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TMI Blog2024 (8) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... ce to show that other partners have agreed to constitute and continue the new partnership. No such evidence is forth coming. Even by the case of department both sons have shared 10 sheds each and are doing manufacture and selling of fireworks separately. The clearances of each manufacturer is eligible for SSI exemption. These aspects have not been examined at all. By clubbing the clearances of both premises (20 sheds) the demand of duty has been raised, which in our view cannot sustain. The department has mainly relied on 711 invoices seized from the premises. In the impugned order the Commissioner (Appeals) has not rendered any finding as to how these 711 invoices are admissible and acceptable in evidence. Further, if such large quantities of fireworks are alleged to be manufactured and sold, there should be proper evidences for purchase of raw materials. The impugned order does not reason this out - The confirmation of duty on the basis of these 711 invoices therefore cannot sustain. Use of brand name Parrot which belongs to M/s. Premier Fireworks which was run by Shri. Vadivel as sole proprietorship - HELD THAT:- After his death this firm has become defunct. So it cannot be said ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licence in the name of Shri. Vadivel Fireworks (which was earlier partnership firm) was later shared by both units for purchase of raw materials for manufacture of fireworks. It is mandatory to declare the details of licence on the goods manufactured. Since the raw materials were purchased under the licence issued to Shri. Vadivel Fireworks of which Shri. V. Arumugasamy was the owner, the goods cleared by Shri. Selvaraj also indicated in the label the goods are produced at Vadivel factory. 5. Based on the intelligence, that two independent manufacturing units are functioning in the single factory, namely M/s. Vadivel Fireworks and also that the fireworks are manufactured in the brand name Parrot which did not belong to them (according to department belonged to Premier Fireworks), a search was conducted on 27.08.1999 at the factory premises of M/s. Vadivel Fireworks and the residences of the partners. Evidences were collected to the effect that M/s. Vadivel Fireworks has indulged in the manufacture of fireworks in the brand name Parrot which is owned by another. M/s. Premier Fireworks was closed with the demise of Shri. Vadivel. After his death the brand name was not assigned to an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry i.e. original M/s. Vadivel Fireworks. Though each of them holds independent sale tax registration certificate it is clear from the facts that all manufacturing activities carried out in original Vadivel Fireworks (original Vadivel Fireworks referred to in show cause notice is the partnership firm in which both V. Arumugasamy and Shri. V. Selvaraj were partners). 9. Show cause notice dated 16.02.2000 was issued to M/s. Vadivel Fireworks (i.e. original Vadivel Fireworks) represented by its partners proposing to confiscate the fireworks seized and for imposing penalty. 10. Subsequently, show cause notice dated 18.02.2000 was issued to M/s. Vadivel Fireworks, Sivakasi (i.e. original Vadivel Fireworks represented by the partners Shri. V. Selvaraj and Shri. V. Arumugasamy) proposing to deny the SSI exemption and clubbing the clearances of M/s. Vadivel Pyro Techs Pvt Ltd., manufactured by both sons to be under original Vadivel Fireworks as a partnership firm and demanding duty of Rs.1,44,999/- for clearance of fire works during period 27.08.1999 to 31.01.2000. The show cause notice also proposed to imposed penalty under Rule 173Q and 209 of Central Excise Rules 1944. 11. Another show c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id order in original dated 26.03.2002 reads as under:- 15. I had already held in the aforecited OIO that the value of clearances of both Premier Fireworks and Vadivel Fireworks are to be clubbed and had demanded an amount of Rs.5,828.00: (Rupees Five thousand eight hundred and twenty eight only) as duty from M/s Vadivel Fireworks under Section 11A(2) of the Central Excise Act, 1944 by invoking the larger period of limitation, as per details shown below: WORKSHEET FOR DUTY CALCULATION Year VALUE AS PER SALES TAX RETURNS VALUE AS ADMITTED BY BUYERS TOTAL VALUE EXEMPTION AVAILABLE UPTO Rate of duty Duty payable Premier Vadivel Premier Vadivel 1996-97 622577 997639 34660 0 1654876 3000000 0 0 1997-98 1103835 1495570 173074 421708 3194187 3000000 3 5828 1998-99 1109150 2129504 150851 772120 4161625 5000000 0 0 1999-00 581910 634860 123417 503416 1843603 5000000 0 0 TOTAL 5828 16. It is pertinent to note that the value of clearances determined by me for the year 1999-00(covering the earlier period) was Rs.18,43,603/- and even after including the value of Rs.9,06,241.05/-(bearing the brand names of both Parrot and Bison), the total value of clearances works out to Rs. 27,49,844.05/- which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 04 dismissed the appeal filed by department against Order-in-Original No.21/2002 dated 26.03.2002 (two SCNs dated 16.02.2000 and 18.02.2000). As per Order-in-Appeal No.111/2004 dated 22.09.2004 the appeal filed by the department against Order-in-Original No. 20/2002 dated 13.03.2002 (SCN dated 08.02.2001 for Rs.14,45,371/-) was also dismissed. 15. Aggrieved by the above orders passed by the Commissioner (Appeals) the department filed appeals before the Tribunal. As per Final Order No.608/2012 dated 05.06.2012 the Tribunal remanded the matter (SCN dated 08.02.2001) to the Commissioner (Appeals) for fresh consideration of the appeal. The relevant part of the said Final Order dated 05.06.2012 reads as under:- 6. Later, as per Final Order No.40223/2013 dated 19.06.2013, the Tribunal remanded the matter (appeals on SCNs dated 16.02.2000 and 18.02.2000) to the Commissioner (Appeals). The relevant para of Tribunal order reads as under:- 17. Pursuant to the remand of both appeals by the Tribunal, the Commissioner (Appeals) passed common order vide Order-in-Appeal No.60 and 61 dated 15.07.2014. The Commissioner (Appeals) then confirmed the proposals in show cause notice dated 16.02.2000 for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d name of Bison on 27.08.1999 were seized due to improper accounting. (v) Shri. Ganesan Manager of the appellant's unit admitted that 711 invoices recovered from the premises of M/s. Vadivel Match Industries belonged to the appellant's unit. (vi) Further investigations with buyers of the fireworks with reference to the said 711 invoices revealed that some of the buyers had admitted to have purchased fireworks to the extent of invoices specifically identified by them and some other buyers admitted purchase of fireworks from appellant unit to the extent of list of invoices given in their statements. (vii) The partners of appellant admitted of having manufactured fireworks without proper accounting and clandestine removals under the second set of invoices. 18.2 Against the above allegations, the appellant had submitted before original authority as under: (i) the proposals made in the first two SCNs for confiscation of seized goods and for demand of duty were not maintainable since the brand name Parrot did not belong to anybody and that value of clearances was well below SSI exemption limits (Rs. 50 Lakhs). (ii) The demand made in the third SCN on the basis of 711 invoices was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s. (vii) Consequent to re-quantification of value of clearances it was found that the appellant was well below SSI exemption limits during the demand period, i.e., 1996-97 to 1999-2000 except in the year 1997- 98 wherein the value of clearances had exceeded the full exemption limits of Rs. 30 lakhs. (viii) Accordingly, the demand was maintainable only to the extent of Rs. 5,828/- for the year 1997-98 and dropped proposals in respect of rest of the demand. 18.4 In regard to two show cause notices dated 16.02.2000 and 18.02.2000 (Rs.1,15,000/-) the original authority had held as under: - i. The Bison brand was owned by the appellant and since the value of clearances for the year 1999-2000 (as held in his earlier O-in-O 20/2002 dated 13.03.2002) even after clubbing the turnover was well below SSI exemption limits, the seizure of impugned goods bearing Bison brand on the grounds of improper maintenance of was not maintainable and the goods were liable to be released unconditionally. ii. Since the Parrot brand did not belong to any one after the demise of Shri. Vadivel and could be used by anyone as held in the case of Unjal Ayurvedic Pharmacy 2001 (134) ELT 706 (T) and in the case of H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... idence of dispatch or transportation of the alleged clandestinely removed finished goods. There is absolutely no evidence for clandestine manufacture. It is submitted that the Commissioner (Appeals) has confirmed the duty demands without any basis. The Ld. Counsel prayed that the appeal may be allowed. 19. The Ld. AR. Shri. M. Selvakumar appeared and argued for the department. Para 9 of the impugned order was referred to submit that the officers conducted search operations on 27.08.1997 at the factory premises of M/s. Vadivel Match Industries and at the residences of Shri. V. Selvaraj and Shri. V. Arumugaswamy who are partners of M/s. Vadivel Match Industries. Incriminating documents including 711 invoices raised to parties all over India were recovered. Statements were recorded. At the outset, it was revealed that M/s. Vadivel Fireworks M/s. Premier Fireworks were owned by Shri. Vadivel and on his demise, M/s. Vadivel Fireworks was co-owned by his two sons, Shri. V. Selvaraj and Shri. V. Arumugaswamy. The Explosive license issued in the name of M/s. Premier Fireworks expired and the unit became defunct. The brothers held 20 sheds each of original M/s. Vadivel Fireworks and manufac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he father, Shri. Vadivel had started the original Vadivel Fireworks in which both sons were also partners. When Shri. Vadivel died in 1993, the partnership gets dissolved. It is submitted by Ld. Counsel that without looking into this aspect, the department has issued show cause notices to original Vadivel Fireworks and that the show cause notices are therefore not valid in the eye of law. 21.2 On perusal of the show cause notice dated 16.02.2000 which is the genesis of the litigation, the arguments put forward by the Ld. Counsel for appellant is not without substance. In para 1 of the show cause notice it is alleged that Shri. V. Selvaraj and Shri. V. Arumugaswamy are continuing with one establishment as M/s. Vadivel Fireworks which is referred to by department as original Vadivel Fireworks. It is also coming out from the show cause notice that the original Vadivel Fireworks was founded by father Shri. Vadivel. 21.3 Section 42 of the Partnership Act, 1932 reads as under:- Dissolution on the happening of Certain Contingencies: - (a) If constituted for a fixed term, by the expiry of that term. (b) If constituted to carry out one or more adventures or undertakings, by the completion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o brothers to carry out independent manufacturing from out of their own share of sheds that Shri. V. Arumugasamy and V. Selvaraj are independent manufactures who carried out manufacturing activity from a single factory i.e. from original Vadivel Fireworks. Though Shri. V. Arumugasamy and V. Selvaraj hold independent sales tax Registration Certificate in the name of Vadivel Fireworks and Premier Fireworks respectively, it is clear from the facts admitted that all the manufacturing activity was carried out in original Vadivel Fireworks. xxxxxxxxx xxxxxxxxxx xxxxxxxxx xxxxxxxxxx Therefore, M/s. Vadivel Fireworks, Sivakasi (i.e. the original Vadivel Fireworks) represented by its partners Shri. V. Selvaraj, S/o Shri. Vadivelu, 42, Kaliammankoil Street, Sivakasi and Shri. V. Arumugasamy, S/o Shri. Vadivelu, 41, Kaliammankoil Street, Sivakasi are required to show cause to the Deputy Commissioner of Central Excise, Sivakasi as to why- . 21.5 From the above excerpts of show cause notice, it can be gathered that the case of the department is that the partnership firm founded by the father with his two sons continue even after his death. Though both sons are independently manufacturing and se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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