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TMI Blog2011 (8) TMI 1062X X X X Extracts X X X X X X X X Extracts X X X X ..... the charges against one of the parties namely, Shri Rakesh Kumar, the proprietor of M/s. India Corporation. The Department has come in appeal against this order. In the other five cases the appeals are by the assessees. 2. It is also relevant to note that this is the second round of litigation. The first adjudication order in the impugned matter was passed by Commissioner of Cental Excise on 7-5-1999. The parties came in appeal to the Tribunal. The Tribunal vide its order dated 27-8-2003 remanded the matter for de novo adjudication for the reason that the finding in the order was that clearances of five units were to be clubbed but the demand was again made separately from the five units. Tribunal ordered that the matter should be re-examined in the light of the Apex Court s decision in Gajanan Fabrics Distributors v. C.C.E., Pune - 1997 (92) E.L.T. 451 (S.C.). In the second round, the adjudication order is passed by the Joint Commissioner because by that time the powers delegated to the Joint Commissioner had been increased by the Board and the case fell within his competency. 3. This is a case where the SCN alleged that four entities who supposedly were manufacturing excis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Engg. were not actually working and operational during the period in dispute. The learned Commissioner also held that value of clearances of all the five units are to be clubbed in view of financial flow back of the funds, common funding of consumable used of common facilities and mutuality of interests. 10. After giving these findings, the learned Commissioner confirmed the demand of each unit in respect of their clearances and imposed penalties under Rule 173Q of the Central Excise Rules. This approach of the Revenue is not approved by Hon ble Supreme Court in the case of Gajanan Fabrics Distributors v. Collector of Central Excise, Pune reported in 1997 (92) 451 (S.C.). In this case, Hon ble Supreme Court remanded the matter to the adjudicating authority where demand was confirmed from each unit after giving finding that all the units other than Gajanan Weaving Mills to be fictitious unit. The Hon ble Supreme Court held as under : We find, after having heard learned Counsel, that it is necessary to remand the matters to the Collector to consider the entire case afresh. The principal factor that leads us to this conclusion is the finding of the Collector, upheld by the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rguments on either side could not be appreciated fully during hearing and hence the order was reserved for issue after detailed examination of case papers. We have examined the case papers. 8. The Order-in-Original running into 69 pages lists facts and arguments in a very meandering manner. Numbers are not assigned to pages. Paragraph numbers are given to certain paragraphs. How those paragraphs are chosen for number is not quite evident. The Commissioner (Appeals) also does not find it necessary to number the paragraphs in his orders. This has resulted in poor ordering of facts and arguments and difficulty for the Tribunal in referring to findings in these orders. This is a matter in which the Central Board of Excise and Customs can issue instructions, in the interest of Revenue, to guide its officers to make matters easier for all authorities who have to handle such orders after adjudication. 9. Further the Order-in-Original starts with the case against M/s. India Corporation who is just a buyer of the goods. For a logical ordering of the arguments this part of the case should have been examined after examining the cases against the manufacturers. In fact M/s. Guru Dashmesh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steem Electrodes and M/s. Guru Dashmesh Engineers and Traders at Mansa Road, Bhatinda; (vii) The goods invoiced in the name of M/s. Akal Engg and Perfect Fasteners were delivered on truck PB 09 2929 owned by Shri Z.S. Sidhu; (viii) M/s. Perfect Fasteners spent only ₹ 1282/- on repair of machines during 1991-92 to 1994-95 showing that the unit was in fact closed. There was no purchase of dyes required for wire drawing; (ix) M/s. Unique Industries was lying closed in 1994-95 as per the statement of its proprietor Mr. Davindar Singh; (x) The goods invoiced in the name of M/s. Unique Industries were delivered on Truck PB 09 2929 owned by Shri. Z.S. Sidhu. (xi) Shri Rakesh Kumar, Proprietor of M/s. India Corporation has stated that he had received bolts under the bills of M/s. Unique Industries during the period 1994-95 from Joginder Singh an employee of M/s. Guru Dashmesh Engg and Traders. 11. In the de novo adjudication the adjudicating officer decided that the clearances of M/s. Akal Engineers, M/s. Perfect Fasteners and M/s. Unique Industries are to be added to the clearances of M/s. Guru Dashmesh Engineers and Traders. He demanded duty on clearances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is firm in which Shri Sidhu is only a partner. Separate SSI exemption should have been extended to him. (c) There is no evidence to show that the goods sold by Perfect Fasteners, Akal Engineering and Unique Industries were manufactured by this firm. (d) There is allegation in the SCN that this appellant financed Perfect Fasteners and Akal Engineers for purchase of diesel. There is also allegation that Esteem Electrodes supplied packing material. This amounts to admitting that the other firms had in fact been doing manufacturing activity. If those firms were only traders they did not need these raw materials. (e) The value of clearance of this appellant was much below the exemption limit of ₹ 30 lakhs in each year as indicated in page 6 of the impugned order. (f) M/s. Akal Engineers and M/s. Unique Industries were located at different premises, having machinery and employing their own labourers. (g) In the de novo proceeding more duty than what was demanded from the appellant in the initial proceedings cannot be demanded. 14.1 Reasons given by Guru Dashmesh Engineers and Traders as to why clearance of Akal Engineers should not be added to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -examination of Davinder Singh in the first proceedings he was evasive to the questions put. Since bank accounts show that he was getting the sale proceeds in his account he should be considered as the manufacturer. (b) The allegations in the SCN that there was advancing of interest free loans and financial control by Z.S. Sidhu is contradictory to the case that there was no manufacturing activity by the firm because there is no need for funding of a non-operational unit. 15. E/Appeal 2532/2005 filed by Akal Engineering The arguments raised by the appellants are the following : (a) The Proprietor of India Corporation has accepted that the firm had received goods from Akal Engineering; (b) If the unit was not in existence there was no need to elaborate discussion regarding financial flow back; (c) Since the Tribunal has remanded the case back it is implied that all the parties were accepted as manufacturers; (d) The period is after 28-9-1996 when Section 11AC was inserted in Central Excise Act. So penalty under Section 11AC is not applicable. In the present order penalty under Rule 173Q is imposed. This amounts to a new case made out by Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... heard. Further when an opportunity was given the parties did not show keenness in availing the opportunity. Further when the Commissioner (Appeals) gave adequate opportunity the appellants did not have any further submissions to make except to say that they should have been heard by the adjudicating authority. So it is very obvious that the issue is being raised more as a technical objection rather than as a denial of opportunity to explain their case. So we are not impressed by this argument. 19. There is no question of extending separate SSI exemption limit to each partner of a firm or to different firms being run by the same person especially in a situation where goods are manufactured by one firm and sold in the name of different firms. Here it is relevant that under Notification No. 175/86-C.E., dated 1-3-1986 providing exemption to small scale units, the exemption was available only to aggregate value of goods cleared from a factory up to the value of a specified limit by a manufacturer in any financial year. There was restriction on the exemption with reference to aggregate value of clearances by a manufacturer from one or more factories as also restrictions with referen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in fact at the premises of Guru Dashmesh Engineering and Traders. The second fact is no evidence to prove that M/s. Akal Engineers were manufacturing the goods. 23. The appeal filed by Unique Industries also does not give any fact to prove that they have in fact manufactured the goods sold using their invoice. 24. The main appellant M/s. Guru Dashmesh Engineering and Traders have given some arguments why the clearance of other units should not be clubbed with their clearance. The main argument is that they might have got some goods manufactured under job-work basis from other units and such clearances do not form their clearance. There is also the argument that since sale proceeds were received in the bank accounts of M/s. Unique Industries, sales made by that entity cannot be clubbed with their clearance. However no records of goods that were manufactured on job work is produced. Further the case of Revenue is that both M/s. Akal Engineers and M/s. Perfect Fasteners were not working during the period. The facts of the case prove such allegation. So we do not find any merit in the argument. Further receiving sale proceeds in bank accounts of another entity like Unique Indust ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e book when the offence was committed. It is a settled position that once offence is stated clearly wrong quoting of section does not make the notice unsustainable, so long as there was another legal provision in place under which the proposed action could have been taken. 30. The appellant also argues that penalty under Rule 173Q is not maintainable because that amounts to travelling beyond the finding in the order. We find that there is no issue of travelling beyond the finding because clearing goods under the invoice of some other person would constitute an offence under clauses (a), (b) and (d) of Rule 173Q and hence the penalty is correctly imposed. Appeal No. E-2530/2005 Filed by Esteem Electrodes (P) Ltd. 31. In the case of this appellant the show cause notice had two components of allegations namely :- (i) This entity had no separate existence and was a proxy for M/s. Guru Dashmesh Engineering and Traders and the units of these entities should be clubbed. (ii) This appellant had suppressed its production and had indulged in clandestine removal. The adjudicating authority accepted the contention of separate existence and manufacturing but gave a fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Even if sale of raw material was considered as sale of finished goods during the relevant period they were within the SSI exemption limit and there was no reason to account sale of finished goods as sale of raw material; (e) Show cause notice itself shows numerous instances of sale of wire rods; (f) The sale of these materials to Guru Dashmesh Engineering and Traders was on account of the fact that they had let out their premises to that firm to do trial production of welding electrodes; (g) Reliance cannot be placed on information furnished to Department of Atomic Energy. This was a false statement made by the appellant. Findings 35. We do not find much merit in the preliminary objections raised regarding violation of natural justice because this is the second round of adjudication and all their submissions in the first round was already on record. Further the adjudicating authority has observed that the appellant did not appear for hearing when the case was posted for hearing. They were only interested in delaying this matter which was already almost one decade old. The second round was only for reworking of the duty demand in appropriate hands. Fu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o issue of travelling beyond the SCN or finding because suppression of production and clandestine removal would constitute an offence under clauses (a), (b) and (d) of Rule 173Q and hence the penalty is correctly imposed. 37. On the whole we do not find any merit in the argument of the Appellant and hence the Appeal is rejected. Appeal No. E/182/2005 filed by Revenue against Ramesh Kumar, Proprietor of India Corporation. 38. In this case Revenue is in appeal against the order of Commissioner (Appeals) setting aside the penalty of ₹ 10,00,000/- imposed on the respondent under Rule 209A of the Central Excise Rules by the adjudication order. 39. M/s. India Corporation was a buyer of goods from the appellants in Appeal Nos. E/2531/05, E/2532/05 and E/2534/05 dealt with in this order. Para 21 of the SCN brings out the charge against them. It is alleged that this respondent helped M/s. Guru Dashmesh Engineers and Traders, M/s. Perfect Fasteners and M/s. Akal Engineering in recasting their sale invoices with an intention to help them in getting out of the case booked against them. The specific allegation is that the respondent produced before the department invoices issu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any document. The charge is that the respondent produced documents re-casted by others. How this becomes an offence punishable under Rule 209A of the erstwhile Central Excise Rules, 1944 is not clear. It is not clear whether he was asked about the alleged discrepancy prior to issue of show cause notice. The ld. DR s argument that he did not say about re-casting of the documents earlier is relevant only if he was asked about it earlier. At any rate it is not brought out clearly that when he was dealing with the goods he had knowledge that the goods were liable to confiscation under Central Excise laws. The fact that he received goods invoiced by M/s. Unique Industries through an employee of M/s. Guru Deshmesh Engineers and Traders is not sufficient evidence in this regard. If they became aware after, it is not an offence punishable under Rule 209A of the Central Excise Rules, 1944. So we do not find any reason to interfere with the order of the Commissioner (Appeals). 45. So the appeal filed by Revenue is rejected. 46. To sum up the appeals filed by M/s. Akal Engineers, M/s. Perfect Fasteners and M/s. Unique Industries are allowed by setting aside the penalty. The appeal file ..... X X X X Extracts X X X X X X X X Extracts X X X X
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