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TMI Blog2014 (6) TMI 268X X X X Extracts X X X X X X X X Extracts X X X X ..... y had intimated the Assistant Labour Commissioner regarding closure of their unit in September, 2001. After this communication of September, 2001 there is no further communication, which shows that the unit remained closed since September, 2001. It is also seen that M/s. Shamli had deposited their contributions towards employees provident fund in the office of Provident Fund Commissioner only upto February, 2001. It is difficult to believe their claim that their factory was still functioning by hiring contract labour. When no evidence of contract labour having been engaged by them have been produced. Even if the claim regarding supply of waste paper from M/s. Raghav Enterprises is accepted, it cannot be concluded that this waste paper was used by M/s. Shamli, when all other evidence indicate that the same was closed - obviously the waste paper, if any, supplied by M/s. Raghav Enterprises must have been used in the factory of M/s. Sikka. Taking into account the totality of the evidence against M/s. Shamli, we are of the view that the claim that M/s. Shamli was functioning during the period of dispute is difficult to believe, more so, in view of the fact that at the time of offic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was checked, stock 16.037 M.T. of writing and printing paper was found to be in excess of balance recorded in the RG-1 register and when the officers asked to Shri S.K. Srivastava, the Authorized Signatory of M/s. Sikka for this, he could not give any explanation for the same. The excess stock of 16.037 M.T. of writing and printing paper was, therefore, placed under seizure. On checking the stock of the news print, the officers found that the shortages of 16.452 M.T. vis-a-vis the balance in the RG-1 register for which also Shri S.K. Srivastava could not give any explanation. The officers on taking round of the adjoining unit of M/s. Shamli found that the same appeared to be closed since long, as there was of absolutely no manufacturing activity in that unit. Shri S.K. Srivastava, Authorized Signatory of M/s. Sikka, on being asked stated that the unit was closed for the last one month. It was also found that there was no electricity connection in the factory of M/s. Shamli and on inquiry it was learnt that the same had been disconnected since 3-7-1998. The officers found two generators of 380 KVA each in the premises of M/s. Shamli out of which only one generator appeared to be in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he could not give any satisfactory reply. 1.3 In view of the above investigation, it appeared that M/s. Shamli was not functioning and it is only a part of production of paper by M/s. Sikka which was being shown as the production of M/s. Shamli so as to avail of duty evasion in respect of first clearances of 3500 M.T. in a financial year in respect of both the units. It, therefore, appeared that the goods shown to have been produced in and cleared from M/s. Shamli were not eligible for duty exemption under Notification No. 6/2001-C.E. It is on this basis that a show cause notice dated 25-8-2001 was issued to M/s. Sikka, M/s. Shamli and Shri Vinay Bansal, Director of M/s. Sikka and M/s. Shamli for - (a) recovery of Central Excise duty amounting to Rs. 68,72,658/- from M/s. Sikka in respect of clearances of Kraft paper, writing and printing paper during period from 18-9-2001 to 31-3-2003, which had actually been manufactured by M/s. Sikka but had shown to have been cleared from M/s. Shamli by wrongly availing the benefit of duty exemption under Notification No. 6/2001-C.E., under proviso to Section 11A(1) of Central Excise Act, 1944 along with interest on this duty under Se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on regarding closure of factory due to labour unrest and reopening of the factory subsequently, that just because the department could not locate all the suppliers of the waste paper, it cannot be concluded that they were bogus, that department did not make any inquiry from the transporters in this regard, that the purchase of waste paper by M/s. Shamli had been duly declared by them to Sales Tax and Income Tax Authorities and the assessments have been made accordingly without any objection having been raised, that two suppliers which are alleged to be non-existent account for only 25% waste paper procured and in respect of third supplier M/s. Raghav Enterprises, even the Department has accepted that the same was genuine, that from the fact that M/s. Shamli had made provident fund contribution in respect of staff only upto February, 2009, no adverse conclusion can be drawn as, as mentioned above, on account of labour problem they have terminated the services of the regular labourers and thereafter, they had engaged contractor labour only, that there is no evidence to prove that the factory of M/s. Shamli was closed during the period of dispute, that there is no evidence to prove th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shamli manufactured same final products - printing and writing paper as well as news print and both during the period of dispute were availing of the benefit of duty exemption under Notification No. 6/2001-C.E. Shri Vinay Bansal is the common Director of both the units, the other two Directors of both the units being Shri Rajinder Prasad and Shri Rajeshwar Bansal. Both the units are situated in adjoining plots. It is also not in dispute that at the time of visit to the factory of M/s. Sikka and M/s. Shamli on 24-4-2003, it is only the M/s. Sikka which was found to be functioning and the unit of M/s. Shamli was found to be totally closed and from its appearance, it appeared that it was not functioning since long. The allegation of the department is that during the period of dispute i.e. from 18-9-2001 to 31-3-2003 M/s. Shamli was not functioning at all and it is the part of the production of paper by M/s. Sikka which was being shown under the invoices of M/s. Shamli so as to wrongly avail of duty exemption under Notification No. 6/2001-C.E. which exempts the first clearances of paper and paper board upto 3500 M.T. in a year from the whole of the duty of excise leviable thereon. The ..... X X X X Extracts X X X X X X X X Extracts X X X X
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