9911796707
TMI Blog2007 (4) TMI 91X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. P. Raju, Chairman 20.00 Sl. No. 3,4,5 6 2. P. Subramaniam , MD Brother of S. No. 1 35.50 hold 180 lakhs as shares which is about 45% of the total shares 3. R. Rajendran, Director Son of S. No. 1 46.00 4. R. Balakrishnan Director Son of S. No. 1 58.00 5. R. Thiruvasagam, Director Son of S. No. 1 46.00 6. S. Leelavathi, Director Wife of S. No. 2 30.00 7. R. Rajammal, Director Wife of S. No. 1 10.00 8. B. Kalavathy, Director Wife of S. No. 3 40.00 9. B. Rajamani, Director Wife of S. No. 4 40.00 10. T. Karunambigai, Director Wife of S. No 5 40.00 S. No. Directors of Raju Rajammal Textiles Pvt. Ltd. S/Shri/Smt. Relationship Value of shares held Rs. Lakhs Remarks 1. R. Rajenddran Son of P. Raju 2.50 25% 2. R. Balakrishnan Son of P. Raju 2.50 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... original authority passed order dated 23-2-2005: (i) Confiscating the seized cotton yarn on cones [valued at Rs. 6,62,000/-] with option for redemption against payment of Rs. 50,000/- and appropriated the security deposit of Rs. 17,500/- to wards such fine; (ii) Demanding duty of Rs. 60,844/- on the said goods and appropriating the amount already paid towards such demand; (iii) confirming the demand of duty to the extent of Rs. 18,67,840/- [out of Rs. 20,39,762/-] as also demand of duty to the extent of Rs. 24,77,515/- [out of Rs. 27,05,488/-] against M/s. Goodwill and adjusting the duty amount of Rs. 3,08,000/- already paid towards the latter demand; (iv) Demanding interest on duty till date of payment; (v) Imposing total penalty of Rs. 43,45,355/- on M/s. Goodwill under Section 11AC of the Act; and (vi) Imposing the following penalties under Rule 209A of the Central Excise Rules, 1944 / Rule 26 of the Central Excise Rules, 2002 on the other noticees. S. No. Name S/Shri / M/s. Appellants in Appeal No. Amount of Penalty Rs. 1. P. Subramanian , MD , GWT E/993/2005 1,00,000 2. R. Ra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 2 Nil 3,00,000 Grand Total 1,00,000 10,00,000 Results of investigations indicated that they had also cleared cone yarn (dutiable) in the guise of hank yarn (exempted) without payment of duty to M/s. RRT during the period 11-10-1999 and 31-8-2001 and had not correctly determined the assessable value of the goods so cleared to the buyer, who was allegedly 'related' to M/s. Global in terms of Section 4(4)(c) / Section 4(3)(b) of the Central Excise Act. Accordingly, show-cause notice dated 8-6-2004 was issued to M/s. Global Ors. proposing to: (i) recover duty from M/s. Global on the cone yarn cleared to M/s. RRT during the above period, by invoking the extended period of limitation under Section 11A(1) of the Central Excise Act; (ii) levy interest on such duty under Section 11AB of the Act; (iii) impose penalty on M/s. Global under Section 11AC of the Act; and (iv) impose penalties under Rule 209A of the Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001 /2002 on three partners of M/s. Global, an employee of M/s. Global, M/s. RRT, M/s. Golden Dye House and a few others. In adjudication of this notice, the or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion and the same were not to be relied on. It is also submitted that the statements of those witnesses who were not cross-examined were also not be relied upon. In this connection, it is pointed out that 15 out of 32 witnesses whose statements were relied upon in the show-cause notices were not cross-examined. Learned counsel pointed out that cone yarn was usable only in power-loom and hank yarn only in handloom. A reeling machine had to be used for converting cone yarn into hank yarn. M/s. Goodwill did not have such machine and used to get their cone yarn converted into hank yarn by M/s. Global and this was done by following Rule 96E procedure monitored by the department. On these facts, counsel claimed, it was not possible to arrive at a finding that the appellants had clandestinely removed cone yarn in the guise of hank yarn during the material period. We find no substance in this claim of the counsel inasmuch as the case framed by the department against M/s. Goodwill in respect of 2/40s cone yarn covered under Invoice No. 236 dated 30-7-2001 and Invoice No. 240 dated 31-7-2001, seized from the premises of M/s. Golden Dye House, was conceded by them before the lower appellate au ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f oral and documentary evidence is in favour of the latter and there is no scope for giving the benefit of doubt to the parties concerned. Hence we are of the opinion that the aforesaid demands of duty raised on M/s. Goodwill and M/s. Global in respect of cone yarn cleared by them to M/s. RRT in the, guise of hank yarn during the respective periods of dispute require to be upheld, and we do so. 6. The lower authorities also demanded differential duty of over Rs. 24.70 lakhs from M/s. Goodwill and Rs. 1,99,927/- from M/s. Global in respect of cone yarn cleared by them to M/s. RRT, by rejecting the transaction value of the goods on the ground of 'relationship' under Section 4(4)(c) /4(3)(b) of the Central Excise Act. We have already indicated the constitution of M/s. Goodwill, M/s. Global and M/s. RRT. Out of the eleven partners of M/s. Global, four of them constituted M/s. RRT as a private limited company and engaged them as sole distributors for their product. The partners of M/s. Global were members of the same family and four of them held 100% shares in M/s. RRT. These four Directors of M/s. RRT held more than 93% of the shares of M/s. Global. In the impugned order, learned C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, one would be justified in lifting the corporate veil to see the ground realities. This exercise was neatly done by the lower appellate authority in the light of the Apex Court's ruling in Calcutta Chromotype (supra) and it was held that M/s. RRT were related to M/s. Goodwill in terms of Section 4(4)(c) /Section 4(3)(b) of the Central Excise Act. We are in full agreement with this decision of the Commissioner (Appeals). We also note that M/s. Global have conceded similar 'relation' between them and M/s. RRT. 8. Having sustained the finding of clandestine removal of cone yarn and suppression of 'relationship' by M/s. Goodwill and M/s. Global, we have also to uphold the invocation of extended period of limitation by the lower authorities for demanding duty from the said parties for the respective periods of dispute. 9. However, in respect of penalties, we have not found valid findings in the impugned orders to justify personal penalties on the Managing Director, Directors or employees of M/s. Goodwill under Rule 209A of the Central Excise Rules, 1944/Rule 26 of the Central Excise Rules, 2001-2002. None of these persons was found to have physically dealt with the goods ..... X X X X Extracts X X X X X X X X Extracts X X X X
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