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TMI Blog2017 (7) TMI 160X X X X Extracts X X X X X X X X Extracts X X X X ..... s SRS Synthetics has also been included for the purpose of making demand. Thus though I hold that the charges against M/s G.P. Textiles stands proved but the adjudicating authority shall re-quantify the demands in as much as it relates to duplication of demand, inclusion of value of goods from M/s SRS Synthetics since the demand on same already stands confirmed from M/s G.P Textiles - demand upheld. Demand upon assumption that M/s Gaurishankar Textiles during the period January’ 2001 to July’ 2001 has supplied grey fabrics to them which was not accounted by them - Held that: - possibility of clandestine clearance of laminated fabric processed out of such jobwork goods cannot be ruled out. It is especially in case when the evidence of clandestine clearances has been found from the factory and M/s SRS Synthetic. Thus looking to the overall modus operandi adopted by the Appellant for getting the fabric manufactured on jobwork without any document and clearances made through dummy concern M/s SRS Synthetics, it is clear that the Appellant has used such jobwork fabric in manufacture of laminated/ impregnated fabric and the same was removed without payment of duty. I therefore do not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to them. I therefore hold that they are not liable for penalty under Rule 209A of erstwhile Central Excise Rules.1944 or Rule 26 of Central Excise Rules,2002. I therefore set aside the penalty imposed upon M/s Weave Tex and its partner Shri Yogesh Kabaria. Appeal allowed - decided partly in favor of appellant. - E/1023, 1110, 1111/04 - A/88038-88040/17/SMB - Dated:- 15-6-2017 - Shri Ramesh Nair, Member (Judicial) Shri Mayur Shroff, Advocate, for Appellant Shri V.K. Agarwal, Addll. Commr. (A.R), for respondent ORDER These appeals have been filed by M/s G.P. Textiles, M/s Weave Tex Synthetics and Shri Yogesh Kabaria against order dt. 28.11.2003 passed by the Commissioner, Central Excise, Thane - II wherein demand of ₹ 44,09,902/- was confirmed against M/s G.P. Textiles and equivalent amount of penalty was imposed under Section 11AC and of ₹ 5,000/- under Rule 27 and of ₹ 40,000/- under Rule 25 of the Central Excise Rules, 2002. Also penalty of ₹ 5,40,000/- was imposed upon M/s Weave Tex Synthetics, penalty of ₹ 4,35,000/- was imposed upon Shri Yogesh Kabaria, Partner of M/s Weave Tex under Rule 26. The facts leading to the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ers visit, M/s S.R.S. Synthetics received 8 bales measuring 1220 Mtrs on chit through Hammal who stated that the said goods were received from M/s Speed Transport. It was found that in premises of M/s S.R.S., 6233 Mtrs of Impregnated coated and laminated fabrics was lying without cover of duty paying documents. The goods were thus seized. Statements of persons working at the said premises and Investigations revealed that employee of M/s G.P. Textiles, Shri Srinath Pandey was looking after the said unit and that the goods received at M/s SRS were received from M/s G.P. Textiles without duty payment. The unit was found to be dummy unit floated by Shri Arun Poddar for selling the goods clandestinely cleared from M/s G.P Textiles. The facts stands accepted by Shri Arun Poddar. Statement of Shri Hemant Shah employee of M/s G.P. Textile was recorded on 11.12.2001 wherein he stated that he was also proprietor of M/s SRS synthetics and the name was changed to R.P. Synthetics w.e.f. 1.12.2001. That the company was operational since last two years. Both the firms were not registered under sales tax or income tax.; laminated fabrics is supplied to firm by M/s G.P. Textiles; he agreed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ort while no invoice was sent with the material that was sent through M/s Yadav Transport M/s Speed Transport and the details of production of material was sent on invoice was only entered as per direction of Shri Arun Poddar. Shri Arun Poddar in his statement dt. 12.12.2001 confirmed his earlier statement dt. 08.12.2001 and also confirmed statement of Shri Indresh Shukla; he also confessed that M/s G.P. Textiles had been clandestinely clearing laminated coated fabrics without accounting in their statutory records and without paying duty; he also accepted the statement of Shri Hemant Shah, Supervisor of M/s G.P. Textiles and also proprietor of M/s SRS Synthetics dt. 08.12.2001 and 11.12.2001. he also confirmed panchnama dt. 08.12.2001 drawn at premises of M/s G.P. Textiles; he also confessed that he instructed Shri Indresh Shukla to destroy the pages of the notebook once the goods are cleared from the factory and dispatched and that Shri Hemnat Shah was aware of his instructions; he also confirmed the panchnama dt. 08.12.2001 drawn at M/s SRS Synthetics and statement of Shri Srinath Pandey; that Srinath Pandey was employed with M/s G.P. Textiles and that he had instructed Shri Pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er Job work challans but lately the goods were received under packing slips but no Annexure challans. He stated that M/s Weave Tex has been doing jobwork for M/s G.P. Textiles for conversion of dyed yarn to fabrics. That M/s G.P textiles supplied dyed yarn to them alongwith the cartonwise packing slips; that they have received jobwork Annexure - II challan bearing no. 1 to 22 till 03.09.2001 and subsequently they received dyed yarn for conversion to fabrics only on basis of packing slips but no annexures; he also submitted a file containing details of cash transactions. It was also stated that Shri Arun Poddar instructs the other partner regarding details of type of design, quantity etc, accordingly they produced fabric and cleared it on challans. From the documents recovered from the premises of M/s Weave Tex it was found that it contained details of cash transactions for the period 2000 - 2001 and 2001 - 02. The cash received by M/s Weave Tex Synthetics from M/s G.P. Textiles during 2000 - 01 and 2001 - 02 was ₹ 9,41,021/- The conversion charges of yarn to fabric was ₹ 3 per l. mtrs. Therefore it appeared that during the year 2000 - 01 M/s G.P. Textiles has received 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of conversion of yarn to fabrics in such cases to M/s Gaurishankar Textiles ; that in one case they issued delivery challan to M/s G.P. Textiles but the goods were delivered to M/s Gaurishankar. As a result of above investigation, the show cause notice was issued to M/s G.P Textiles, the jobworkers M/s Gaurshankar textiles and M/s Weave Tex wherein duty demands was made against M/s G.P Textiles and it was also proposed to impose penalty against them. The penalties on jobworker was also proposed. Confiscation of goods lying at premises of M/s SRS Synthetics was also proposed. The duty was also demanded on shortages found at factory of M/s G.P. Textiles. The adjudicating authority confirmed demands and imposed penalties against M/s G.P. Textiles, jobworker and their Partners. Also the seized goods were confiscated. Hence the present appeals. 2. Heard both sides and perused the records. The Counsel Shri Mayur Shroff appearing for M/s G.P Textiles and Shri Vinay S. Sejpal appearing for M/s Weave Tex and Shri Yogesh Kabaria has argued at length and also filed the written submissions. 3. Shri V.K. Agarwal, Ld. Additional Commissioner (AR) supports the impugned order and also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SRS Synthetics is not sustainable as the same is sought to be corroborated with records of three transporters namely M/s Yadav Transport, M/s Somnath Transport and Speed Transport Agency; that the reliance has also been placed upon note book seized from premises of M/s G.P. Textiles. He submits that the chits were not recovered from premises of the Appellant M/s G.P. Textiles. The revenue has relied upon the note book recovered from the premises of M/s G.P textiles for demand. However the same is not corroborated with evidence. That there is duplication of demand as while working out the demands, the chits pertaining to further clearances from SRS Synthetics have also been included. It has been alleged that the Appellant M/s G.P textiles has been clearing the goods more than once to SRS Synthetics through various transporters and preparing invoice only once. The demand in Annexure B to the SCN has been made by deducting the invoice quantity from the total clearances but in many cases the invoice quantity has not been deducted. That in many cases the chits do not pertain to clearances from G.P. Textiles to M/s SRS Synthetics but by other transporters and from SRS Synthetics to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon assumption that M/s Gaurishankar Textiles during the period January 2001 to July 2001 has supplied grey fabrics to them which was not accounted by them. Reliance has been placed upon the statement of Shri Babulala Lavti, Director of M/s Gaurishankar, Supervisor Shri Harshad and dispatch register of said concern and other records. The Appellant s submission is that before September 2001 there is no evidence of receipt of job worked material by Appellants from M/s Gaurishankar Textiles or any evidence of transportation of goods. That Shri Arun Poddar in his statement dt. 07.01.2002 had categorically refused that any jobwork activity was undertaken by M/s Gaurishankar Textiles during January to August 2001. The Appellant further submitted that the statement of Shri Babulal Lavti, of M/s Gaurishankar textiles is patently false as he had stated that sometimes the yarn was received from third parties i.e D.N. Synthetics, M./s Mahavir Textiles M/s Mohit Enterprises on jobwork and the charges are collected from M/s G.P Textiles and manufactured product is delivered to them. No statement of aforesaid parties were recorded and the statement of Shri Babulal Lavti was not corrobora ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rds maintained by the jobworker and the details of cash transactions maintained by them cannot be brushed aside as it is an accepted fact that M/s Gaurishankar were undertaking jobwork activity for M/s G.P. Textiles and the details were appearing in the dispatch register and dispatch file and other records maintained by M/s Gaurishankar Textiles for this purpose. The said register does not stands disputed even the cash details appearing therein. In such case it has to be accepted that M/s Gaurishankar Textiles undertook jobwork activity for M/s G.P. Textiles. In such scenario possibility of clandestine clearance of laminated fabric processed out of such jobwork goods cannot be ruled out. It is especially in case when the evidence of clandestine clearances has been found from the factory and M/s SRS Synthetic. Thus looking to the overall modus operandi adopted by the Appellant for getting the fabric manufactured on jobwork without any document and clearances made through dummy concern M/s SRS Synthetics, it is clear that the Appellant has used such jobwork fabric in manufacture of laminated/ impregnated fabric and the same was removed without payment of duty. I therefore do not find ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case is of clandestine removal against M/s G.P. Textiles, hence the penalty under Section 11AC is also applicable against them. As regard penalty under Rule 27 and Rule 25 I find that the same are also justified for the above reason. Further the goods seized from the premises of M/s SRS Synthetics being removed clandestinely and non duty paid are liable for confiscation and therefore I uphold the confiscation. As regard penalty upon M/s Weave Tex and its partner Shri Yogesh Kabaria, I find that they have contested the penalty mainly on the ground that the grey fabrics is exempted from duty whether the same is manufactured on own account or on jobwork. That they had returned the process goods and had no malafide intention. They had no reason to believe that the goods shall be used for manufacture of goods on which duty shall be evaded. I find that the transactions between M/s Weave Tex and M/s G.P Textiles stands recorded in books and bank passbook of M/s Weave Tex. Further there is no ground to hold that the processed goods shall be used for manufacture of goods which shall be cleared without payment of duty. Also they have in no way handled the dutiable goods. They were not eve ..... X X X X Extracts X X X X X X X X Extracts X X X X
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