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TMI Blog2020 (1) TMI 997X X X X Extracts X X X X X X X X Extracts X X X X ..... ure was manifest from the panchnamas and the show cause notice relied upon the statements to allege otherwise, the adjudicating authority should have allowed the cross examination - when the Appellant unit has not been granted the opportunity to cross examination of persons whose statements have been relied upon to make allegation against the Appellant, the demand cannot be confirmed based upon such statements. Only on the basis of statement without any corroborative evidence, no allegation can be made against the Appellant. It is undisputed fact that the Appellant unit was doing trading of goods also and even if assumed that the goods were delivered to their firm, it cannot be said that the goods so delivered were manufactured by M/s JSFPL. Even Shri Hemnani in his statement has not stated that the said furniture was manufactured by M/s JSFPL. Thus the statement of Shri Hemnani cannot be made ground to hold that M/s JSFPL has cleared goods manufactured by them under the cover of estimate chits - as long as the associate units were found to be engaged in manufacturing of furniture, it cannot be said that the said furniture was manufactured by M/s JSFPL. In such case when the dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alaram Furniture. 2. During search at factory of M/s JSFPL, Note book and other records/ documents were seized. The Note book was found to be containing the date wise sales of wooden and steel furniture along with name of buyers. Also two pens drives i.e. one from the Table Drawer of Shri Karsanbhai, Director of M/s JSFPL and another from cupboard lying at office premises where staff used to sit were seized. In his statement dt. 23.03.2012 Shri Karshanbhai stated that their sales include the sales of goods manufactured by them as well as traded goods. Goods valued at ₹ 31,80,235/- was seized from the factory. During search at Corporate office of M/s JSFPL cum retail outlet premises of M/s Jalaram Furniture, it was found that the same is corporate office of group companies cum furniture show room and wherefrom they were selling goods manufactured by M/s JSFPL as well as trading of domestic or imported goods. The officers seized two computers containing the data from said office. Shri Rajni G. Patel, Partner of M/s Jalaram Furniture stated that they were doing trading of Wooden and Steel Furniture under brand name Jalaram . That records pertaining to M/s JSFPL, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Parin Furniture Surat. It was also found that the manufacturing activity of wooden furniture was carried out by said firm. The furniture bearing logo Jalaram was found to be sold by them. The goods valued at ₹ 2,28,050/- bearing brand name Jalaram were seized. Statement of Shri Mamotra was recorded on 23.03.2012 wherein he stated that M/s Hardik Steel Furniture were manufacturing steel and wooden furniture and were selling it to M/s JSFPL; that two cupboards bearing brand Jalaram were sold by them to Ms/ JSFPL and the Proprietor Shri Mansukhbhai Vaishnav could give details about the branded clearance in past. During investigation at M/s Trimurti Steel Industries, Navsari Proprietorship concern of Shri Nagjibhai Muljibhai, a computer was found containing details of sales and purchase. The basement was found to have been given on rent to M/s Jalaram Furniture. Shri Ajaybhai Nagjibhai, Partner of M/s Jalaram Furniture stated that they were selling steel cabinets/ Tijoris supplied by M/s Trimurti Steel Industries but no tax was paid on such goods even though received on invoice. In ground floor of said premises the steel cabinets, Racks and tables were found to be manufact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JSFPL on couple of occasions and also produced the bill. One paper showing JSF at the top was also found containing details of models number of M/s JSFPL in relation to which Shri Rajkumar informed that the same are details of different types/ models of power coated steel cupboards/ steel cabinets purchased from M/s JSFPL and the same has been sold in local market in cash. In his statement dt. 07.04.2012 Shri Rajkumar Hemnani stated that rate shown in purchase bills of M/s JSFPL are showing less price on invoices i.e 50% to 60% of actual purchase price and differential amount was collected by M/s JSFPL in cash. Shri Rajesh Govindbhai Patel, Director of M/s JSFPL in his statement dt. 27.08.2012 agreed with the seizure of goods valued at ₹ 31,80,235/- made at their factory and goods valued at ₹ 14,54,096/-show rooms/ dealers located at different places. Shri Ajay Nagjibhai Patel Partner of M/s Jalaram Furniture in his statement dt. 20.09.2012 stated that 75 Nos of steel furniture seized from their premises and were manufactured by M/s JSFPL and cleared to their firm without payment of duty. 5. Based upon seizure of documents/ recording of statements and inves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /s JSFPL it appears that M/s JSFPL in addition to the above has manufactured and cleared various items under the cover of estimates chits during the period 01.01.2012 to 22.03.2012. The show cause notice relied upon statement of Shri Rajkumar Hemnani authorised signatory of M/s Gopal Furnitures that the acknowledgment receipt of goods from JSFPL were given on estimate chits and payment was made in cash. Reliance was placed upon the statement of driver of Tempo No. GJ-05 YY 8393, Shri Khandu Devrampatil that he had loaded 22 Nos of Wooden Steel furniture items from JSFPL, Laskana, Surat under estimate chit dt. 23.03.2012 to deliver the same at Jalaram Furniture, Valsad and directed to contact Shri Santosh Bhai. It was alleged that aforesaid statement shows no invoice were issued for goods narrated in these images of estimates. The said items were manufactured and cleared by M/s JSFPL. That from the Note books seized from the factory premises of M/s JSFPL it appears that the said note book contains the date wise sale of models of Wooden Steel furniture items along with name of buyers. On comparing the same with the details shown in estimate chits the details of both are matching. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uty of ₹ 1,64,42,851/- on Wooden Steel furniture cleared by M/s JSFPL. It was also proposed to adjust the amounts deposited by them against the said demand. Penalty under Section 11AC was also proposed read with central excise Rule 25. Penalty under Rule 26 was proposed on co-appellants. 8. The adjudicating authority vide impugned Order dt. 28.11.2014 confirmed the demand of ₹ 1,64,42,851/- against M/s JSFPL alongwith interest and equivalent amount of penalty. A penalty of ₹ 1,00,000/- each was also imposed upon the co-appellants under Rule 26 of Central Excise Rules, 2002. Hence the present appeals by the above named Appellants. 9. Shri Anish Goyal, learned Chartered Accountant alongwith Shri Kushal Rathi, Learned Chartered Accountant appearing for the Appellants submits that the furniture items were manufactured by individual/ separate factory premises of various entities and M/s JSFPL has traded the furniture items after purchasing it from such entities. The adjudicating authority has failed to appreciate the above fact in spite of numerous evidences and physical position found during panchnama in many units. The contention of the Sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ply to show cause notice which shows the goods which could not have been manufactured by M/s JSFPL. He submits that M/s JSFPL were selling their products through show rooms/ dealer and tender sale and have separate marketing division which used to issue Order acceptance cum work order to customer having pre-printed format and only on the basis of such pre-printed formats it cannot be said that the goods were manufactured by M/s JSFPL. No facts has been ascertained during investigation. Shri Rajesh Patel, director of M/s JSFPL in his statement dt. 21.12.2013 has clearly stated that on going through the files of order acceptance cum work orders, I agree with the fact that it contains details as shown. However few items viz. Revolving Chairs, Revolving stools, Wooden Tables, Wooden settee, Wooden Table Tops, coffers, cash boxes and safe, steel heavy duty racks and plastic furniture which we do not manufacture at M/s Jalaram Steel Furniture Pvt. Ltd, have been purchased from our other units and supplied to customers. Only on the basis of common order acceptance form it cannot be concluded that the furniture was manufactured by M/s JSFPL. 11. In case of M/s Jalaram Steel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... artered Accountant. The figures of Balance Sheets itself show that the manufacturing activity was carried out by said firm. The factory was on rent which was submitted before the adjudicating authority. The raw materials purchases were made and the goods were delivered to factory. He draws our attention to the evidences submitted to the adjudicating authority viz. wages incurred by the firm and wages register, insurance expenses, freight inward expenses and various other expenses, VAT registration and VAT Returns. He draws our attention to Income Tax Audit Report, Income Tax Return, VAT Returns, Wages Register all for the year 2008 09 to 2010 11. He also takes us through Rent agreement of the factory, sample purchase bills of Raw Materials, sample sale bill of furniture sale, transportation bill, creditor confirmation certificate and Ledger of M/s Jalaram Steel Industries in books of M/s JSFPL to support his contention that M/s Jalaram Steel Industries is an independent unit and its clearances cannot be included in clearances of M/s JSFPL. 12. In case of M/s Hariom Industries he submits that during search in the premises of said unit, it was found that the unit was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... guage and cannot read/ write English. He relies upon tax audit report, VAT returns, DIC registration, wage register, creditors ledger, sample bill of raw material purchase, transportation bills, certificate from chartered engineer certifying the machinery installed, photos of machine installed and ledger of M/s Hiral in books of M/s JSFPL to support his above contention. 14. In case of M/s Trimurti Steel industries also he takes us through similar set of evidences viz. statutory records and panchnama during which the officers found unit being engaged in manufacture of goods to show the independent unit. He also submits that the Partner Shri Nagjibhai Muljibhai Patel is only 7th standard pass and could not understand English but still the officers made him sign the statement which was signed by him in Gujarati language. Similarly in case of M/s Hardik Steel Furniture he takes us through the panchnama dt. 23.03.2012 wherein Shri Rajesh Rasiklal Mamotra informed the officers that they were selling the goods manufactured by them and imported goods which was purchased by them from M/s Parin Furniture. That the furniture bearing Jalaram sticker were manufactured by them. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on judgments in case of Narendra B Jain 2014 (304) ELT 563 (TRI), Anil PannalalSarogi 2009 (241) ELT 219 (TRI), Sai Kripa Exim P, Ltd. 2003 (156) ELT 225 (TRI) and Super King Manufacturers (Tyres) Pvt. Ltd. 2012 (286) ELT 637 (TRI) and Latex Chemicals 2005 (181) ELT 138 (TRI). He also submits that the evidence of evasion is to be proved by cogent, convincing and tangible evidence. He relies upon orders in case of Premium Packaging Pvt. Ltd. 2005 (184) ELT 165 (TRI), Motabhai Iron Steel Industries 2014 (302) ELT 69 (TRI) and Hindustan Aegis LPG Bottling Co. 2005 (182) ELT 180 (TRI). 17. As regard demand based on scanned copy of estimate retrieved from the two pendrives and computers seized from the office, he submits that data contains some images of estimates, issued during the period from 01.01.2012 to 22.03.2012 under the details like name of party, destination, date. Model No., description of goods, rate, quantity and value. On the basis of said data the demand has been made against M/s JSFPL. For making demand statement of Shri Rajkumar Hemnani, Authorised signatory of M/s Gopal Furniture has been relied upon that the goods under estimate slips were delivered by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on invoice were infact manufactured by M/s JSFPL and cleared by M/s JSFPL under the cover of Retail Resale Invoices or Tax Resale Invoices. 22. As far as allegation of non manufacturing of goods by the units in which the co-appellants are Partners/ proprietors are concerned, we find that these units during investigation were visited by the officers and they prepared panchnama as well as recorded statements. The Panchnama at Hariom Steel Industries Shows that during the visit the firm was found to be engaged in manufacture of steel furniture viz. Steel Cabinet, Rack, Table, Book case, partition, sliding door unit, Magazine Almirah cum Display stand. Similarly in case of M/s Hardik Steel Furniture, Proprietor firm of Shri Mansukhbhai Bhagvanbhai Vaishnav, the panchnama shows that manufacturing activity of wooden furniture was being carried out behind the premises on western side and manufacturing activity of steel cupboards and various types of steel furniture was being carried out at the premises situated at Shed No. 41/3 situated at opposite to the above premises on eastern side. On being asked Shri Rajesh Rasiklal Mamotra, Manager informed that their office and reta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Karshanbhai was owner of said unit. He also informed that M/s Jalaram Furniture was a Partnership firm engaged in purchase and sale of furniture item; that he himself, his son Shri Rajnibhai G. Patel, Smt. Binalben Rajinibhai Patel (wife of Shri Rajnibhai) and Smt. Dhrutiben Rajeshbhai Patel were the partners in said firm. Statement of Shri Ajaybhai Nagjibhai Patel, Partner of M/s Jalaram Furniture was recorded on 23.03.2012 wherein he stated that they are procuring/ purchasing the steel cabinet, table bearing brand name Jalaram from M/s Trimurti Steel who are manufacturing the same on behalf of M/s JSFPL. Further even in statement dt. 03.07.2012, Shri Rajesh Govindbhai Patel, Director of M/s JSFPL stated that M/s JSFPL are engaged in manufacture of different type of steel furniture and office furniture and also doing trading of different type of wooden and steel furniture which is purchased from different parties viz. M/s Jalaram Furniture, Surat, M/s Hiral Furniture, Surat, M/s Hiral Steel Industries, Surat M/s Loyal Wood, Palej, M/s Neelkanth Furniture, Bharuch, M/s Trimurti Steel Industries, Navsari, M/s Trimurti Steel Industries, Valsad, M/s Laxmi Trading, Ahmedabad, M/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... wn against Appellant and its associate manufacturing unit. Our view is also based upon Tribunal order in case of M/s Saakeen Alloys Pvt. Ltd. 2013 (296) E.L.T. 392 (Tri. - Ahmd.) as upheld by the Hon ble High Court of Gujarat reported in 2014-TIOL-739-HC-AHM-CX and subsequently by Hon ble Supreme Court as reported in 2015 (319) ELT A117 (SC), Continental Cement Company 2014 (9) TMI 243 (All- HC), Siddhi Vinayak Sponge Iron P. Ltd 2014 (308) ELT 154 (TRI). 24. Secondly we find that the adjudicating authority has relied upon the statements to confirm demand and did not allow the cross examination as sought by M/s JSFPL. We are of the view that when against the actual situation of associate concerns engaged in manufacturing furniture was manifest from the panchnamas and the show cause notice relied upon the statements to allege otherwise, the adjudicating authority should have allowed the cross examination. Our views are based upon the judgments passed by the Hon ble Courts in case of GUJARAT CYPROMET LTD.2017 (345) E.L.T. 520 (Guj.) and VISHNU CO. PVT. LTD.2016 (332) E.L.T. 793 (Del.). Therefore we are of the view that when the Appellant unit has not been granted the o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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