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TMI Blog2001 (3) TMI 713X X X X Extracts X X X X X X X X Extracts X X X X ..... peal challenges the dropping of the proceedings against Nippon. 2. Each of these three units had been licensed for manufacture of electric transformers. In May 1990, Vidarbha and Nippon applied for permission under Rule 57F(2) to send out to Archana transformer assembly without connection for the purpose of connection and dehydration in baking chambers and return to them for completion of manufacture. The permission was granted. Notice was subsequently issued to those persons following investigations by the department. The notice alleged that there was no manufacture taking place in either Vidarbha or Nippon; the entire manufacture of transformers took place at the premises of Archana. The manufacture and clearances recorded by these two therefore should form part of the manufacture of Archana. By doing so, Archana was not entitled to the benefit of Notification 175/86 for the years 1990 to 1993. Paragraph 7 of the show cause notice summarises the basis for the charge as follows : 7. Detailed scrutiny of the documents seized/withdrawn/produced from/by M/s. Archana, M/s. Vidarbha, Nagpur and M/s. Nippon and enquiries/investigations made by the officials revealed that M/s. A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ippon Nagpur, respectively floated by them at concessional rate of duty of 10% advl. by misutilising the provisions of Notification No. 175/86-C.E. dt.. 1-3-86 as amended, instead of payment of duty of full rate i.e. 20% advl. as per tariff. 3. The evidence upon which these allegations are based is as follows. A visit by the officers to the factory of Archana and Nippon showed no manufacturing activity taking place. There was a general atmosphere of dust and neglect suggesting absence of any activity. Only low tension and high tension winding machine were found in each of these premises. The records relating to production of these two firms were kept in the premises of Archana. Three of the workers shown to have been employed in Vidarbha stated that they had actually been working in Archana, and not in Vidarbha. The security guard employed in Archana said that Vidarbha s factory had been closed for the past year, the transformers shown to have been made by Vidarbha and dispatched to Archana were made in Archana and despatched in the name of Vidarbha. 4. On this evidence, the Commissioner has concluded that Vidarbha, Archana and Nippon were separate independent units; there was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment of the core assemblies before and after their baking had taken place under challans issued in terms of permission granted under Rule 57F(2). That permission has not so far been cancelled. Therefore, the Commissioner s view that the permission was obtained by misdeclaring the facts to the department cannot be accepted. Raghunath Mondal, the security guard at Archana, had only commenced work there from 1-1-1993 onwards, a fortnight before his statement was recorded, and hence false. The presence at the premises Archana of the production records of Vidarbha and Nippon is explained by saying that they were required there in order to send the production reports to the common management situated at Calcutta. 6. The departmental representative largely relies upon the reasoning in the Commissioner s order. 7. It would be difficult to conclude that, considered on their own, the activities that Archana and Vidarbha claim to have undertaken would amount to manufacture of electrical transformers. The core assemblies may no doubt be critical parts of transformers, but cannot by any means be said to have acquired the essential characteristics of transformers. However, that is not the de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s to have been attempted. 10. We agree that the statement dated 16-1-93 of Bondre lends support to the department s case. Bondre in that statement has said that Vidarbha was closed for a year and that occasionally, it used to do coil winding. As against this, the statements of Mondekar, Paralkar and Deshmukh indicate that manufacturer of coil winding took place at Vidarbha during the period under consideration. The claim that testing of these transformers at the premises of Vidarbha was carried out by the representatives of the purchaser Maharashtra State Electricity Board has also not been rebutted by the Commissioner. The explanation for the presence of the production records of Vidarbha (and Nippon) at the premises of Archana, detailed in paragraph 5 above, is not far-fetched. There does seem to have been a relationship of some kind between Archana and Vidarbha. Mondekar was the managing director of Vidarbha and general manager of Archana. At any rate, the Commissioner has not rebutted the explanation, which was offered to him in reply to the notice. 11. We are of the opinion that the consideration of the evidence cannot justify the conclusion that the absence of manufacture ..... X X X X Extracts X X X X X X X X Extracts X X X X
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