice proposed to recover duty jointly and severally from M/s. VPPL and other firms, confirming the duty demands and imposing penalties. The department's main evidence was a file containing computer printouts of sales details and the hard disc of a CPU seized from M/s. VPPL's factory. However, the Tribunal found that the department did not comply with Section 36B of the Central Excise Act, 1944, which mandates specific procedures for admitting computer printouts as evidence. The Tribunal emphasized that the provisions of Section 36B are mandatory and non-compliance renders the printouts inadmissible. The Tribunal cited several case laws supporting this view, including CCE Vs Jindal Nickel & Alloys Ltd. and S.N. Agrotech Vs CC New Delhi. 2. Alleged Non-Passing of Discounts to Customers: The second allegation was that M/s. VPPL raised invoices showing discounts but did not actually pass on these discounts to customers, thereby suppressing the value of clearances. The department relied on computer printouts and sales ledgers of a few customers to support this allegation. The Tribunal found that the department failed to establish this allegation convincingly. The Tribunal noted that the comparison made with computer printouts, which were already held inadmissible, could not substantiate the claim that discounts were not passed on. The Tribunal held that the department's reliance on the sales ledgers of a few customers was insufficient to prove the suppression of sales turnover. 3. Admissibility of Computer Printouts as Evidence: The Tribunal extensively discussed the admissibility of computer printouts as evidence under Section 36B of the Central Excise Act, 1944. It was observed that the department did not comply with the mandatory requirements of Section 36B, such as obtaining a certificate stating that the computer printouts were produced during the regular use of the computer and that the computer was operating properly. The Tribunal cited several judicial precedents emphasizing the mandatory nature of Section 36B, including the Delhi High Court's decision in CCE Vs Jindal Nickel & Alloys Ltd. The Tribunal concluded that the computer printouts could not be relied upon for confirming the duty demand. 4. Clubbing of Clearances of Different Units: The department alleged that the clearances of M/s. VPPL and other units should be clubbed and treated as a single financial entity, thereby denying the benefit of SSI exemption. The Tribunal found inconsistencies in the department's approach. While the department proposed to club the clearances, it also raised separate duty demands on each unit, indicating that the units were considered independent entities. The Tribunal noted that the units had separate factory premises, infrastructure, and independent existence, and there was no evidence of mutuality of interest or financial flow back between the units. The Tribunal referred to several judicial decisions, including Renu Tandon Vs Union of India and Coimbatore Engineering Works Vs CCE Coimbatore, which held that in the absence of evidence of common funding and financial flow back, units could not be treated as one for the purpose of clubbing clearances. The Tribunal concluded that the department failed to establish sufficient grounds for clubbing the clearances and confirming the duty demand. Conclusion: The Tribunal set aside the impugned orders, holding that the department failed to establish the allegations of evasion of duty, non-passing of discounts, and the clubbing of clearances. The appeals were allowed with consequential relief as per law.
|
