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TMI Blog2012 (11) TMI 690X X X X Extracts X X X X X X X X Extracts X X X X ..... ny who did the transactions. Tribunal was right in holding that the penalty could not have been imposed upon the fictitious company which, in fact did not do any transaction and all the transactions were done by the original company and rightly interpreted the judgment of [GAJANAN FABRICS DISTRIBUTORS Versus COLLECTOR OF CENTRAL EXCISE, PUNE 1997 (5) TMI 50 - SUPREME COURT OF INDIA] and the question referred above raised before us are answered that in the facts of this case, no penalty could have been imposed upon the respondent M/s Xenon company - Tax Case is answered and disposed of accordingly. - Tax Case No. 04 of 2001 - - - Dated:- 12-10-2012 - MR. PRAKASH TATIA, AND MRS. JAYA ROY, JJ. For the Petitioner: M/s Ratnash Kumar, Rupa Kumari, Amit Kumar, Advocates For the Respondent: M/s Binod Poddar, Sr. Advocate, Mahendar Choudhary, Piyush Poddar, Amrita Sinha, Darshana Poddar, Advocates This is a Tax Case under Section 35H(1) of the Central Excise Act, 1944. Following are the grounds of reference: a) Hon'ble CEGAT appears to have not appreciated that M/s Xenon has a separate identity as a manufacturer of goods and have camouflaging their identity as a facade u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Crores on M/S SECO and Rs.1 Crore on the assessee under Rule 173Q, a penalty of Rs.2000.00 each under Rule 9(2) and a penalty of Rs.2000.00 each under Rule 226 of the CER'44. The liability against M/S SECO have been settled under KVSS'98 and settlement Certificate in Form 3 has been issued to M/S SECO on 03.05.99. The CEGAT, Caltutta vide its order no.A-943/CAL/2000 dt.07.07.2000 disposed the appeal of M/S SECO as the disputes have been settled under KVSS'98. The CEGAT, Calcutta vide its order no.A-1200/CAL/2000 dated 03.08.2000 allowed the appeal of the assessee by setting aside the portion of the impugned Order-In-Original dt.22.10.97 imposing penalty of Rs. One Crore under Rule 173Q, Rs.2000.00 each under Rule 9(2) and 226 of CER'44. The facts stated in the Reference application itself reveals specifically in Paragraph-2 that a A.S.C.N. no. V(84)(15)49-Adj./94/ 17589-90 dt. 20.12.94 was issued to both the units specifically asking them to show why the manufacture and clearances as shown by them separately should not be clubbed together as manufacturer and clearances of a single unit viz. M/S SECO. Both the companies failed to show that the manufacture and the clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Learned counsel for the Revenue tried to justify the judgment delivered in case of Gajanan Fabrics Distributors, Sangli and Others Versus Collector of Central Excise, Pune reported in (1997) 11 SCC 66, and submitted that the Gajanan Fabrics Distributors' case was decided in the facts of that case and it was nowhere laid down that in such type of transactions, the penalty cannot be imposed upon the dubious company. It is submitted that in fact in the Gajanan Fabrics Distributors' case, there were seven units, which were found to be dubious companies and the tribunal failed to give due attention to the fact that the Collector had confirmed the demand made in the show cause notice upon all the seven units and their partners and or Directors and then in that situation, observed that having regard to his conclusion that all the units other than Gajanan Weaving Mills were fictitious units, the sequitur one would have assume could only be that it was Gajanan Weaving Mills which was the assessee and liable to pay the demand . The Hon'ble Supreme Court has further observed that by confirming the demand upon all the seven units, the Collector appears to have treated them all as assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accepted that mere because of the existence of the dubious company, the said dubious company be treated to have undertaken the dealings, then in that situation, the finding of the dubious company could not have been recorded. At the cost of the repetition, we may observe that the existence of one company cannot create liability under the provisions of the Central Excise Act or the Rules of 1944 and the liability is created only on account of the actual transaction. Once it has been held that the company which was in existence in fact did not do the transactions and the transactions shown by the dubious company was done by the original company, then only this finding can be recorded that the transactions were done in the name of the dubious company by the original company resulting it into the clubbing of the transactions shown in the name of the dubious company as of the original company, and thereafter, only the full duty of entire transactions done in the name of the original company and the dubious company falls upon the original company. So has been done in the order by the adjudicating authority -the Commissioner, Central Excise, Jamshedpur in its order dated 24.10.1997. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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