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TMI Blog2018 (3) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... same impugned order are heard together and disposed by this common order. 2. The appellant M/s. Sri Vari Print Pack Pvt. Ltd., Puducherry (herein after referred to as M/s. SPP) are engaged in the manufacture of corrugated cartons. They are registered with the Central Excise department and were earlier availing SSI exemption benefit. During the year 2001 02, M/s. SPP crossed the limit of ₹ 3 crores of aggregate value of clearances and started paying duty from 2002 03. M/s. Sri Vari Graphics Pvt. Ltd. (herein after referred as to M/s. SG) had two units, one at Hosur and another at Puducherry. These units were also engaged in the manufacture of corrugated cartons and were not registered with the department as on 20.5.2003, thus availing SSI exemption limit. Based on intelligence, M/s. SG are clearing corrugated cartons without payment of central excise duty. The officers visited the unit on 20.5.2003. They found two machines in the premises of M/s.SG, Puducherry such as (i) stitching machine without motor and (ii) punching machine installed with electricity connections. Some stock of corrugated board partitions and corrugated carton board waste were found strewn around. Some ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther, only at the time of visit of officers on 20.4.2006, the salary particulars maintained for the employees of M/s. SG was produced which is only an afterthought. As regards raw materials, it appeared that M/s. SG have sourced the raw material namely kraft paper under their own account and payments for the same have been made by M/s. SG through cheques. The documents pertaining to the transport of raw materials showed that the delivery of raw materials has been made to M/s. SPP. With regard to production and clearance, no records as to daily stock account or production register was maintained. However, M/s. SG produced records pertaining to the receipt of corrugated cartons after job work from M/s. SPP which were sent under delivery challans of M/s. SPP. The clearances made under invoices of M/s. SG was also available. The entire movement of the goods, that is, receipt of goods after job work and clearance of finished goods was stated to have been made under their own transport. However, no documents in this connection were made available. With regard to sales tax returns, M/s. SG unit was under exemption of sales tax for 10 years and has not paid any sale ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the seized goods were ordered to be confiscated allowing them to be redeemed on payment of redemption fine. On appeal, the Commissioner (Appeals) upheld the same. Hence these appeals. 4.1 On behalf of the appellants, ld. counsel Shri M. Karthikeyan made the following submissions:- 4.2 That both the units are separate and legal entitles being private limited companies. They have separate sales tax registration and income tax assessee. Being separate legal entities, their clearances cannot be clubbed together. Neither can the clearances of one be clubbed with other nor can one unit be alleged to be dummy unit of another. 4.3 Both the units were having separate manufacturing premises. They had separate machinery and separate working capital besides having separate work force. 4.4 M/s. SG, Puducherry was having a unit at Hosur as well as Puducherry. Both these units obtained centralized excise registration. 4.5 M/s. SG, Puducherry was having one punching machine and one stitching machine. These were operated using a generator. At the time of visit, the stitching machine was under service and therefore the officers have recorded that it is lying in dismantled condition. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the semi-finished goods received from M/s. SG. 5.2 It is pointed out by him that the job work charges were reflected only in the ledgers and there were no vouchers or payments regarding the job work charges. There was no evidence to show the agreed rate of job work charges. The facts reveal that the entire manufacture by the assessee was done at the premises of M/s. SPP and the goods were returned to M/s. SG in a finished condition. The corrugated cartons received back at M/s. SG were not in a semi-finished condition requiring any further process of punching or stitching. This is clear evidence that the entire manufacturing activity was carried out by M/s. SPP alone at their premises and M/s. SG was only dummy to fragment the clearances of M/s. SPP. The Director Shri Govindarajulu stated that in the job work documents, the goods returned are mentioned as corrugated boxes and not semi-finished boxes. The version of the appellant that they have sent raw materials from M/s. SG to M/s. SPP and received semi-finished goods for further processing of final product is not substantiated by any material evidence. There is no document to support the contention that materials for job work w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ahazar also. It can be safely concluded that this plea of the appellant is made without any factual basis and only to get over the allegation that there has been no manufacturing process carried out in the premises of M/s. SG. Though appellant contends that entire manufacturing activity was not done at M/s. SG and only final stage of punching etc. was done, the machines were lying in an idle condition and there was no power supply. The contention that goods were sent for job work at M/s. SPP also does not stand the text of evidence. It is brought out from records that there is no receipts / payments raised for the job charges made by M/s. SG to M/s. SPP. The job charges are merely mentioned in the ledger account of these units. Further, the job work charges reflected in the ledgers is totally disproportionate to the value of clearances. The original authority has noticed that although sales to the extent of ₹ 97.66 lakhs was made during the period 2002 03, the job charges shown was meagre and disproportionate to the quantity of clearance made. It is noted that the entries in the ledger accounts of both the units do not give any reference to job work charges raised in the form ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Punching machine and a dismantled/unassembled Stitching machine without motor, seems to be far-fetched, unrealistic and impractical. Moreover, the ledger maintained by them revealed that no entries were available under the capital goods account as on 20.05.2003, evidencing the non-possession of any capital goods/machineries at their factory premises other than the punching and stitching machines mentioned hereinabove. From the foregoing, it could be understood that manufacturing activity of such a magnitude proportionate to the value of clearances made by them, which is ₹ 97,66,473/-, cannot by no stretch of imagination carried-out in the small and inadequate premises. Therefore, their contention in their reply that M/s. Srivari Graphics Pvt. Ltd. had separate manufacturing premises, separate work force and separate machinery lacks force and not convincing. The entries in the Ledger accounts of both the firms do not give any reference to job-work charges raised in labour bills, nor are there any vouchers available for payments/receipts. Instead, the amounts have been charged through journal entries as on 23-05-2003. Had they been different entities having independent ..... X X X X Extracts X X X X X X X X Extracts X X X X
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