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TMI Blog2006 (10) TMI 369X X X X Extracts X X X X X X X X Extracts X X X X ..... Divn. Erode (iii) C.No. IV/16/260/2002 dated 2-8-2002 Dy. Commissioner of Central Excise, Erode Divn. Erode (iv) C.No. IV/16/130/2003-Pol.Adjudication dated 2-5-2003 Dy. Commissioner of Central Excise, Erode Division, Erode 2. The total amount of duty demanded from them is Rs. 7,00,42,408/-. They have admitted a liability of Rs. 2,08,86,126/- (without the availability of deemed credit) and Rs. 1,04,43,063/- (with the availability of deemed credit) Along with the applicants, (1) Shri K. Vinayagam, Partner, M/s. SCM Textile Processing Mills, Erode, (2) Shri Chendhil Murugan Printing Works, 290, Marapalam Road, Erode 638 003, (3) M/s. Majestic Dyers Printers, 29C, Marapalam Road, Erode-638 003, (4) M/s. Saran Garments, 4/52, Kamatchi Complex, Palladam Road, Veerapandi (PO), Tirupur-5, (5) M/s. Jamuna Impex, No.6, Amarjoti Garden, Mangalam Road, Tirupur-4, (6) M/s. Nithya Exports, No. 10, Amarjoti Garden, Railway Feeder Road, Tirupur-1, (7) M/s. Knit Wear Exports, No. 11, Asha Nagar, SAP Theatre Back Side, Tirupur-3, (8) M/s. Ramraj Handlooms, 13, Thulasi Rao Street, Tirupur, (9) M/s. Ramraj Cotton Mills, 13, Thulasi Rao Street, Tir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,23,290/- 1,26,82,589/- 2 Demand on account of denial of Notification 8/96-C.E. dated 23-7-96 in respect of Khadi : (a) MDP, 67,72,175/- 50,14,282/- 1,17,86,457/- (b) SCMPW 36,54,410/- 26,72,414/- 63,26,829/- 3 Demand of duty on woven fabrics removed without accounting, based on folding charges :- (a) based on folding expenditure vouchers 55,24,604/- 31,37,755/- 86,62,359/- (b) Based on general ledgers. 56,17,964/- 56,17,964/- 1,12,35,928/- 4 Demand of duty on woven fabrics cleared to co-operative societies 7,30,563/- 5,33,065/- 12,63,628/- 5 Demand of duty on woven fabrics cleared to exporters 3,42,225/- 3,41,056/- 6,83,281/- 6 Demand of duty on woven fabrics cleared to Raghavendra Khadi 12,45,146/- 8,48,555/- 20,93,701/- 7 Demand of duty on quantity cleared to Ramaraj Group 59,28,396/- 44,73,616/- 1,04,02,012/- Total 3,71,74,782/- 2,79,61,997/- 6,51,36,77 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicants only from these institutions. In view of this, the denial of benefit of Notification 8/96 in respect of Khadi processed by applicants was not sustainable. Hence, the applicants submitted that they were not admitting this amount also. 7. The demand of Rs. 1,98,98,287/- in respect of clearances of woven fabrics has been based on folding charges and on the basis of vouchers. According to the department, these folding charges relate to woven fabrics and not knitted fabrics processed by the applicants using power and machines. The applicants submitted that 80 to 90% of their turnover related only to hosiery fabrics which were not liable to duty. They submitted an affidavit from their folding contractor to establish that hosiery fabrics were also folded in the factory before their clearance. Further, they questioned the assumption that the vouchers were issued in respect of woven fabrics which were subjected to machine processing and not hand processing. The applicants submitted that the Show Cause Notice has ignored the hand processing done at the factory of the applicants. However, they stated that in the absence of any evidence on their part, they accepted the entire duty l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... duty leviable in terms of the Notification No. 29/96 dated 3-9-96. 13. The department in their comments reported that the applicant M/s. SCM Textile Processing Mills and M/s. SCM International Impex were functioning in the same premises, whereas, M/s. Majestic Dyers and Printers and Chendhil Murugan Printing Works existed in paper only with no machinery and the goods cleared by MDP and CMPW were processed by the applicant company. The Polyester and Khadi fabrics were not received by the applicant, but by MDP and Chendhil Murugan Printing Works, though they were processed by the applicant company and the question of availing benefit of Notification No. 8/96 by the applicants does not arise as they were received by MDP and CMPW. Recognition by KVIC is only for MDP and CMPW. M/s. MDP and CMPW existed only in paper and did not have any plant and machinery. The argument that the activities of MDP were activities of the applicant company did not meet the requirement of the KVIC approval nor the conditions laid down under the Notification No. 8/96-C.E. The applicant company was not recognized by KVIC for Polyvastra. This has been confirmed by the Director, KVIC in a letter dated 6-7-20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Section 11A of the Central Excise Act, 1944 has been invoked and the demand has been made for the extended period of five years. Therefore, they are not entitled to the benefit of Notification 29/96 dated 3-9-96. 16. After the first hearing, the application was admitted by the Admission Order No. 8/2005-C.Excisable goods (sic) dated 3-3-2005. Subsequently, the Commissioner (Investigation) was directed to carry out certain investigation in to the claims by the applicant. The Commissioner (Inv) submitted his investigation report dated 26-5-2006. 17. The final hearing of the applicants and the Revenue was held on 12-9-2006, wherein S/Shri Lakshmi Kumaran, G. Shivadas, Senthil Advocates and Shri M. Saravanan, Consultant represented the applicant. The Revenue was represented by Shri K.P.H. Paul Mohamed, Assistant Commissioner, Shri R. Kuppuswamy and Shri T.M. Raghunath, Inspectors, Commissionerate of Central Excise, Erode Division. 18. During the hearing, the Advocate for the applicant admitted the liability at S. Nos. 3 to 7 of the table given in Para 4 supra. However, this is subject to the application of the correct rate of duty, benefit of elongation factor and cum duty be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sing such fabrics. To support the contention that M/s. MDP was a branch of M/s. SCM Textile Processing Mills, they have produced various partnership deeds indicating Majestic Dyers and Printers is a branch of SCM Textile Processing Mills. The Advocate has pleaded that what the branch has done is as good as the main company doing it, therefore, as the branch office has carried out the processing, it should be taken that it has been done by the main company, namely, M/s. SCM Textile Processing Mills. They have also filed certificates issued by the Commercial Tax Officer showing that MDP are the branch office of the SCM Textile Processing Mills. 21. We have examined this contention. We find the plea that MDP is a branch of the main company is difficult to accept. In this case, the main company is, M/s. SCM Textile Processing Mills is operating from their premises at Erode. It is not known why they should have branch in the same premises with a different name. M/s. MDP is claimed to be a branch of SCM Textile Processing Mills. But as MDP is a separate organization with a separate name and identity and, therefore, it cannot be recognized as a branch of M/s. SCM. Even if for legal purp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ention of the applicants that they are entitled to the benefit of this exemption in respect of Khadi fabrics processed by them under Notification 8/96-Central Excise, and, hence, they are not liable to pay this amount. 23. In respect of S. Nos. 3 to 7, the applicants have already admitted the total amount. However, they have claimed the benefit of elongation factor and also the correct rate of duty. However, we find that under Sr. No. 3 the Revenue has demanded duty based on the folding charges at the rate of seven paise per metre. According to the applicant, though they admit duty liability in respect of clearances under this Sr. No., they submit that the actual folding charges would be fifteen paise per metre and on this basis, the amount of duty will come down substantially. 24. We have examined this contention. We find that the Revenue has gone by the vouchers issued by the folding contractor. The additional expenses said to have been issued in this connection are not clear and not supported by any documents. Therefore, we are unable to accept the contention and hold that the applicant company is liable to pay the total amount demanded subject to the factors agreed to by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e period November 1996 onwards. In view of the fact that considerable time has elapsed since the date when the liability for duty arose and they have been having this amount with them since then, we are of the view that the applicants are liable to pay simple interest of 10% per annum on this amount for the period. However, they have pleaded that no interest is leviable on the AED portion. We agree with this. They are eligible for immunity from interest in excess of 10% per annum on the basic duty portion of the liability only. We also grant them immunity from penalty and prosecution under the Central Excise Act, 1944. Since the main applicants have been granted immunity from penalty and prosecution, the co-applicants also deserve similar immunity. 29. In the light of the foregoing, the application is finally settled under Section 32F(7) of the Central Excise Act, 1944 on the following terms and conditions :- (i) The duty amount is settled at Rs. 4,64,72,058/-. Since the applicant has already paid Rs. 1,04,43,068/- they have to pay the balance amount of Rs. 3,60,28,995/- within 30 days from the date of receipt of this order and report compliance. (ii) The applicants s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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