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TMI Blog2008 (4) TMI 109X X X X Extracts X X X X X X X X Extracts X X X X ..... ication No. 8/2002-C.E. dated 1-3-2002 and Notification No. /2003/- dated 1-3-2003; (b) confirmed the demand of duty amounting to Rs. 49,39,323 against BCI under proviso to Section 11A(1) of Central Excise Act, 1944 alongwith interest on this duty at the applicable rate as per the provision of Section 11AB; (c) imposed penalty of Rs. 49,39,323/- on BCI under Section 11AC; (d) imposed penalty of Rs. 15 lakhs on BCI under Rule 25(1) of Central Excise Rules, 2001/2002 read with erstwhile Rule 173Q(1) of Central Excise Rules,1944 and (e) imposed penalty of Rs. 2 lakhs on Shri S.K. Gandhi, and penalty of Rs. 5 lakh on Shri A.K. Gandhi under Rule 26 of Central Excise Rules, 2001/2002 read with erstwhile Rule 209A of Central Excise Rules, 1944. 2. SFP is a partnership firm incorporated since 1985 with Shri A.K. Gandhi and Shri S.K. Gandhi, who are real brothers, as its partners. Since 1-4-02 when Shri A.K. Gandhi retired from the partnership, SFP has become a proprietorship firm of Shri S.K. Gandhi. However, except for Rs. 25,000/-, Shri A.K. Gandhi's share of capital has not still been returned by Shri S.K. Gandhi, on which according to him, he is paying interest to Shri A.K. Gandhi. SF ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... received in the factory premises of BCI and in fact the raw-material for both the units was being received under the same Salex Tax No. FBD/HGST/120298 dated 26-3-85 which belongs to SFP. (4) From a file recovered from BCI, some letters issued from BCI to their customers - M/s. Maturi Udyog Ltd. and JCT Ltd. were found wherein BCI had offered to supply the corrugated boxes through their 'associate concern SFP'. (5) Though on paper BCI with Shri A.K. Gandhi, Ms. Pushpa Gandhi and Ms. Reena Gandhi as Directors and SFP with Shri S.K. Gandhi as proprietor, claim to be independent units, it was found that on numerous occasions, Shri S.K. Gandhi had signed BCI letters to the customers of BCI and similarly Shri A.K. Gandhi has signed the letters of SPF to its customers, while Sh. A.K. Gandhi and Shri S.K. Gandhi had not authorized each other to sign the letters of each other's company. 3.1 It is the view of the above that the SCN dated 1-9-04 was issued to BCI, SFP, Shri A.K. Gandhi and Shri S.K. Gandhi proposing to club the clearances of BCI and SFP for the purpose of exemption Notification No. 8/99-C.E. and successor notifications arid recovery under Section 11AC of the Act, of alleg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... estion as to whether BCI and SFP are two independent units or the two are one and the same. (6) In this case, there is no suppression, as BCI were filing R.T.12/GR-1 returns during the period of dispute, and SFP, availing SSI exemption, was filing annual declaration regarding value of clearances. Therefore, major period of SCN from Aug. '99 to July '03 is time barred. In any case, since the officers visited the unit of BCI and SFP was on 27-3-03 and the SCN had been issued on 1-9-04, the Department had knowledge about the alleged relationship between BCI and SFP since 27-3-03 and therefore, the demand for the period from 27-3-03 to 31-7-03 is time barred. In this regard, reliance is placed of the Larger Bench of the Tribunal in the case of Nizam Sugar Factory v. CCE reported in 1999 (114) E.L.T. 429 (7) Since the demand of duty against BCI is without any basis or justification, there is no ground for imposition of penalty on Shri A.K. Gandhi and Shri S.K. Gandhi under Rule 26 of Central Excise Rules. (8) In any case, the quantification of demand is incorrect. If the clearances of SFP are clubbed with the clearances of BCI, the demand of duty against BCI would be only Rs. 27,95,8 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es which can be supplied through their associate concern SFP in which case they would not be charge with excise duty. Similarly, BCI vide their letter dated 14-3-2000, intimated M/s. JCT that since 16% excise duty has been imposed on corrugated boxes, they can supply the corrugated boxes through their sister concern SFP, which is an exempted SSI unit and M/s. JCT was requested to issue a purchase order in the name of SFP. This letter to JCT had been signed by Shri S.K. Gandhi on behalf of BCI though on paper Shri S.K. Gandhi was supposed to have nothing to do with BCI. 5.1 The explanation given for Shri S.K. Gandhi of SFP signing without any authorisation from BCI, the letters on behalf of BCI (reminding the buyers for payment as well as quoting the rates of corrugated boxes manufactured in BCI) and Shri A.K. Gandhi of BCI signing, without any authorization from SFP, letters on behalf of SFP to SFP's customers; receipt in the premises of BCI of the raw material purchased in the name of SFP and numerous instances of BCI offering to supply corrugated boxes to its customers through SFP to enable them to save the excise duty, are not at all satisfactory. 5.2 From the above facts the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been placed on the Tribunal judgment in the case of Nizam Sugar Factory v. CCE reported in 1999 (114) E.L.T. 429. However, this judgment does not help the appellant as in this case, it has been held that the date of knowledge of the departmental officers in respect of clandestine removal of goods/suppression of facts is not relevant: for the purpose of computing the period of five years and the date for this purpose is the "relevant date" as defined in Section 11A(3). 7. It has been pleaded that in any case the quantification of duty demand is incorrect and would get reduced to Rs. 27,95,873/- as (a) in the event of clubbing the clearances of SFP with the clearances of BCI, the BCI would become eligible to claim input duty credit of Rs. 12,74,311/- in respect of inputs received by SFP for manufacturing operation and (b) export sales of Rs. 36,29,012/- involving excise duty of Rs. 5,80,642/- made by SFP during the period of dispute. However, the Commissioner in his order has given a clear finding that inspite of being asked, BCI have neither furnished the documents showing the procurement of raw material by SFP nor have furnished any documents in support of their claim that SFP ma ..... X X X X Extracts X X X X X X X X Extracts X X X X
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