M/S Kanaiya Textile vs Commissioner, Central Excise & Service ...

Appeal No.E/549/2009-SM; E/MA(EXTN)/14468/2014 [Arising out of OIA No.RKA/46/SRT-I/09, dt.27.01.2009, passed by Commissioner (Appeals), Central Excise & Customs, Surat]

M/s Kanaiya Textile Appellant

Vs

Commissioner, Central Excise & Service Tax, Surat-I Respondent

Represented by:

For Appellant: Shri P.M. Dave, Adv., Shri N.J. Gheewala, Consultant For Respondent: Shri S.K. Shukla, Authorised Representative

For approval and signature:

Honble Mr. H.K. Thakur, Member (Technical)

1. Whether Press Reporters may be allowed to see the No Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether their Lordships wish to see the fair copy of Seen the order?

4. Whether order is to be circulated to the Departmental Yes authorities?

CORAM:

HONBLE MR. H.K. THAKUR, MEMBER (TECHNICAL)

Date of Hearing: 12.06.2015 Date of Decision: 29.06.2015

Order No. A/10896 / 2015, dt.29.06.2015

Per: H.K. Thakur

This appeal has been filed by the Appellant with respect to the OIA No. RKA/46/SRT-I/09, dt.27.01.2009, under which the First Appellate Authority upheld the OIO No.29/ADC-PS/OA/2006, dt.28.12.2006, except allowing the appeal of the Appellant with respect to redemption fine as no seizure of the goods was effected by the Department.

2. Shri P.M. Dave, learned Advocate and Shri N.J. Gheewala, learned Consultant appeared on behalf of the Appellant. Shri P.M. Dave, learned Advocate argued that M/s Kanaiya Textile is a 100% EOU and Shri Shyam Sunder Arora is the Proprietor of this 100% EOU. That the Appellant obtained a 100% EOU licence for the premises located at Plot No.16-17, Hari Ichcha Industrial Estate, Behind M. Jagdamba Mills, A.K. Road, Surat. That the Appellant obtained 63,598.87 kgs of Textured Filament Yarn valued at Rs.37,58,247.00 duty free under 25 ARE3. That after undertaking the process of weaving fabric was manufactured and supplied to Asharani Garments & Fabrics Pvt.Ltd., EOU, Medak (A.P.) (for short M/s AGFPL) and that delivery of the goods given was ex-factory to the consignee. That all the ARE3 duly endorsed by the jurisdictional Central Excise officers, incharge of Medak were duly received by the Appellant regarding rewarehousing of the fabric supplied by them. The learned Advocate made the Bench go through the various annexures to the show cause notice dt.02.12.2004 issued by Hyderabad Commissionerate and emphasized that the grey fabric was supplied to M/s AGFPL which are duly reflected in the annexure to the show cause notice. Learned Advocate also furnished a copy of OIO No.26/2005, dt.29.11.2005 passed by Commissioner of Customs, Central Excise, Hyderabad-I to argue that the show cause notice dt.02.12.2004 has been decided by the Adjudicating authority confirming the duty demand with respect to all the ARE3 against M/s AGFPL under which the Appellant cleared the grey fabrics. It was his case that once the rewarehousing certificates from the jurisdictional Central Excise officer, incharge of the consignee, were furnished, then there is no doubt that all the goods manufactured by the Appellant have reached the destination and no duty is demandable from the Appellant as per the provisions of Rule 20 of Central Excise Rules, 2002. It was also strongly argued by the learned Advocate that since the entire duty demand has been confirmed by the Commissioner, C & C.Ex., Hyderabad-I, under OIO No. No.26/2005, dt.29.11.2005 against M/s AGFPL, as obtained under RTI application, there is no ambiguity that the goods manufactured by the Appellant has reached the destination.

3. Shri S.K. Shukla, learned Authorised Representative appearing on behalf of the Revenue made the Bench go through Para 12 to 18 of the OIO dt.28.12.2006, to argue that during investigation, the address declared by the Appellant was visited by the officers of Central Excise and that some other units were working at the declared premises. That the statements of various persons working in those units clearly state that they do not know Shri Shyam Sunder Arora, Proprietor of the Appellant and that no goods are manufactured at the said premises by the Appellant. Learned Authorised Representative also made the Bench go through the statement of Shri Anil Kumar J. Saini, Excise Clerk of the Appellant indicating that the Appellant was making entries only on paper as per the directions of Shri Shyam Sunder Arora. It was also emphasized by the learned Authorised Representative that Shri Shyam Sunder Jagannath Arora, Proprietor of the Appellant also brought certain excise records with him as no Central Excise records were available at the declared premises of the Appellant. That as per the statement of Shri Popatbhai M. Patel, Proprietor of M/s Kesarinandan Textile, working at the declared premises of the Appellant, stated that the Appellant entered into a rent agreement with his younger brother Shri Dhirubhai Patel, but only one month rent was paid.

4. As a counter to the argument made by the learned Authorised Representative, Shri P.M. Dave, Advocate argued that all the persons whose statements have been relied upon, has filed affidavits to the effect that the list of the said premises was on lease for a period of 6 years as per the lease deed entered by the Appellant and Shri Dhirubhai M. Patel. The learned Advocate relied upon the following case laws to argue that in case of conflict between the documentary evidence and the oral statement, the priority should be given to the documentary evidence and not to the oral statement made by the witness:-

i) R.P. Industries Vs Collector of Customs, Ahmedabad [1996 (82) ELT 129 (Tribunal)]

ii) Raj Petroleum Products Vs CCE Mumbai-I [2005 (192) ELT 806 (Tri-Mum)]

5. Heard both the sides and perused the case records. The issue involved in the present appeal is whether any goods were manufactured by the Appellant at Plot No.16-17, Hari Ichcha Industrial Estate, Behind M. Jagdamba Mills, A.K. Road, Surat or not. It is the case of the Appellant that out of duty free yarn, grey fabrics was manufactured at this address and the same was supplied to M/s AGFPL. Appellant relied upon the re-warehousing certificates issued by the jurisdictional Central Excise officers incharge of the consignee and also one adjudication order, dt.29.11.2005 issued by the Commissioner, Cusoms, & Central Excise, Hyderabad-I under which the demand has been confirmed with respect to ARE3 issued by the Appellant. It is observed from the case records that on the date of visit by the Central Excise officers, following four units were working at the address given by the Appellant.

a) M/s Krishna Textiles (Prop. Shri Dhirubhai Manjibhai Patel)

b) M/s Khodiar Textiles (Prop. Smt. Muktaben Popatbhai Patel)

c) M/s Kesarinandan Textiles (Prop. Shri Popatbhai Manjibhai Patel)

d) M/s Unique Textiles (Prop. Shri Kamleshbhai Popatbhai Patel)

6. The statements of the proprietors of all the above units working on the date of visit were recorded under which all those persons stated that no unit by the name of the Appellant ever worked at the declared address. Shri Arora, Proprietor of the Appellant was not able to explain as to whether the goods supplied to the consignee M/s AGFPL were manufactured at the declared address. Shri Anil Kumar J. Saini, Excise clerk of the Appellant stated that the entries are made only on paper as per the direction of Shri Shaym Sunder Arora, Proprietor. The Panchnama recorded by the officers of Central Excise clearly reflect that the said premises were in the possession and control of the two Patel brothers before us who were undertaking manufacturing operation under the name of 4 units indicated above. The First Appellate authority in Para 4.7 of the OIA have expressed certain reservations as to why re-warehousing certificate issued by the officers incharge of M/s AGFPL cannot be taken as a proper documentary evidence of the rewarehousing of goods. There is no evidence on record produced by the Appellant as to how the goods were transported from Surat to Medak (A.P.).

The learned Advocate appearing on behalf of the Appellant has relied upon the OIO No.26/2005, dt.29.11.2005 issued by Commissioner of Customs & Central Excise. Hyderabad, under which the demand with respect to the ARE3 issued by the Appellant has been confirmed. On going through the OIO No.26/2005, dt.29.11.2005, it is observed that Shri D. Siva Rama Krishna, Authorised Signatory of M/s AGFPL in his statement dt.01.05.2002, inter alia, stated that their factory was working since March 2002 onwards and that all records prior to 01.04.2002 were computerized and relevant data was available in the form of computer print out which could be produced within a couple of days, but as per the OIO dt.29.11.2005 none turned up for providing the details. The period of demand in the present appeal is from 31.10.2001 to 10.02.2002. It is further observed from Para 7 of the OIO dt.29.11.2005 that several summons were issued to M/s AGFPL, but the same were not responded. In Para 18, 19 and 20 of the said OIO No. dt.29.11.2005, certain specific observations have been given by the Adjudicating authority that M/s AGFPL has floated unit exclusively with malafide intention of misusing the benefit of 100% EOU by not using duty free material procured through other EOUs against CT3 certificate and that M/s AGFPL has not manufactured any finished goods.

The findings recorded by the Adjudicating authority under Order dt.29.11.2005 cannot be considered as a conclusive proof that any fabric was received by M/s AGFPL when no statement of the authorised representative of M/s AGFPL is available on record. It is also not coming out of the records whether the Adjudicating authority at Hyderabad had the knowledge of investigation done by the officers in Surat Commissonerate. In view of the investigation conducted by the Central Excise officers with respect to Appellant pre-ponderence of probability goes in favour of the Revenue that no goods were manufactured at the declared address by the Appellant.

7. Appellant has relied upon the decision of R.P. Industries Vs Collr. Of Customs, Ahmedabad  1996 (82) ELT 129 (Tribunal) (supra) in support of their contention that the documentary evidence should be preferred over the oral statement recorded by the investigating agency. A careful reading of this order indicates that in the case before CESTAT Mumbai, the issue was whether the Appellant in that case imported complete 10 Draw Texturising Machine components. Appellant M/s R.P. Industries in these produced certain invoices to show local purchase of some items which have also gone into manufacture of Draw Texturing Machine. It was in that factual matrix that CESTAT Mumbai delivered the judgment that documentary evidence should be preferred over the oral submissions. The same was followed by CESTAT Mumbai in Raj Petroleum Products Vs CCE Mumbai-I (supra). The facts of the case laws relied upon by the Appellant were different than the facts of the present case, where no manufacture has been undertaken by the Appellant at all as per the investigation carried out. The case of Raj Petroleum Products Vs CCE Mumbai-I  2005 (192) ELT 806 (Tri-Mum), relied upon by the Appellant with respect to clandestine manufacture and clearance of certain goods by clubbing of clearances, the issue involved was not a situation where no clearance has been made at all. In the present case, the authenticity of rewarehousing certificate and the receipt of the finished goods at the factory premises of the consignee are doubtful and cannot be considered as authentic evidences to establish that the goods were manufactured by the Appellant because the transportation of the goods from Surat to Medak (A.P.) is not established by Appellant. Further, in the absence of any manufacturing facility available with the Appellant, pre-ponderence probability goes in favour of the Revenue that goods were manufactured by the Appellant. This Bench, therefore, does not interfere with the order passed by the First Appellate Authority. In view of the above observations, the appeal filed by the Appellant is rejected.

8. The miscellaneous application for extension of stay also stands disposed off.

(Pronounced in Court on 29.06.2015)

(H.K. Thakur) Member (Technical)

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