9911796707
TMI Blog2007 (11) TMI 47X X X X Extracts X X X X X X X X Extracts X X X X ..... xturised yarn, nylon covered yarn and polyster covered yarn. (b) A portion of the final product manufactured by SPL instead of being exported where diverted to the local market. The diversion has taken place by showing them as production and clearances of M/s Hindustan Cotton Co. and that of M/s. M.M. Sanghavi, a unit of Hindustan Cotton Co. The above facts were unearthed by the officers who visited the factory of SPL on 17-9-2000; on comparison of the statutory records maintained by them and the private records like loose papers maintained by them and computer generated production sheet, suppression of production and clandestine removal of such suppressed production by SPL came to light. One such consignment dispatched by SPL using the invoices of Hindustan Cotton Co. and transported through M/s. Jaipur Golden Transport Co. was intercepted in their godown and seized. (c) Incriminating documents were also recovered from Mumbai Office of M/s. M.M. Sanghavi claimed to be a unit of Hindustan Cotton Co. (d) The clandestine removal of goods manufactured and cleared for SPL using the name of Hindustan Cotton Co. and M/s. M.M. Sanghavi has been admitted by the representatives of SPL as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stan Cotton Co., M/s. M.M. Sanghavi, as fully established. We find that such a finding is supported by the private records seized from the company and corroborated by seizure of documents from the premises of Hindustan Cotton Co. and M/s. M.M. Sanghavi and seizure of goods on the Transport Company and the confessional statements of persons concerned including the chairman of the SPL. Therefore the contention that the demand has been raised only based on the computer generated production sheet is not correct. 6.1 The main issue raised is the durability of goods cleared clandestinely by a 100% EOU and without permission of the Development Commissioner. This issue was referred to the Larger Bench [2006 (204) E.L.T. 103 (Tri.- Mum.)] and the relevant portion of the decision of the Larger Bench [2007 (215) E.L.T. 503 (Tri.-LB)] on this issue is reproduced below : "The issue referred to this Bench is whether the goods which are cleared by 100% EOU clandestinely and without any permission are eligible to full ex emption under Notification No. 125/85-C.E. and whether such goods are to be assessed under the provision of main Section 3(1) of the Central Excise Act or under the proviso to S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s dismissed by the Supreme Court cannot be considered as a declaration of a law. 17. In view of the above reference. In case of goods cleared by 100% EOU and sold in India whether with or without permission of the Development Commissioner, the assessment shall be made under proviso to Section 3(1) of the Central Excise Act, 1944 and the exemption under Notification 125/84 shall not be applicable." 6.2 In the light of the decision of the Larger Bench dated 3-8-07, it has to be held that the goods clandestinely removed from a 100% EOU are not eligible for exemption under Notification 125/84-C.E. and the assessment of the goods shall be made in terms of the proviso to Section 3(1) of the Act. Therefore, the rate of duty adopted by the Commissioner in demanding duty is in order. 7.1 The next issue to be considered is whether the sale price of the clandestinely removed goods should be treated as cum-duty value. The issue has been considered by the Tribunal in the case of Asian Alloys Ltd. v. CCE, Delhi -III reported in 2006 (203) E.L.T. 252 (Tri.-Del.) and the relevant portions of the order are reproduced below : "18. It was contended that the amounts worked out for the values of j ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ining the value on which excise duty is payable the element of excise duty which must be regarded as having been incorporated in the sale price, must be excluded. There is nothing to show that once the demand was raised by the Department, the respondent sought to recover the same from the purchaser of scrap. The facts indicate that after the sale transaction was completed, the purchaser was under no obligation to pay any extra amount to the seller, namely, the respondent. In such a transaction, it is the seller who takes on the obligation of paying all taxes on the goods sold and in such a case the said taxes on the goods sold are to be deducted under Section 4(4)(d)(ii) and this is precisely what has been directed by the Tribunal. There is also nothing to show that the sale price was not cum-duty". (emphasis added). 18.1 In the present case, all the sales to the DTA were clandestinely done in contravention of the provisions of the EXIM Policy and the rules applicable to such 100% EOU unit. The appellant-company adopted a studied course of non-co-operation and did not raise any contention that the price which was charged, included the component of excise duty as contemplated by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... firmed the illicit clearances in his statement dated 14-2-01. The roles of Shri Satish Kumar Sharma, authorised signatory of SPL and Dinesh Chandra Pandey, Despatch In charge of SPL in relation of clandestine removal of goods manufactured by SPL adopting ingenious method were admitted by them. They also concerned themselves in preparing manipulated documents facilitating such clandestine removal. 10.3 As regards the penalty imposed on M/s. Hindustan Cotton Co., M/s. M.M. Sanghavi, described as a unit of Hindustan Cotton Co., we find that M/s. Hindustan Cotton Co. is a partnership firm consisting of Madhusundan S. Jhunjhunwala, Sarla Devi Jhunjhunwala and Krishna Kumar Junjhunwala. These partnership firm by an agreement dated 1st January, 1988 decided to carry on the a new business in the name of M/s. M.M. Sanghavi; the agreement envisaged that profit or loss earned or incurred in the name of M.M. Shanghavi shall be taken into account in the books of Hindustan Cotton Co., Hindustan Cotton Co. was carrying on a business of manufacture, processing etc. in the name of M.M. Sanghavi. In the light of the above, we find that M.M. Sanghavi is not an independent assessable entity form M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of FOB value of export to arrive at the quantum of eligible domestic clearances and whether the same should include only physical export or it should include deemed export as well. It deemed exports are held to be no included, then the quantum of clearances permitted in DTA will be accordingly reduced. This issue has been decided by the Tribunal in favour of the assessee on a number of precedent decisions, holding that the value of deemed export should be included while determining the FOB value of export, based on which DTA clearances are permitted. However, in this case, the assessee is not in appeal before us. The duty on finished goods stands demanded on the ground that the same is in excess of the permissible limit for the purpose of DTA clearance. The department's claim is to the effect that the raw material used in such finished products cleared in DTA should be treated as not used for the intended purposes and the duty on import should be demanded. We do not agree with this view. In this case, it cannot be said that the raw materials have not been used for the intended purpose. Even if there was clearances in excess of permissible limit it may amount to be case of diversio ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
