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TMI Blog2023 (12) TMI 1106X X X X Extracts X X X X X X X X Extracts X X X X ..... ctured on job-work basis. It is found that the submissions advanced by the appellant are of general in nature and devoid of rebuttal of evidences brought on record indicating procurement of raw materials, processing of the same in the factory premises, stock of the glass wool etc. used in the manufacture of acoustic enclosures found in their factory, low conversion charges reflected in the invoice of job-worker etc. overwhelmingly indicate that the acoustic enclosures were manufactured and cleared without payment of duty from their factory. The appeal of the appellant is rejected and order of the Commissioner(Appeals) is upheld. - DR. D.M. MISRA, MEMBER (JUDICIAL) AND MR. PULLELA NAGESWARA RAO, MEMBER (TECHNICAL) Sh. Shreehari Kutsa, Advocate for the appellant. Sh. H. Jayathirtha, Superintendent (AR) for the respondent. ORDER This appeal is filed against Order-in-Appeal No. 106/2007-CE dated 29.11.2007 passed by the Commissioner of Central Excise ST (Appeals), Cochin. 2. Briefly stated the facts of the case are that the appellants are engaged in the manufacture of Diesel Generating sets (DG sets) falling under Chapter sub-heading 8502 90 of Centra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e manufactured by certain job workers who were already doing job work for the appellants in connection with the manufacture of DG sets. Since they were already doing job work for the appellant, they sent raw materials to the site of the job workers as a matter of commercial expediency and hence no adverse inference can be drawn on these aspects. v. Undue importance was placed on unloading of raw materials i.e HR sheets at the premises of the appellant as the said raw materials were to be sent for bending and corrugation to workshops. The learned Commissioner(Appeals) failed to appreciate that the ownership of the raw materials always rest with the job workers and merely because the raw materials procured and routed through the premises of the appellant, the ownership of the same remained with the job workers only. vi. Learned Commissioner (Appeals) also wrongly concluded that movement of raw materials from the premises of the appellant to the work shop of M/s. Keshava Engineering Works were without challans, since no procedure is prescribed under the Central Excise law, where a unit whose turn over has not exceeded the limit of exemption to either to intimate the Department o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s on the principal to principal basis and all agreements were on commercial terms. xvii. In view of the provisions of Sections 2(d) and 2(f) of the Central Excise Act, 1944, the manufacturing activity on the goods being at the job workers premises, hence the job workers is the manufacturer and liable to pay duty, which was earlier held by the Tribunal. The fact that the appellant has not opted under Notification No.214/86 dt. 01/03/1986 as a result of which excise duty continues to be liability on the job worker but not on the appellant. xviii. In the event, acoustic enclosures are manufactured by the appellant, credit on the raw materials and labour used in the manufacture is available to them and liability to pay duty would be considerably low which has not been considered by the learned Commissioner(Appeals). xix. Even though, they are entitled to avail credit on payments of raw material being made by the appellant on behalf of the job worker, proves their bona fide intention. xx. Assembly of acoustic enclosure results into emergence of immovable property; hence not liable to excise duty, a fact not considered by the learned Commissioner(Appeals). 4.1. Per contra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ual work carried out with the amount in respect of their customers, does not reflect any Acoustic Enclosure processing work. i. If the appellant were receiving fully manufactured Acoustic Enclosure ready to despatch in unassembled condition from jobworker and were clearing as such on trading, procurement of Nylon wheels and Pin sets (used exclusively in Acoustic Enclosure) separately on regular basis was not required. j. The payment job charges of 3% of Basic value + Sales Tax amount is paid by the appellant to the said jobworker for the purported processing of the AE. It appears to be very meagre and not even one fourth of actual labour and the same is impossible to fabricate for the said amount. It amounts to the fact that the manufacturing was done in the premises of appellant with the help of its own skilled employees and only in order to evade payment of duty, entire financial accounts raising of invoices in these cases have been created / fabricated. It is clear that the 3% amount paid is nothing but the commission/ a sort of charges paid for raising the invoices in appellant s name and paying the Sales Tax in their own account. k. It is also stated by their staf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contend that mere supply of raw materials mere routing of raw materials to a job worker will not leave supplier of raw materials, for whom the work is done by the job worker, the manufacturer of the product, manufactured using the said raw materials. In this regard, it has been very evidently brought out at para 20 to 25 of the SCN that the appellant had actively engaged their employees for enquiring about the bending facility and were sending the raw materials for the said job work and receiving back in their factory for further process. There are documents to show that they had incurred expenditure in the processes connected to the manufacture of Acoustic Enclosure. It has also been brought out that the said bending/cutting of the sheets had been undertaken as per the drawing/sketches given by appellants. Evidences have also been discussed which support the fact that such activities of cutting/corrugating has been got done even without raising bills between them. As such, it is not mere routing of raw materials, but the appellants had undertaken various processes of work right from the stage of procuring the raw materials to the testing of the Acoustic Enclosure in their facto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and hence it is not an immovable property. Therefore the same is liable to Central Excise duty. VIII. Also, the adjudicating authority had held that it is not conclusively established that the appellant had the facility to manufacture AE in their factory. However, on proper analysis of the evidences, that have not been assailed/ contested with evidences by the appellant, proves that they had the capability of manufacturing AE in their factory. IX. It can be seen that the appellant has denied all charges/points/evidences without any corroborative evidences. They have also failed to produce a copy of agreement of job work and also documents to explain the reasons for procuring raw materials in the name of job workers. On perusal of the evidences discussed in the show cause notice, it becomes abundantly evident that two parties have connived to avoid payment of duty on the manufacture of Acoustic Enclosure. It is obvious that there is pieces of evidence of creating an elaborate system of fraudulent documentation with intent to evade payment of Central Excise duty, as has been held by the Commissioner (Appeals) in his order dated 29.11.2007. X. The findings of OIA and CESTAT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri Sebastian, Works Manager of the appellant. The statements recorded from persons who carried out the bending works viz. Shri V.P. Suresh Babu, Partner of M/s. Kesava Engineering Works in his statement dt. 27/05/2003 categorically stated that they had undertaken bending of HR sheets for making acoustic enclosure as per the drawings and sketches given by Shri Sebastian. The HR sheets that were required for bending had been brought in to their factory and on completion of bending, it was sent back to the factory of the appellant for making acoustic enclosure. Similar information were also furnished by Shri Vasanth Kumar, representative of M/s. Unifab, in his statement dt. 09.06.2003. All these evidences have been challenged by the appellant arguing that there are stray cases and trivial issues. 8. Besides, evidence in support of manufacturing of acoustic enclosures in their factory viz. payments for overtime to employees, where the vouchers indicate acoustic enclosure were also placed on record. Also, all other allowances, expenses incurred in connection with manufacture of acoustic enclosure were placed on record, which indicate that the acoustic enclosures were manufactured ..... X X X X Extracts X X X X X X X X Extracts X X X X
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