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TMI Blog2018 (9) TMI 630X X X X Extracts X X X X X X X X Extracts X X X X ..... h. Kaushal Kumar. It is contended that attribution to Geeta Rani about private records does not attribute criminality to her as she was only a sleeping partner - It is found that the private records amongst other places were recovered from the residential premises of Smt Geeta Rani and this fact of recovery of the records from her residence was admitted by her in her statement dated 14.10.1996. The adjudicating authority has correctly appreciated the facts and the evidence and therefore uphold the clubbing of clearances of M/s.HBC and M/s.HCW in the impugned order - appeal dismissed - decided against appellant. - Appeal No. E/2194/2007 - A/62647/2018-EX[DB] - Dated:- 14-5-2018 - Mr. Ashok Jindal, Member (Judicial) And Mr. Devender Singh, Member (Technical) Present for the Appellant: none Present for the Respondent: Shri V. Gupta, AR ORDER PER: DEVENDER SINGH The brief facts of the case are that the appellant M/s. Honey Biscuits Company (M/s. HBC) is a manufacturer of biscuits but had not obtained Central Excise registration. On 14.10.1996, the Central Excise staff searched the factory premises of the appellant and three other companies, namely, M/s. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... M/s Punjab Maize Products, Sangrur in the name of Sh. B.P. Sharma (Supervisor). (d) that daily stock/production/clearance accounts indicated the manufacture of Biscuits and sweets out of the above said unaccounted raw materials. These records were maintained by above said S/Shri Lakhwinder Singh and B.P. Sharma. They used to prepare these reports and sent the same to the office of Sh. Montoo. (e) Shri Tek Singh (Gate Keeper of M/s.HBC) also used to prepare and submit daily gate reports of the goods cleared from factory premises Sh. Arvind Sharma, Manager of M/s.HBC also used to prepare daily raw materials/ production (specifying no. of mixing and quantity of raw materials used), clearances and requirements (items required for the next day) reports and used to submit to Sh. Montoo. The persons who had prepared these reports identified the same. (f) Invoice bearing same S.No.was used again and again for safe delivery for the goods to different stations and destinations. It was found that these invoices were prepared by Shri Montoo. S/Shri Jai Prakash, R.K. Arora, Sukhwinder Singh and Kaushal Kumar (Partner of M/s.HCW) when confronted with these invoices admitted that these w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fied as the ones as having been maintained by them. They also identified their handwritings and signature in the said diaries and ledgers. 3. The investigations conducted by the department further indicated the following:- (i) that all the partners in the aforesaid four firms were members of a family residing in the same house and the total business of the three i.e. M/s.HBC, M/s.HCW and M/s.MEW was controlled by three main members of joint family i.e. Shri Jai Prakash, Sh. Montoo and Sh. Kaushal Kumar and the remaining partners being ladies of the family were the sleeping partners. (ii) that the business among all the above four firms was neither independent nor at arm s length and there was mutuality of interest in the business of each other. (iii) That M/s.HBC and M/s.HCW had been receiving the raw materials clandestinely which were not reflected in the statutory records and were being transferred from one unit to other unit without any proper accountal and receipt of payments; (iv) That M/s.HBC and M/s.HCW manufactured Biscuits and sweets respectively in their factory premises and removed the same without any accountal, without having obtained any Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7/05-EX dated 28.9.2005. 7. In the remand proceedings, the adjudicating authority has passed the following order:- (i) I confirm the demand of Central Excise duty amounting to ₹ 1,01,33,896/- (Rs.one crore, one lakh thirty three thousand eight hundred ninety six only) against M/s. Honey Biscuit Company, Alipur Arian, Patiala under Rule 9(2) of the Rules read with Section 11A of the Act and Section 38A of the Act along with interest at the applicable rates under Section 11AA upto 27.09.1996 and Section 11AB from 28.09.1996 to 14.10.1996. (ii) I impose a penalty ₹ 1,01,33,896/- (Rs.one crore, one lakh thirty three thousand eight hundred ninety six only) against M/s. Honey Biscuit Company, Alipur Arian, Patiala under Rule 9(2), 173Q and 226 of the Rules read with Section 38A of the Act . 8. Aggrieved from the order of the adjudicating authority, in remand proceedings, the appellant has filed this appeal. 9. Ld. Advocate appearing for the appellant has made written submissions and prayed that the matter may be decided on the basis of written submissions. In thee written submissions, the appellant have pleaded that attribution to Shri Geeta Rani about recover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ere partners upto 31.3.1993 in M/s Honey Biscuit Company (M/s HBC): 1. Shri Mangal Sain 2. Shri Jai Prakash S/o Sh. Mangal Sain 3. Smt. Yog Mudra W/o Late Sh. Nand Kishore 4. Shri Mantoo S/o Late Sh. Nand Kishore After 1.4.1993, the following were partners in the firm M/s.HBC:- 1. Shri Montoo S/o Late Sh. Nand Kishore 2. Smt.Geeta Rani W/o Sh.Jai Prakash. In the other firm namely, M/s. Honey Confectionary Works (M/s.HCW), the following were partners in the firm:- 1. Shri Kaushal Kumar S/o Sh. Mangal Sain 2. Smt. Yog Mundra W/o Late Sh.Nand Kishore and Mother of Sh.Montoo. 13. We find that both the units were not registered with the department and were claiming SSI exemption. M/s. HBC was engaged in the manufacture of biscuits and M/s. HCW was engaged in the manufacture of biscuits and sweets (confectionary items like toffees and golis). Private records were found hidden in crockery shelves and bed box at residential premises of Mr.Montoo (partner of M/s. HBC and son of partner of M/s. HCW) and Smt.Geeta Rani (partner of M/s.HBC). Kachha records, which were pertaining to transactions which were not recorded in official records were resumed from facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s been mentioned. Be as it may, the statements have been tendered by such employees in which they have certified the fact of maintenance of such records. There is also no retraction by any of the employees. 16. We further find that in order to cover the transportation, bogus invoices were issued in the name of M/s. Honey Biscuit Co./Goel Traders/Shiv Traders/Singla Traders and these bills/invoices were prepared by Sh. Montoo or Sh Jai Prakash. Such bogus invoices were brought back by the delivery man after the consignments reached their destination. Invoices with same serial no. were used again and again. The invoices were used from 2 to 14 times. This fact has been admitted by Sh Montoo in his statement dated 01.11.1996. We also find that apart from the staff of both M/s. HBC and M/s.HCW, shop keepers/dealers who purchased goods also confirmed this practice in their statements recorded under Section 14 of the Central Excise Act, 1944. Some of the octroi receipts and GRs used with such invoices were also recovered during the visit. 17. The appellant has nowhere disputed the fact that receipts from these bogus invoices (covering goods cleared from both M/s.HBC and M/s. HCW) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that all the business affairs of both M/s. HBC and M/s. HCW like purchase of raw material, production, despatch, collection of sale proceeds etc were managed by Sh Montoo and Sh Jai Prakash. They are members of one family running both the units though these units have different family members as their partners. It is also evident that goods were moved in same vehicle under same invoices/kachha slip by the same salesman. Amount collected by the salesman (sometimes in parts) cannot be seggregated between the two units. The Benami accounts maintained with Oriental Bank of Commerce were used for transactions in respect of both the units. Since financial transactions cannot be segregated between the two units mutuality of interest is thus clearly established. 20. From the written submissions made at the time of hearing, we find that the appellant is contesting only that the clearances of M/s.HCW be not clubbed and inclusion of other partners, namely, Ms.Geeta Rani, Sh. Jai Prakash and Sh. Kaushal Kumar. It is contended that attribution to Geeta Rani about private records does not attribute criminality to her as she was only a sleeping partner. We find that the private records amongst ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rlier, same unit was working in the name and style as M/s Snack Foods (P) Ltd. M/s. SFPL was registered with department and was paying duty. As the control of the unit remained with the same family, name of the unit appears to have been changed for the sole motive of duty evasion. However, it was shown as on lease. In the present proceedings neither any demand has been confirmed against M/s. SFPL nor have its clearances been clubbed with M/s. HBC. These facts have nothing to do with the clubbing of clearances of M/s. HBC and M/s. HCW. Thus, the factum of one unit on lease does not make any difference in this case. The kachha records were resumed from the residential premises, factory premises and office premises of M/s.HBC. The office of M/s. HBC was being maintained inside M/s.MEW and the manufacturing unit of M/s. HCW existed on the first floor of same building of M/s.MEW. Hence it cannot be said that no records were recovered from M/s. HCW. 24. It is also contended that both the firms had separate manufacturing premises, separate machinery manufacturing different goods and were owned by separate partnership firms. We find that while the units have separate premises with separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... managed in collective manner. No valid distinction could be made and a line drawn between the manufacturing activities of Noticee No.1 and 2. The investigations caused in the matter revealed that the Noticees had been issuing bogus invoices/dispatch slips. The raw materials and packing materials were also accounted for in the same private ledgers and no separate ledgers were maintained in respect of Noticee No.1 and 2. Even the raw materials were transferred sometime from the premises of Noticee No.1 to 2 and vice versa without issuing any document an without giving and receiving any payments. The Biscuits and the sweets manufactured in the factory premises of Noticee no.1 and 2 respectively were also being removed from the factory premises on the same bogus invoices/dispatch slips. So much so goods were also transported to the various stations in the same truck and were delivered by the same deliveryman. The sale proceeds were collected by the same deliveryman and were further handed over to Sh. Montoo and Sh. Jai Prakash who used to make entries in the same ledger and no separate ledgers were maintained for Noticee No.1 and 2. The expenditure incurred on the sale of the goods we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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