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TMI Blog2010 (12) TMI 170X X X X Extracts X X X X X X X X Extracts X X X X ..... cerns and they have been purchasing their raw materials separately and Maxworth is also trading the raw materials on its own - Similarly, separate books of accounts have been maintained and each one of them have transactions with banks and other concerned authorities - Thus factually, they are not the units on papers only. Adjudicating Authority has adjusted the entire amount of cash which was recovered from the assessee was adjusted against the demand as has been confirmed by him. Subject to the adjustment of the amount which has been confirmed by us and the interest and penalty from the amount seized, the balance amount which is in the hands of the revenue needs to be returned back to the appellant. - E/3107/2002; E/3109/2002; E/3110/2002; E/4131/2003 - Final Order Nos. 1575-1579/2010 - Dated:- 29-12-2010 - SHRI M. V. RAVINDRAN, SHRI P. KARTHIKEYAN JJ, Shri G. Venkatesh, Advocate for the appellants. Mrs. Sudha Koka, SDR for the revenue. Per Shri M. V. Ravindran The following appeals are disposed of by this common order as they arise out of the following impugned orders. Appeal No. Appellant Respondent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mber Traders (hereinafter referred to as M/s. Rekung); Maxworth Plywoods, and Tru-woods. During the course of investigation, it was also noticed by the officers that DVPL, AP, Maxworth Plywoods and Tru-woods were all the same, there was a systematic flow of funds and only in order to avail ineligible benefit under small scale industries by DVPL, they created dummy units. The views reached by the lower authority, concluded in issuance of show cause notice to the appellants mainly on the grounds of clandestine manufacture and clearance of veneer out of unaccounted logs; dummy nature of Maxworth Plywoods, AP and True wood; removal of veneer manufactured by M/s. DVPL through Tru-woods without payment of duty; removal of veneer manufactured by M/s. DVPL through Maxworth Plywoods without payment of duty and shortages or excesses noticed during the stock taking wherein a demand of duty to the tune of approximately rupees five crores was raised along with proposition for imposition of penalties and recovery of interest. Assessee-appellants along with Director contested the show cause notice, submitting that the allegation of the department regarding alleged clandestine removal of veneers i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... quantified against the said years as ordered at (i) above, and from first day of November, 2000 in respect of ₹ 1,02,277/- as ordered at (iii) above. (ix) I impose a penalty of ₹ 87,88,721/- under Section 11AC of Central Excise Act. (x) I impose a penalty of ₹ 1,00,000/- on Mr. Sanjiv Agarwal for his role under Rule 209A of Central Excise Rules, 1944. (xi) I confiscate the plant and machinery under Rule 173Q and allow redemption on payment of ₹ 1,00,000/-. (xii) I impose a penalty of ₹ 5,00,000/- collectively under Rule 9(2), 52A and 173Q(1) of Central Excise Rules, 1944. (xiii) I adjust the entire amount of ₹ 31.09 lakhs cash towards payment of duty. 2.1 Appellant-assessees are in appeal against the confirmation of the duty confirmed, equivalent amount of penalty, other penalties and redemption fine imposed by the authorities, while revenue is in appeal against the order of the learned Commissioner for dropping the proceedings of clubbing of clearances. 3. Learned Counsel appearing on behalf of the appellants would submit that demand of duty on the ground of alleged manufacture and clandestine removal, is not sustainable as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ced evidences before the learned Commissioner regarding the documents obtained from Sales Tax check-posts which indicated that the logs were transported to the northern parts of the country. He would submit that in the above manner, they submitted the documentary evidence for the entire quantity of the logs for which demands were raised against the assessee-appellant. It is his submission that the confirmed demand against the appellants-assessee is totally on the basis of assumptions relying upon unreliable third party documents. There is no other corroborative evidence to show that the appellants had actually received this quantity of timber logs in the factory and manufacturing activity has taken place; evidence as regards the consumption of electricity was not established by the department to show that there is a manufacturing activity and physical clearance of the veneer by the appellants without payment of duty. It is the submission that there is also no seizure made by the department of any vehicles showing the clearance of veneers without payment of duty and there is also no flow back of monetary consideration of alleged clandestine clearances of veneer. On this regard, he w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rine Consultants and Surveyors Pvt. Ltd. indicate that DVPL and AP were the consignees and they received the consignment. It is her submission that diversion of the goods to the appellants cannot be confirmed from the bills of entry or from any other documents as the said diversion has taken place subsequently but the fact remains that the survey report was prepared based upon the direction given by M/s. Bothra Shipping Services. It is her submission that survey report which has been prepared is a strong evidence to indicate that the logs were imported by the appellants herein and the challans and the certificates prepared by M/s. Bothra Shipping Services indicates that the appellants were the consignees, is an enough evidence. She would draw our attention to the correlation made by the department in respect of the three imports through marine vessel M. V. Pagon, M. V. Chayastar and M. V. Sukaria. It is her submission that application for forest permits were made by M/s. Rekung and had requested the forest department to issue the forest permit to transport the wooden logs to M/s. DVPL or AP. It is her submission that the forest permit reveals that the consignment under question wer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er to the submission, the learned counsel submits that revenue cannot ask for remand of the matter in an appeal filed by the assessee. It is his submission that as regards the claim of the revenue that the Commissioner dropping of the substantial quantity of demand with regard to clubbing of clearances, filed by the assessee to be incorrect and this cannot be raised by the revenue at this stage as they have not filed any appeal against such finding. It is his submission that the delivery challans relied upon by the learned SDR do not indicate the acknowledgement of said logs in the factory premises of the appellant. It is his submission that they had given the entire set of records to the learned Commissioner in their replies to the show cause notice by properly correlating the entries of imports of the logs and the disposal of the same. 6. The learned SDR as regards the appeal filed by the revenue, submits that the entire activity of DVPL is connected with Truewood Ltd., Maxworth Plywoods and AP by common procurement of the logs and distribution among the units. It is her submission that Maxworth Plywoods did not have the facility to manufacture veneers and veneers manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l have not challenged the findings of the Commissioner and there is no financial flow back between the units which would prove that there is no question of clubbing of clearances of four units. In support of the above proposition, he relies upon the following case laws. (i) Supreme Washer (P) Ltd. Vs. CCE 2003 (151) ELT 14 (SC) (ii) Arca Controls Pvt. Ltd. Vs. CCE 2003 (158) ELT 272 (SC) (iii) Malik Company Vs. CCE 2003 (161) ELT 466 (iv) L. D. Industries Others Vs. CCE 2003 (157) ELT 459 (v) CCE Vs. Madhusudan Chemical Industries 2004 (174) ELT 335 (vi) Tapasya Steels Pvt. Ltd. Vs. CCE 2004 (174) ELT 108 (vii) Poly Printers Vs. CCE 2002 (139) ELT 295 (affirmed by Supreme Court in 2003 (151) ELT A 303) (viii) Special Machines Vs. CCE 2004 (169) ELT 275 (ix) Bentex Industries Vs. CCE 2003 (151) ELT 695 (affirmed by Supreme Court in 2004 (173) ELT A79. In view of the foregoing submissions, he prayed that the departments appeal seeking clubbing of clearances is not supported by any evidence and hence, needs to be dismissed. 8. We have considered the submissions made at length by both sides and perused the records. 8.1 The issue involved in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isakhapatnam this 04.04.199 between M/s. BOTHRA SHIPPING SERVICES, hereinafter called THE SELLER of the first part and M/s. REKUNG TIMBER TRADERS hereinafter called as THE BUYER of the second part. Where as the party of the first part has placed an order for import of MYANMAR GURJAN LOGS from M/s. FARLIN TIMBER INT PTY. LTD. SINGAPORE. The said goods are shipped from VICTORIA POINT, MYANMAR PORT TO VISAKHAPATNAM PORT, vide Bill of Lading No.EBP-910 Dt.02.04.98. NOW THE AGREEMENT WITHNESSES AS UNDER : 1. The Bill of Lading No. EBP-910 B Dt.02.04.98 of M/s. FARLIN TIMBERS INT. PTY. LTD., AUSTRALIA, for 225.55 CBM is sold by the party of the first part to the party of the second part of consideration of ₹ 23,27,205/-. 2. The goods have been shipped from VICTORIA POINT, MYANMAR PORT to VISAKHAPATNAM PORT by sellers and covered under the shippers invoice No.FAR/910/98 B Dt.04.04.98. 3. On endorsement of Bill of Lading of delivery order, in the event of the late receipt of Bill of Lading in favour of the first part of the first part title of the said goods will be unconditionally transferred to the said party of the second part. 4. The goods having been sold as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e port, some of the goods have been transported up country though initial destination in the forest permit was DVPL factory area. There have been a few mistakes in account in CHAs end and those figures have been duly deleted. The department have laid hands on 3295 CBM forest permits. It has not been possible for the Department to get forest permits for other consignments. Party has also collected forest permits for 1107.1170 CBM which, though endorsed in the name of DVPL has been sent elsewhere, giving proof of diversion of permits. If there were similar diversion to other parties of the goods covered by those permits, party would surely have come up with that evidence. They have not got evidence of further diversion because there was perhaps none. The party would like to inject a degree of suspicion in the evidential value of all the records and statements on the basis of these few mistakes. Considering the nature of industry, there seems to be preponderance of evidence that the goods have gone to DVPL. Regarding the judicial pronouncements quoted by Dr. Chatterjee, I would like to mention that in the case of Rajendra Prabhu Vs. UOI, 1999 (107) ELT 293 (Ker.), the Honrable High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts in their factory premises. It is a common knowledge that any document which does not indicate the acknowledgement of the recipient of the goods in their premises, cannot indicate that the goods were delivered at such premises. If there is no acknowledgement of the receipt of the consignment at the DVPL or AP factory premises, adverse interference is to be drawn as to receipt of logs. There being no other copies, recovered from the CHAs place, containing an acknowledgement delivery of the consignment, our observation is fortified. Further, it is to be seen that the reliance placed by the revenue on the said evidence, is short of any corroborative evidence, inasmuch as though their transporters name as well as the vehicle number is being mentioned on each and every unacknowledged challans; from the show cause notices and the relied upon documents from the show cause notice, it is seen that the revenue authorities have not recorded any statement from the transporters or the drivers of the said lorries. Such a statement would have definitely indicated where delivery of the consignment took place. In the absence of any such statement, merely going by the challans and the certificate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in terms of Annexure 3. The same is confirmed. The appeal is allowed accordingly. Evergreen Veneers Pvt. Ltd. Vs. CCE, Visakhapatnam (supra) 11. The learned? Advocates during the hearing emphasized the point that the goods belonging to other importers were also dumped near the appellants yard and while sending these goods, the transport documents indicated the destination to be M/s. Evergreen Yard as the area was well known. In other words, it does not mean that all the timber received in the year adjacent to the yard of the appellants was on account of the appellant and they had used the same for manufacture and clandestine clearance. He said that the Revenue has gone by these assumptions and slapped up a huge demand on the appellants. It was further pointed out that the appellants do not have the capacity to manufacture such a huge quantity of plywood and veneers, as assumed by Revenue. He also pointed out to the above observations of the Adjudicating Authority and his conclusions, which are quite contrary to his observations. It was further pointed out that there is not even a single evidence to show that the goods cleared clandestinely have been received by any buyer. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that the work in process has not been taken into account in the RG-I register at the time of visit of the Departmental officers. In view of all the above reasons, we feel that the Revenue has not made out a strong case against the appellants and the Order-in-Original cannot be sustained. For these reasons, the appeal of the Revenue has also no merits and hence we allow the appeals of the parties with consequential relief and reject Revenues appeal. In view of this, the impugned order confirming demand on both the appellants, of the duty liability arising out of manufacture and clearance of the veneers from the logs which were unaccounted, seems to be without any evidence and is on presumptions and assumptions and hence, is liable to be set aside. Further, it is also to be noticed that the revenue authorities have not adduced any corroborative evidence as regards the excess consumption or unaccounted consumption of electricity, etc., and other inputs, for the manufacturing alleged excess quantities clandestinely manufactured and cleared from the factory. 8.3 The next issue is regarding: (II) Clubbing of clearances i.e., dummy nature of Maxworth Pvt. Ltd. Alpine Panel and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ine (Annexure T). Similarly, separate books of accounts have been maintained and each one of them have transactions with banks and other concerned authorities. (See Annexure WW and RR). Thus factually, they are not the units on papers only. The Adjudicating Authoritys above findings have been challenged by the revenue in their appeals. The revenues grounds of appeal in the instant case on the issue reads as under : 5. Dummy nature of M/s. Maxworth Plywoods, M/s. Alpine Panels and M/s. Truwoods: 5.1 This is a case of centralized production and de-centralised clearance. The Commissioner has dropped the proceedings on the allegations of the dummy nature of M/s. Maxworth Plywoods, M/s. Alpine Panels and M/s. Truwoods Pvt. Ltd., holding them that they are independent units in their own right. 5.2 It is also seen that M/s. Deccan Veneers had cleared Veneer to M/s. Truwoods without payment of duty with a direction to sell the same in the name of M/s. Truwoods which has been held as proved by the Commissioner in the said order. Similarly, it is also seen that, M/s. Deccan Veneers have cleared Veneer without payment of duty through M/s. Maxworth Plywoods on the commercial challa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd M/s. Truwoods opeate from the same city office. It has also been admitted that, the other three units did not pay any amounts to M/s. Deccan Veneers for accommodation and telephones. It has also been admitted that, the staff of all the four units operate from the same city office and the staff work interchangeably for more than one unit. It has also an established fact that the staff is not separately compensated for doing the work of other units. Totality of all the evidences point to the fact that this is a fit case for lifting the corporate veil. In other words they are common employees working for all the four units. It has also been admitted that, there has been common decision making for all the units in as much as Sri Sanjiv Agarwal, Director of M/s. Deccan Veneers has been the common Director of all the other companies. 5.6 All points for clubbing the clearances mentioned in the show cause notice are not discussed in the Order-in-Original. So, the conclusion arrived is not correct. 5.7 In the light of the above, it appears that M/s. Maxworth Plywoods, M/s. Alpine Panels and M/s. Truwoods Plywoods are indeed dummy units and the clearances of such units will have to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... venue any further inasmuch, as in all those cases there was an evidence to show that there was clubbing of clearances needed to be done. In the absence of any contrary evidence to indicate that the findings of the Adjudicating Authority that the factories were in existence and had their own procurement of raw materials and manufacturing activity, we find that the Adjudicating Authority was correct in coming to a conclusion that there cannot be any clubbing of clearances. Accordingly, we reject the appeals filed by the revenue. 10. Other two small issues in the case of DVPL is regarding the demand of ₹ 1,02,277/- and redemption fine of ₹ 1,00,000/- under Rule 173Q of Central Excise Rules. 10.1 The said confirmation of the demand has arisen on the ground that DVPL had cleared to True wood certain quantities of logs without payment of duty and no explanation was given. We find that before us also there is no convincing explanation given by the appellants and hence, we uphold this demand of duty as confirmed by the Adjudicating Authority. Since there is a demand of the duty, equivalent penalty imposed on this account needs to be upheld. As regards the redemption fine ..... X X X X Extracts X X X X X X X X Extracts X X X X
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