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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 ..... of the appellant company) resulting in recovery of certain private records hidden in crockery shelves and bed box. In her statement dt.14.10.1996, Smt. Geeta Rani admitted the recovery of the private records. Investigations revealed that the unit of M/s.HCW situated at the first floor of the rented portion of M/s.MEW was also engaged in manufacture of Biscuits and sweets. 2. Scrutiny of the documents seized/recovered recovered revealed as under:- (a) that the major raw materials i.e. Maida, Sugar and Packing material were received through Commission agents and the billing was not done directly in the names of M/s.HBC and M/s.HCW. However, the details of receipt of raw material and other goods were reflected in their daily private/ kacha reports prepared by Shri Arvind Sharma (Manager of M/s.HBC), Sh. Tek Singh (Gate Keeper and supervisor of M/s.HBC) and Sh. B.P. Sharma (Supervisor of M/s.HCW). All these reports were submitted to the office of Shri Montoo, situated in the factory premises of M/s.HCW. (b) that the daily reports/ gate reports for the years 1993 to 1996 resumed were also confronted to various representatives of M/s.HBC and M/s.HCW. S/Shri Arvind Sharma (Manager), T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ruck from the factory premises of M/s.HBC and preparing the covering document, namely, bogus invoice/private dispatch slips, the truck was brought to the factory premises of M/s.HCW and further sweets were loaded from there. The entry regarding quantity and value of the sweets was also made in the invoice/private dispatch slip which used to accompany the goods from the factory premises of M/s.HBC. These invoices used to bear the name either of M/s.HBC or other bogus firms. The concerned documents, after making the entries of the quantity and value of the sweets, were handed over to the delivery man for the delivery of goods to various buyers. (i) S/Shri Montoo and Jai Prakash used to make entries in the private ledgers (party-wise and station wise) maintained by them. The total amount of each slip was entered in the ledgers. (j) The delivery man after handing over the goods to the specified shop keepers/dealers used to collect part payments made by such buyers on the spot and make relevant entries on the slips. The bogus invoices/dispatch slips and cash collected were received back in the office of M/s.HBC and M/s.MEW. The remaining payments were later on collected by the salesma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to Rs. 1,02,07,036.00 not paid by Noticee No.1 by clubbing the sales with Noticee No.2 should not be demanded from them under Rule 9(2) of the Rules read with Section 11A of the Central Excise Act, 1944 (hereinafter referred to as "the Act") by invoking the extended period along with interest under Section 11AB of the Act; (ii) seized goods valued at Rs. 7,31,398/- involving Central Excise duty amounting to Rs. 73,140/- should not be confiscated under Rule 173Q of the Rules; (iii) land, plant and machinery belonging to M/s/SFPL and leased to should not be confiscated under Rule 173Q of the Rules as the same was used in the manufacture of excisable goods removed clandestinely and the fact that in the knowledge of M/s.SFPL. 5. The matter was adjudicated by the then Commissioner of Central Excise, Chandigarh vide Order-in-Original No.172/CE98 dated 26.11.1998. In the adjudication order:- (i) The demand of Central Excise duty amounting to Rs. 1,02,07,036/- was confirmed against M/s.Honey Biscuits Company, Patiala (M/s. Honey Confectionary Works, Patiala) along with interest. Penalty of equivalent amount was also imposed on M/s.Honey Biscuits Company, Patiala (M/s. Honey Confection ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of appellant was with Sh.Montoo as Managing Partner; that clubbing of value of clearance of M/s. Honey Biscuit Company with M/s. H.C.W. was not proper as it was set up in the year 1983. The contention is that both firms had separate manufacturing premises, separate machinery owned by separate firms with different partners and manufacturing different goods. The contention is that clubbing is patently fallacious as the liability exclusively lay with the managing partner of M/s.Honey Biscuit Company and he was solely responsible for running the business of the company. It is also argued that the unit being a leased out unit has not been considered nor the fact that incriminating record has not been seized from M/s. H.C.W. has also not been considered. The fact that business of M/s.MEW was run by the family consisting of Geeta Rani and Jai Prakash has also not been considered. 10. Ld. AR reiterated the findings in the order of the adjudicating authority and pointed out that the goods manufactured in the factory of the appellant were transported with bogus invoices to M/s.HCW. These invoices were thereafter manipulated to show addition of further goods. He pointed out that Shri Monto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same vehicle. Quantity and value of the goods cleared from M/s. HCW were added in the same Kachha/Despatch slips. 15. During investigations, daily reports reflecting purchase of raw material/production/gate reports were recovered. The employees S/Sh Arvind Sharma (Manager), Tek Singh (Gate Keeper/Supervisor), R.K.Arora (Salesman), Lakhwinder Singh (Supervisor), Sukhwinder Singh Alias Jackie (Supervisor/Deliveryman), B P Sharma (Manager)/Supervisor of M/s.HCW) and Sh Montoo on being confronted, admitted that these reports were prepared on the basis of actual receipts and were submitted to Sh Montoo in a routine manner (various statements of these employees were recorded on different dates i.e. on 25.10.1996/3010.1996/01.11.1996/03.11.1996/11.11.1996/14.11.1996/22.11.1996/22.11.1996/06.12.1996/07.01.1997. In this regard, the following findings of adjudicating authority are very relevant:- "44. It has been contended that on behalf of the Noticee that certain records had allegedly been attributed to them and most of them were written by various employees. It is their contention that no reliance deserved to be placed on such records as the entries had apparently been made by cert ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... finding of the adjudicating authority:- "Had the accounts contained licit transactions, there could be no questioning of opening these accounts as benami accounts. The very fact that they were benami accounts operated by the persons manning the operations of the Noticees proves beyond the shadow of doubt that the transactions made through these accounts were not legitimate. And no benefit accrues to the Noticees from the contention raised in their defence in this regard." 18. We further find that Sh B P Sharma (Manager/Supervisor of M/s/.HCW), in his statement dated 06.12.1996, also confirmed that he used to collect payments from these accounts. He also identified his signature on cheques against which he collected payments from these bank accounts. After delivery of goods on Kuchha parchies, salesmen used to collect part payments also and record same on the kuchha parchies. During the searches, some invoices which were not filed with consignee details, unsigned and showing 30% lower rates but entered in books of accounts were also recovered. These invoices were having no relevance with the actual clearances. This clearly shows that invoices were prepared at will to reflect sal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wise and station wise) maintained by them. The total amount of each slip was entered in the ledgers. The deliveryman after handing over the goods to the shopkeepers/dealers used to collect part payment also and record same on the kuchha parchies. The remaining payments were also collected by the deliverymen and handed over to S/Sh Montoo and Jai Prakash. The slips were in the handwriting of both Sh Montoo and Sh Jai Prakash. Moreover, they were found to be maintaining six benami accounts with OBC for deposit of money received from bogus invoices. Chief Manager of the bank and also Sh Montoo admitted that they were operating three accounts each by S/Sh Montoo and Jai Prakash. Hence, we are not convinced by the contention that the entire operation was handiwork of Sh. Montoo only without involvement of Sh. Jai Prakash. 22. It has also been contended that there was no mutuality of interest in the business of any of the separate units and control of appellant M/s. HBC was with Sh. Montoo as only Managing Partner. We find that mutuality of interest is established in as much as that the accounts relating to purchase of raw material / sales of finished goods were commonly maintained. Go ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of raw materials. The materials have been purchased even in the names of their employees who were working only for the Noticees and not on their own behalf. It is observed that both the Noticees had received the major raw materials like sugar, maida and packing materials through commission agents but the bills were not directly raised in their names. Glucose Syrup was received from M/s. Punjab Maiza Products, Sangrur in the name of Shri B.P.Sharma working as supervisor in the factory premises of Noticee No.2. The receipt of raw materials and the other goods was reflected in the daily private/kacha reports which was prepared by the various employees of the Noticee no.1 & 2. Such reports were further submitted to the office of Sh. Montoo who was partner in Noticee No.1 & 3. Likewise Shri Arvind Sharma (Manager), Tek Singh, Gate Keeper & Supervisor of Noticee No.1 and Sh. B.P.Sharma, Supervisor of Noticee No.2 have admitted this fact that they had entered the receipt of the various raw materials in their daily private/kacha reports and were not entered in the statutory records. It was further admitted by them and also Sh.Montoo, Managing Partner of Noticee No.1 that entries in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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