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TMI Blog2019 (11) TMI 1615X X X X Extracts X X X X X X X X Extracts X X X X ..... the Appellant is situated at Naraina, New Delhi. According to the Appellant, it purchased the plant/machinery at Roorkee sometimes in February/March, 2010. At Roorkee admittedly two units namely M/s SKN Bentex Lighting and M/s Bentex Control Switchgear Company are running from the premises. In the present Appeals, the issues are only with M/s Bentex Control Switchgear Company. The declaration submitted by the Appellant on 17 March, 2010 for claiming exemption from excise duty in terms of the exemption notification mentions that the Appellant intends to manufacture four items namely, Motor Starters, KWH Meters, Miniature Circuit Breakers and Change Over Switches. The Appellant, however, claims that it started commercial production of Motor Starters only prior to 31 March, 2010 and it did not start commercial production of KWH Meters. Miniature Circuit Breakers and Change Over Switches. To claim the benefit of the exemption notification, it was imperative for the Appellant to have substantiated that the new industrial unit set up by the Appellant had commenced commercial production on or after 7 January, 2003 but not later than 31 March, 2010. The main submission of the Appellant to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect cannot be said to be perverse. The claim for Cenvat credit on inputs, capital goods and input services has also rightly been denied to the Appellant by the Commissioner (Appeals) as the procedure laid down in the 2004 Rules had not been complied with by the Appellant. Learned Counsel for the Appellant could not satisfy that the requirement of the 2004 Rules had been satisfied. Penalty - suppression of facts or not - HELD THAT:- Penalty that has been imposed upon the Appellant has also been assailed by learned Counsel for the Appellant. The Commissioner (Appeals) has recorded a categorical finding that there was suppression of vital facts with an intention to evade payment of central excise duty by availing the benefit of the exemption notification, even though it had not started commercial production prior to 31 March, 2010 and it is only when a verification was carried out that the correct facts came to the light of the Department - This finding is based on a report submitted by the inspecting team that went for verification of the declaration made by the Appellant. The declaration was found to be false. It cannot be, therefore, be urged that the Appellant had no intention of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty. 6. The date of six show cause notices, the period of dispute, the duty, the penalty, the date of Appellate order and the date of Order-in-Original have been specified in the following chart: SCN No. Date Period of dispute Duty Penalty Appellate Order Original Order First 06.07.2011 April, 2010 to Jan. 2011 ₹ 444052/- ₹ 444052/- 25.02.2015 30.09.13 Second 03.04.2012 Feb.2011 to Sept. 2011 ₹ 899874/- ₹ 899874/- 25.02.2015 30.09.13 Third 11.10.2012 Oct. 2011 to June, 2012 ₹ 1571750/- ₹ 1571750/- 25.02.2015 30.09.13 Fourth 23.07.2013 July, 2012 to March, 2013 ₹ 1416965/- ₹ 1416965/- 25.02.2015 30.09.13 Fifth 28.04.2014 April, 2013 to June 2013 ₹ 620252/- ₹ 620252/- 04.02.2016 16.04.15 Sixth 31.07.2014 July, 2013 to June, 2014 ₹ 520000/- ₹ 520000/- 04.02.2016 16.04.15 7. The Appellant filed a declaration on 17 March, 2010 claiming exemption from payment of excise duty under the exemption notification dated 10 June, 2003 before the Deputy Commissioner, Central Excise Division, Dehradun. The notification granted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... date of commencement of commercial production, whichever is later. 4. The exemption contained in this notification shall not apply to such goods which have been subjected to only one or more of the following processes, namely, preservation during storage, cleaning operations, packing or repacking of such goods in a unit container or labelling or re-labelling of containers, sorting declaration or alteration of retail sale price and have not been subjected to any other process or processes amounting to manufacture in the States of Uttarakhand or Himachal Pradesh." 8. The declaration was filed on 17 March, 2010 by the Appellant stating that it would be manufacturing Motor Starters, KWH Meters, Miniature Circuit Breakers and Change Over Switches. The verification of the unit was conducted by a team of Central Excise Officers on 18 April, 2010 in the presence of Ram Swaroop Kalia, the Plant Head of the unit. The officers found that there were two units in the premises namely M/s SKN Bentex Lighting and M/s Bentex Control & Switchgear Co. Both the units were separated on the ground floor by a wall and on the first floor by a mark fixed with columns. 9. On the first floor of the unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... steel boxes duly labeled as B-63 to 65/3, Naraina Indl. Area, Phase-II, New Delhi. The unit joins these assembly parts into steel box fitted with switches and pack in their packing cartons. (vii) The officers found the packed boxes manufactured at B-63 to 65/3, Naraina Indl. Area, Phase-II, New Delhi, marked as "SKN". In some of the boxes, the officers found that some of it had been manufactured at B-2, Dev Bhoomi Industrial Area, Bantakheri, Roorkee, but on opening it, the finished goods i.e. Motor Starters were marketed with a label showing goods as manufactured at New Delhi. (viii) The unit raised its 1st commercial Invoice on 19.03.10 vide Invoice No. 00001 dated 19.03.2010 showing BSAK 15 HP (Motor Starter) and BSAK 20 HP (Motor Starters) cleared for ₹ 162768.00. (ix) The unit has shown to have commenced its production on 18.03.10, but as on date the unit did not make production register. (x) During the visit the officers found 462 packed cartons of Motor Starter kept at 1st floor in assembly room. (xi) On the ground floor the Machines have been installed, but only one Power Press is used in the manufacturing activities. (xii) The unit engages the labour for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... any is situated at B-63 to 65/3, Naraina Industrial Area, Phase-II, New Delhi and the present unit was only an additional unit. The said plant and machinery were purchased sometimes in the month of February and March, 2010. It was also stated that since the main unit was manufacturing identical products at their Delhi factory, a decision was taken to stock transfer some of the raw materials meant for the manufacture of Starters and other electrical goods from the Delhi factory on payment of appropriate Central Excise duty. It was further stated the fact that the Appellant was manufacturing the finished goods at Roorkee since number of workers were engaged. When the unit was established in February, 2010 there were six workers, which number had increased to 23 in the month of March, 2010 and to 37 in the month of April, 2010. It was also stated that when the unit was established in the month of February, the electricity bill was to the tune of ₹ 18,480/-, which increased to ₹ 20,784/- in the month of March, 2010 and to ₹ 21,471/- in the month of April, 2010 and to ₹ 21,176/- in the month of May, 2010. It was also stated that it was due to the "sheer mistake o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant head is Mr. Ram Swaroop Kalia, Production Manager is Mr. Ram Ji Lal Uppadhyay, H.R. Manager Mr. Gopal Sharma has left the unit and in his place Mr. Amit is working. (xii) They recorded the commercial production in RG-1 dated 19.03.2010 and made the first sale invoice also on 19.03.2010. (xiii) Copy of stock register as well as sale invoices as on date will be provided. (xiv) The Delhi unit has actually dispatched the raw material along with spares for manufacturing the finished goods. Due to illiterate labour, they have loaded SKN marked labels and cartons marked B-63 to 65/3, NIA, Phase-II, New Delhi-110028. The said labels were affixed on finished goods and packed in cartons by mistake. We admit the statement of Gopal Sharma dated 18.04.2010. (xv) Their sister concern also manufactures Motor Starters, Miniature Circuit Breakers, Ceiling Fans, KWH Meter, Mono block Pump, Main Switches & Change over Switches, Amp Voltmeter etc. (xvi) The goods manufactured in the Roorkee Plant differ from Delhi unit. (xvii) Copies of GR along with sales invoices will be provided. (emphasis supplied) 16. Six show cause notices were issued to the Appellant containing identical charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and the Appellant had correctly filed the declaration. It was emphasized that the Appellant had commenced commercial production of the goods before 31 March, 2010, which was the cut of date and that it had raised first commercial invoice on 19 March, 2010. It was also stated that the team of the Central Excise officers should have ascertained the correct facts from the two officers and what was stated by the Appellant in reply to the communication dated 4 May, 2010 issued by the Department was reiterated in reply to the show cause notice. In addition thereto, it was stated that even if it is assumed that the Appellant was liable to pay duty, then too it was entitled to avail Cenvat credit of duty paid on inputs, capital goods and service tax paid in respect of input services and that the extended period of limitation could not have been invoked by the Department. 18. The Additional Commissioner did not accept the defense submitted by the Appellant. After noticing that most of the 462 packed cartons had marking of "SKN" manufactured at B-63 to 65/3, Naraina Industrial Area, Phase-II, New Delhi and that on opening the cartons, the specification plates fixed on the finished goods al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured by the party in their Delhi unit and, in order to avail the exemption they were brought in this unit in the garb of the raw material." (emphasis supplied) 19. The contention of the Appellant that it had kept the raw material in a locked store room was not accepted and a finding was recorded that the Appellant had been bringing manufacturing goods from the Delhi unit. The finding is as follows: "9.7 xxxxxxxxxx This fact should have been pointed out by the plant incharge Shri R.S. Kalia at the time of the visit or even immediately thereafter. From the fact they had not pointed out the said fact either at the time of the visit or thereafter, it can be concluded that their submission is merely an afterthought. In the absence of the plausible explanation and evidence, I find that there was no stock of the raw materials in the factory at the time of visit of the officers. This shows that the party had been bringing the fully manufactured goods from their Delhi unit in the garb of raw materials and manipulating their records to claim the exemption under notification No. 50/2003." (emphasis supplied) 20. The Adjudicating Authority also found that the Power Press Machine was no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , Phase-II, New Delhi since it was unlikely that this mistake would have gone unnoticed by supervisors, production staff/godown incharge, quality control and dispatch section. The Commissioner (Appeals) noted that even the production register was not presented to the officials nor any record pertaining to the manufacture of the goods was furnished by the Appellant to the officers of the Department during the visit to substantiate the claim that the unit had started manufacture of the goods prior to 31 March, 2010. Regarding electricity bill, the Commissioner (Appeals) found that the actual units consumed were much lesser than would be consumed by an industrial unit engaged in manufacturing activity. The wage register produced by the Appellant was not relied upon for the reason that the Appellant had not produced the records to the Uttarakhand Labour Provident Fund Employees or State Insurance, even though these were mandatory requirements. The copies of the bills relating to purchase of plant and machinery were not found to be of much help to the Appellant because these documents cannot conclusively prove that the Appellant had started commercial production. The Commissioner (Appea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ix) The Commissioner (Appeals) was not justified in imposing penalty upon the Appellant as it had not suppressed facts from the Department. 27. Shri R.K. Mishra, learned Authorised Representative of the Department has, however, supported the impugned order passed by the Commissioner (Appeals) and has made the following submissions: (i) The Commissioner (Appeals) committed no illegality in holding that the most important requirement of the exemption notification that the new industrial unit should have commenced commercial production on or after 7 January, 2003 but not later them 31 March, 2010 was not satisfied; (ii) The findings recorded by the Commissioner (Appeals) are based on evidence; (iii) The relevant documents regarding commercial production having started before 31 March, 2010 were not shown or produced before the officers who visited the unit for verification of the declaration nor any raw material was found in the premises; (iv) On the other hand, the packed cartons and the finished product inside the cartons had markings of being manufactured at the Delhi unit; (v) It was for the Appellant to have substantiated its case of having commenced commercial product ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... showing receipt of the goods by persons in whose favour the invoices had been raised and the receipt of money by the Appellant for supply of the said goods. Invoices can be raised by the Appellant, but in the absence of any document showing receipt of the goods by the persons in whose favour invoices had been issued and the receipt of money by the Appellant for the goods supplied are important factors as they relate to evidence not under the control of the Appellant. According to the Appellant, it was for the Department to have interrogated the persons in whose favour the invoices had been raised. This submission cannot be accepted for the simple reason that it was for the Appellant to substantiate its claim that it had started commercial production on or before 31 March, 2010 and for this purpose, it was for the Appellant to submit all the relevant documents as evidence and it cannot be permitted to urge that it was for the Department to have interrogated such persons. 31. The report of the team of officers that visited the premises of the Appellant for verification of the declaration made by the Appellant also substantiates the case of the Department that the Appellant had not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the time of visit to have informed the officers of the Department that raw material was actually kept at a particular place. 34. The submission that raw material was brought from the main unit at New Delhi also does not help the Appellant. The position, as it emerges and which has also been recorded both by the Adjudicating Authority and the Appellate Authority, is that in order to claim the benefit of the exemption notification, the Appellant was bringing the final product from its main unit at Delhi to the unit at Roorkee to claim benefit exemption notification. The absence of any raw material in the Roorkee unit at the time of inspection does support this finding. If the Appellant was actually manufacturing Motor Starters, the electricity bill also would have given some indication but they also do support the case of the Appellant. The finding recorded by the Appellate Authority on this aspect cannot be said to be perverse. 35. The Appellant has made an attempt to get over this finding by making out a case that the raw materials was obtained from the Delhi unit and they were only assembled at the Roorkee unit. In the absence of any raw material found in the premises at the ti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... peals), therefore, committed no illegality in denying the claim of the exemption notification to the Appellant. 41. Learned Counsel for the Appellant also submitted that the Appellant was entitled to the benefit of small scale industry exemption. The Commissioner (Appeals) has noted that in order to avail the benefit of this exemption, it was necessary for a manufacturer to give an option before effecting first clearance but the Appellant had not fulfilled this condition. No document has been placed which may indicate that such an option had been exercised by the Appellant for claiming the benefit of the notification before the first clearance. The Appellant, was, therefore, correctly denied the benefit of this notification. 42. Learned Counsel also submitted that the benefit of cum duty price was required to be given to the Appellant. This has been denied to the Appellant for the reason that the Appellant had not indicated that the duty element was included in the wholesale price charged from the buyers. No document has been placed by the Appellant to show that the gross value charged by the Appellant was inclusive of the duty. Thus, cum duty benefit has rightly been denied to t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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