M/S. Bharat Industries vs Commissioner Of Central Excise, ...

[Arising out of Order-in-Appeal No.200/2003-CE, dated 31.07.2003 passed by the Commissioner of Central Excise (Appeals), Coimbatore]

M/s. BHARAT INDUSTRIES APPELLANT

Versus

COMMISSIONER OF CENTRAL EXCISE, COIMBATORE RESPONDENT

Appearance:

For the Appellant Shri M. Karthikeyan, Adv.

For the Respondent Shri R. Subramaniyan, AC (AR)

CORAM:

Honble Shri D.N. Panda, Judicial Member Honbe Shri R. Periasami, Technical Member

Date of hearing/decision 15-04-2015

FINAL ORDER NO. 40438 / 2015

Per D.N. Panda:

Cllubbing of the clearances made by tne manufacturing unit of the appellant with three fictitious units created by it, was made in the hand of the appellant and adjudication was made levying duty demand of Rs.5,85,262/- as well as penalty of Rs.5,00,000/- under Rule 9(2) read with Rule 173Q of the Central Excise Rules, 1944. So also penalty of Rs.10,000/- was imposed on different persons involved in the breach of law alleged by Rvenue. But those persons are not in appeal. Therefore, present appeal relates to manufacturer-appellant only.

2.1 Learned counsel for appellant submitted that three fictitious concerns were not created by it. Those were genuine concerns and their clearances were different from appellant not calling for clubbing. Revenue made false allegation. Those three concerns were existing at the appropriate address, which was confirmed by Municipal authorities. Therefore, it cannot be presumed that those were not in existence, by any imagination.

2.2 It was further argued by appellant that the goods manufactured by the appellant were cleared for trading by different concerns. When the show-cause notice did not make any allegation of under-valuation of the clearances made by appellant, the Adjudicating authority re-assessed the clearances making over-valuation thereof adopting trading value which is inconceivable. In absence of such allegation in the show-cause notice Adjudication is bad and ill founded as well as fails to stand.

2.3 So far as penalty is concerned, learned counsel submits that even if there is clubbing then imposition of penalty to the extent of Rs.5,00,000/- is unwarranted by Rule 9(2) read with Rule 173Q of Central Excise Rules, 1944.

3. Revenue on the other hand supports adjudication, submitting that the appellant failing to establish manufacture carried out by fictitious concerns, has no right to challenge valuation. Therefore, entire adjudication should be confirmed.

4. Head both sides and perused the records.

5.1 When the show-cause notice is read that brings out categorically how the appellant arranged its affairs in a manner detrimental to the interest of Revenue creating three fictitious units. Those were only bubbles. It had only one manufacturing unit but no four. In reality, entire clearance made by three fictitious concerns were of the appellant.

5.2 There was no material on record to suggest that fictitious units were in reality manufacturers. Those were neither registered with the Excise Authorities nor machinery were installed by them to carry out manufacture. There is no evidence of any purchase of raw material, consumable or packing material nor payment of electricity charges to prove manufacture was made. There was also no muster roll of the workers engaged. No registration under the PF Act or ESI Act was made to disclose identity of workers. Therefore, appellant failed to contradict allegations of Revenue in absence of credible evidence led by it. Accordingly, Revenue succeeds on the allegation of creation of fictitious units by the appellant and clubbing sustains. Clubbing is accordingly confirmed and adjudication on this score sustains with levy of duty in adjudication untouched by this order subject to recomputation due to valuation defect caused by Revenue.

5.3 The second issue raised is valuation of the goods. There was no allegation as to under-valuation in the show-cause notice. There is also no evidence on record from Revenue to prove that there was under-valuation of the clearances made. Therefore, adjudication on such count of arbitrary valuation fails and value disclosed by appellant shall be followed to recomputed duty liability of appellant on clubbing all four clearances.

5.4 So far as penalty is concerned, looking into the gravity of the matter upon redetermination of duty element adopting the value of clearances declared by appellant, penalty to the extent of the duty evaded shall be demandable.

6. Appeal is party allowed and to the extent indicated above.

(Dictated and pronounced in open court)

(R. PERIASAMI) (D.N. PANDA) TECHNICAL MEMBER JUDICIAL MEMBER

ksr 20-04-2015

DRAFT Remarks

I II III

Date of dictation 15.04.2015

Draft Order - Date of typing 16.04.2015 17.04.2015

Fair Order Typing 20.04.2015

Date of number and date of dispatch

6 E/00878/2003