Custom, Excise & Service Tax Tribunal
Ce & Cgst Noida vs B M Garg on 4 June, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT No. I
Excise Appeal No.70222 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1542-1545-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
Commissioner of Central Excise &
CGST, Noida, .....Appellant
(C-56/42, Sector-62, Noida)
VERSUS
Shri B.M. Garg, ....Respondent
(C-16, Green Park Extn., New Delhi)
WITH
I. Excise Appeal No.70348 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1538-1541-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Garg Industries, .....Appellant
(B-18, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
II. Excise Appeal No.70349 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1546-1547-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s DD Hardware (P) Ltd., .....Appellant
(B-25, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
III. Excise Appeal No.70350 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1550-1551-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
2 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
M/s Doordevices Manufacturing Co., .....Appellant
(C-34, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
IV. Excise Appeal No.70351 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1550-1551-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Doordevices Manufacturing Co., .....Appellant
(C-34, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
V. Excise Appeal No.70352 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1552-1553-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Jai Hardware Pvt. Ltd., .....Appellant
(A-51, Sector-4, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
VI. Excise Appeal No.70353 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1554-1555-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Monica Steels Pvt. Ltd., .....Appellant
(A-56, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
VII. Excise Appeal No.70354 of 2018
3 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1554-1555-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Monica Steels Pvt. Ltd., .....Appellant
(A-56, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
VIII. Excise Appeal No.70444 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1552-1553-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Jai Hardware Pvt. Ltd., .....Appellant
(A-51, Sector-4, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
IX. Excise Appeal No.70445 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1546-1547-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s DD Hardware (P) Ltd., .....Appellant
(B-25, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
X. Excise Appeal No.70446 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1538-1541-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Garg Industries, .....Appellant
(B-18, Sector-8, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
XI. Excise Appeal No.71039 of 2018
4 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1548-1549-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Deepak Hinges Pvt. Ltd., .....Appellant
(B-150, Sector-6, Noida-201301)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
XII. Excise Appeal No.71234 of 2018
(Arising out of Order-in-Appeal No.NOI-EXCUS-001-APP-1548-1549-17-18
dated 29/12/2017 passed by Commissioner (Appeals) Central Goods &
Service Tax, Noida)
M/s Deepak Hinges Pvt. Ltd., .....Appellant
(B-150, Sector-6, Noida)
VERSUS
Commissioner of Central Excise &
CGST, Noida ....Respondent
(C-56/42, Sector-62, Noida)
APPEARANCE:
Shri Manish Raj, Authorised Representative for the Appellant
Shri Hemant Bajaj, Advocate for the Respondent
CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL)
HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL)
FINAL ORDER NOs.70294-70306/2024
DATE OF HEARING : 08 February, 2024
DATE OF PRONOUNCEMENT : 04 June, 2024
SANJIV SRIVASTAVA:
These appeals are directed against Order-in-Appeal
No.NOI-EXCUS-001-APP-1538-1555-17-18 dated 29/12/2017
passed by Commissioner (Appeals) Central Goods & Service Tax,
Noida. Details of the appeals filed is listed in the table below:
5 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
Appeal No. Appellant O-I-A No. OIO Duty Penalty
demanded
For the period from April, 15 to March, 15
E/70351/2018 Door Devices NOI-EXCUS-001- dated 1,08,843/- 7,40,996/-
APP-1550-1551-
Manufacturing 17-18 dated 31.03.2017 (J&S)
Co. 29/12/2017
E/70352/2018 Jai Hardware NOI-EXCUS-001- dated 3,17,675/- 7,40,996/-
APP-1552-1553-
Pvt. Ltd. 17-18 dated 31.03.2017 (J&S)
29/12/2017
E/70354/2018 Monica Steels NOI-EXCUS-001- dated 30,897/- 7,40,996/-
APP-1554-1555-
Pvt. Ltd. 17-18 dated 31.03.2017 (J&S)
29/12/2017
E/70445/2018 D D Hardware NOI-EXCUS-001- dated 2,83,580/- 7,40,996/-
APP-1554-1555-
P Ltd. 17-18 dated 31.03.2017 (J&S)
29/12/2017
E/70446/2018 Garg NOI-EXCUS-001- dated NIL 7,40,996/-
APP-1538-1541-
Industries 17-18 dated 31.03.2017 (J&S)
29/12/2017
E/71234/2018 Deepak NOI-EXCUS-001- dated NIL 7,40,996/-
APP-1548-1549-
Hinges Pvt. 17-18 dated 31.03.2017 (J&S)
Ltd. 29/12/2017
For the period from April, 15 to March, 16
E/70348/2018 Garg NOI-EXCUS-001- dated NIL NIL
APP-1538-1541-
Industries 17-18 dated 31.03.2017
29/12/2017
E/70349/2018 D D Hardware NOI-EXCUS-001- dated 11,24,367/- 11,24,367/-
APP-1546-1547-
P Ltd. 17-18 dated 31.03.2017
29/12/2017
E/70350/2018 Door Devices NOI-EXCUS-001- dated 7,24,094/- 7,24,094/-
APP-1550-1551-
Manufacturing 17-18 dated 31.03.2017
Co. 29/12/2017
E/70353/2018 Monica Steels NOI-EXCUS-001- dated 12,37,035/- 12,37,035/-
APP-1554-1555-
Pvt. Ltd. 17-18 dated 31.03.2017
29/12/2017
E/70444/2018 Jai Hardware NOI-EXCUS-001- dated 12,00,151/- 12,00,151/-
APP-1552-1553-
Pvt. Ltd. 17-18 dated 31.03.2017
29/12/2017
E/71039/2018 Deepak NOI-EXCUS-001- dated 9,68,541/- 9,68,541/-
APP-1548-1549-
Hinges Pvt. 17-18 dated 31.03.2017
Ltd. 29/12/2017
Revenue Appeal
E/70222/2018 B M Garg NOI-EXCUS-001- dated 50,00,000
APP-1542-1545-
17-18 dated 31.03.2017
29/12/2017
1.2 In the impugned Orders-in-Appeal Nos. NOI-EXCUS-001-
APP-1538-1541 & 1546-1555-17-18 dated 29/12/2017
Commissioner (Appeals) has held as follows:-
"6. The issue pertaining to the clubbing of clearances of
various units was earlier taken up for consideration vides
Orders issued for period before January 2015. I find that
the appellant has submitted that the issue has been
decided in their favour by the tribunal and subsequently by
the Allahabad High Court in the matter of earlier show
6 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
cause notice dated 5.2.2009 for the period January 08 to
November 08 involving similar allegations and facts.
However I also find that the tribunal vides its order Final
Order No. A/51455- 51456/2015-EX[DB] dated
09/04/2015 held that, if the clearances of these units are
sought to be clubbed with the clearances of the appellant
unit, it was necessary to issue the show cause notices to
these firms so as to enable them to put up their defense
and without hearing the units, whose clearances are
sought to be clubbed with the clearances of the appellant
company, a unilateral decision cannot be taken that all the
units are owned and controlled by one person only. For
clubbing the different units for the purpose of SSI
exemption, the only requirement is that the units should
be owned by one person and for this purpose, it is
absolutely necessary that if the clearances of a unit A are
sought be clubbed with the clearances of the units, B, C
and D and these units are owned by different persons,
show cause notices must be issued to B, C and D, whose
clearances are sought to be clubbed with the clearances of
Unit A. Therefore the matter was decided on the technical
grounds that demand notices had not been issued to other
said units. Allahabad High Court vide order dated
6.11.2015 upheld the tribunals findings and set aside the
department appeal. Therefore I find that orders No
5/AC/Div-IV/N-I/16-17 and 6/AC/Div-IV/N-I/16-17 are
bound by order of tribunal dated 9.4.2015 and High Court
order dated 6.11.2015 in as much as show cause notices
were not issued to the other said units. Therefore,
according to dictates of the judicial discipline as
enumerated by the Apex Court in various decisions, both
the impugned order for amount 1,50,886/- and 2,35,380/-
are not sustainable and therefore set aside.
7. However, I find that with regard to Order No
55/JC/Noida-I/16-17 and 4/AC/ Div-IV/N-I/16-17 the show
cause notices had been issued to other said units namely
M/s Monika Steels Pvt. Ltd., A-56, Sector-08. Noida; M/s
7 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
Deepak Hinges Pvt Ltd., B-150, Sector-06, Noida, M/s D.D.
Hardware Pvt. Ltd., B-25, Sector-08, Noida, M/s Jai
Hardware Pvt. Ltd., A-51, Sector-4, Noida and M/s
Doordevices Manufacturing Co., C-34 & 35, Sector-08,
Noida. Therefore, no such infirmity of non- issuance of
show cause notice existed in case of both order in originals
and hence issue was correctly taken up for adjudication by
the adjudicating authority on merits of the case and
accordingly decided."
1.3 Revenue has filed an appeal against Order-in-Appeal
No.NOI-EXCUS-001-APP-1542-1545-17-18 dated 29/12/2017 in
case of Shri B.M. Garg, Proprietor of M/s Garg Industries. By the
impugned order Commissioner (Appeals) has disposed of the
appeals filed before him against the four Orders-in-Original Nos.
as detailed in table bellow:-
Sl. Order-in-Original No Date Amount Period
No.
1. 55/JC/Noida/16-17 31.03.17 52,54,189 April'15 to March'16
2. 4/AC/Div-IV/N-I/16-17 31.03.17 7,40,996 Feb'15 to March'15
3. 5/AC/Div-IV/N-I/16-17 31.03.17 1,50,886 Sep'11 to Aug'12
4. 6/AC/Div-IV/N-I/16-17 31.03.17 2,35,380 Sep'12 to Aug'13
1.4 In the impugned order Orders-in-Appeal Nos.NOI-EXCUS-
001-APP-1542-1545-17-18 dated 29/12/2017 in case of Shri
B.M. Garg, Proprietor of M/s Garg Industries, Commissioner
(Appeals) has held as follows:-
"6. I find that the appellant has submitted that the issue
has been decided in their favour by the Tribunal and
subsequently by the Allahabad High Court in the matter of
earlier show cause notice dated 05.02.2009 for the period
January‟08 to November‟08 involving similar allegations
and facts. Hence, with respect to Appeal No.396 and 398
both dated 6.6.2017 the matter was decided on the
Technical grounds that demand notices had been issued to
other said units. Allahabad High Court vide order dated
6.11.2015 upheld the Tribunal's findings and set aside the
department appeal. Therefore I find that orders
No.5/AC/Div-IV/N-I/16-17 and 6/AC/Div-lV/N-l/16-17 are
bound by order of Tribunal dated 9.4.2015 and High Court
8 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
order dated 6.11.2015 in as much as show cause notices
were not issued to the other said units. Therefore,
according to dictates of the judicial discipline as
enumerated by the Apex Court in various decisions, both
the impugned order for amount 1,50,886/- and 2,35,380/-
are not sustainable and therefore set aside.
7. Further, I find that with regard to Order No
55/JC/Noida-1/16-17 and 4/AC/Div-IV/N-1/16-17 the
show cause notices had been issued to other said units
namely M/s Monika Steels Pvt. Ltd., A-56, Sector-08,
Noida, M/s Deepak Hinges Pvt. Ltd., B-150, Sector-06,
Noida, M/s D.D. Hardware Pvt. Ltd., B-25, Sector-08,
Noida, M/s Jai Hardware Pvt. Ltd., A-51, Sector-4, Noida
and M/s Doordevices Manufacturing Co., C-34 & 35,
Sector-08, Noida. Therefore, no such infirmity of non-
issuance of show cause notice existed in case of both order
in originals and hence issue was correctly taken up for
adjudication by the adjudicating authority on merits of the
case and accordingly decided. I find no infirmity in the
impugned order No Order No(55/JC/Noida-1/16-17 and
6/AC/ Div-IV/N-1/16- 17 held them sustainable."
Revenue has filed appeal against this order, setting aside the
penalties imposed upon Shri B M Garg.
2.1 Respondent in revenue appeal namely Shri B M Garg is
operating from his three premises unit-I, II and III and from
other units namely M/s Monica Steels Pvt. Ltd., M/s Deepak
Hinges Pvt. Ltd., M/s DD Hardware Pvt. Ltd., M/s Jai Hardware
Pvt. Ltd. and M/s Doordevices Manufacturing Company. They are
engaged in manufacture of Hinges and other hardware articles
falling under Chapter Heading No.83.02.
2.2 On the basis of searches conducted on 22.02.2007, which
culminated in issuance of show cause notice dated 20th February,
2008 to the M/s Garg Industries alongwith its Proprietor Shri
B.M. Garg.
2.3 It was alleged that Companies/Firms were created by Shri
B M Garg to show their separate and independent entities. Said
facade was created for the sole purpose and intend to keep the
9 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
value of clearances of all those all the units within the exemption
limit of Rs. 1 Crore or Rs.1.5 Crore as applicable during the
material time, thereby wrongly claiming benefit of small scale
industries exemption.
2.4 Show cause notices were subsequently issued periodically
which have been issued for the period indicated i.e. February'15
to March'15 and April, 15 to March, 16. The show cause notices
have been adjudicated by Orders-in-Original referred in para 1
above.
2.5 Vide order No.55/JC/NOIDA-I/2016-17 dated 31.03.2017
following has been held:-
ORDER
(i) I confirm the demand of Central Excise duty amounting to Rs.52,54,189/- [Rs.1237035/- from M/s Monika Steels Pvt. Ltd., A-56, Sector-8, Noida+ Rs.1124367/-from M/s D.D. Hardware Pvt. Ltd., B- 25, Sector-8, Noida)+ (Rs.724094/- from M/s Door devices Manufacturing Co., C-34 & 35, Sector-8, Noida + Rs. 1200151/- from M/s Jai Hardware Pvt. Ltd., A-51, Sector-4, Noida + Rs. 968541/- from M/s Deepak Hinges Pvt. Ltd., B-150, Sector-6, Noida] from M/s Garg Industries B-18, Sector-8, Noida, as per clearances respectively made from different units ( details mentioned in table-2 to show cause notice] under Section 11A of the Central Excise Act, 1944 alongwith appropriate interest thereon under Section 11 AA of the Act ibid.
(ii) I impose a penalty of Rs. 52,54,189/- [ Rs.
12,37,035/- upon M/s Monika Steels Pvt. Ltd., + Rs. 11,24,367/-upon M/s D.D. Hardware Pvt. Ltd., + Rs. 7,24,094/- upon M/s Door devices Manufacturing Co., + Rs. 12,00,151/- upon M/s Jai Hardware Pvt. Ltd., + Rs. 9,68,541/- upon M/s Deepak Hinges Pvt. Ltd.,] upon M/s Garg Industries, B-18, Sector-8, Noida under Section 11 AC of the Central Excise Act, 1944 read with Rule 25 of the Central Excise Rules, 2002.
10 Excise Appeal Nos.70222, 70348-70354,70444-70446, 71039 & 71234 of 2018
(iii) I impose penalty of Rs. 50,00,000/- (Rupees Fifty Lacs only) on Shri B.M Garg, under Rule 26 of the Central Excise Rules, 2002."
Vide Order-in-Original No. 6/AC/D-IV/N-I/16-17 dated 31.03.2017 following has been held:-
"ORDER
1. I confirm the demand of total Central Excise duty amounting to Rs.740996/- (Rupees Seven Lakh Forty Thousand Nine Hundred & Ninty Six only) (including BED+ Edu. Cess + Higher Edu. Cess) [ Rs. 30897/- M/s Monika Steels Pvt. Ltd., A-56, Sector-8, Noida) + (Rs. 283580/- M/s D.D. Hardware Pvt. Ltd., B-25, Sector-8, Noida)+ (Rs. 108843/- M/s Door devices Manufacturing Co., C-34 & 35, Sector-8, Noida) + (Rs. 317675/- M/s Jai Hardware Pvt. Ltd., A-51, Sector- 4. Noida) +(Rs. NIL M/s Deepak Hinges Pvt. Ltd., B-150, Sector-6, Noida + (Rs. NIL- M/s Garg Industries B-18, Sector-8, Noida), as per clearances respectively made in their name shown in Table -2 of para 7 of show cause notice as demanded from M/s Monika Steels Pvt. Ltd., A-56, Sector-8, Noida, M/s D.D. Hardware Pvt. Ltd., B-25, Sector-8, Noida, M/s Door devices Manufacturing Co., C-34 & 35, Sector-8, Noida, M/s Jai Hardware Pvt. Ltd., A- 51, Sector-4, Noida, M/s Deepak Hinges Pvt. Ltd., B-150, Sector-6, Noida, and M/s Garg Industries B-18, Sector-8, Noida jointly and severally under Section 11A (1) of the Central Excise Act, 1944 along with interest under Section 11-AA ibid.
2. I impose a penalty of Rs. 7,40,996/- (Rupees Seven Lac Forty Thousand, Nine Hundred Ninety Six only ) jointly and severally on aforementioned units/Companies under Section 11-AC of the Central Excise Act, 1944 read with Rule-25 of the Central Excise Rules, 2002 for contravention of provisions of Central Excise Act, 1944 and rules framed there under.
3. Imposed penalty of Rs.7,40,996/- (Rupees Seven Lac Forty Thousand, Nine Hundred Ninety Six only) upon Shri 11 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 B. M. Garg. Resident of C-16, Green Park Extension, New Delhi under Rule 26 of Central Excise Rules, 2002 read with Section 11AC of the Central Excise Act, 1944 for his acts of commission or omission as cited supra."
2.6 Aggrieved by these orders appellants had preferred appeal before the Appellate Authority. Appellate Authority has upheld the orders. Aggrieved appellants have filed these appeals before the Tribunal.
2.7 Revenue have also filed appeal challenging the order of Commissioner (Appeals) dropping the penalties imposed upon Shri B.M. Garg.
3.1 We have heard Shri Manish Raj, learned Authorised Representative appearing for the Revenue and Shri Hemant Bajaj, learned Counsel appearing for the Assessee. 3.2 Arguing for the appellant learned Counsel submits that- These show cause notices are periodical show cause notices issued to the appellant/respondent, starting from show cause notice dated 22.02.2008. Some of these show cause notices have been adjudicated and appeals finally decided in favour of the appellant. Details of such show cause notices and their final outcome is as indicated in the table bellow:-
SCN No. Period Duty Current Status
Demanded
in SCN
IV-CE(9)CP/ Feb'03 to 1,70,51,187 Decided in favour of
66/Pt.B/458 Dec'07 Appellant vide No.
20.02.2008 A/71748-71756/2017-
EX[DB] order dated
08.06.2017, Revenue in
appeal before High Court
[Appeal No. 135/2018)
ΟΙΟ ΝΟ. 311 TO Jan'08 to 17,25,261 Decided in favour of
312/Noida/2010 Nov'08 appellants vide order no.
dated 30.09.2010 51455- 51456/2015-
EX[DB] dated
09.04.2015, order
attained finality
V(15)SCN/ Nov'09 to 1,22,659
ADJ/GARG BMG/N- Nov'10
III/590/10
10.12.2010
V(15)ADJ/ SCN/N- Dec'10 to 2,96,768
III/41/ Au g'11
706/2011/5300
22.12.2011
V(15)ADJ/SCN/N- Sep'11 to 1,50,886
12 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
III/GARG/ 1402/12 Aug'12
04.10.2011
V(15)ADJ/ SCN/N- Sep'12 to 2, 35, 380
III/GARG/ Jul'13
462/2013
11.09.2013
V(15)ADJ/ Aug' 13 to 38,14,084 Appeal allowed by Ld.
SCN/GARG Jun'14 Commissioner (Appeals),
IND/183/2014 Department in Appeal
30.09.2014 Before Hon'ble CESTAT
(Appeal
No.E/70469/2017
V(15)ADJ/ Jul'14 to 25,88,225 Decided in favour of
SCN/GARG Jan'15 appellants vide order
IND/NOIDA- no.A / 70378-
1/33/2015 70379/2019-EX[DB]
03.08.2015 dated 22.02.2019, order
attained finality
Reliance is placed on Tribunal's Final Order No.51455- 51456/2015 dated 09.04.2015 wherein the demands were for the past period have been dropped. This order has been upheld by the Hon'ble Allahabad High Court by its order dated 06.11.2015 in Central Excise Appeal No.282/2015.
Further, in case of same asssessee Tribunal has vide Final Order No.71846-71908/2018 dated 07.08.2018 has held that the benefit of SSI exemption would be admissible to each of the unit.
There is no merit in the demands made.
3.3 Arguing for the revenue learned Authorised Representative appearing for the revenue submits that- While dropping the penalty imposed upon Shri B. M. Garg, the Commissioner (Appeals), citing Calcutta High Court in the case of Tarak Nath Sen and others vs Union of India and others, AIR 1975 Calcutta 337, has observed at para 8 that imposition of penalties one, on the proprietorship firm and second, on the proprietor would amount to imposition of penalty twice which cannot be sustained in the eyes of law and has set aside imposition of penalty on Shri B. M. Garg.
It was found during investigation of the case that Shri B. M. Garg was operating several units in different names in order to gain benefit of small scale exemption 13 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 for each units separately and not to pay excise duty. The clearances of all the units run by respondent was clubbed and accordingly duty short paid was confirmed. Although he was proprietor of M/s Garg Industries but he was also controlling seven other units namely, M/s Deepak Hinges Pvt Ltd as Director, M/s Door Devices Manufacturing Company as partner, M/s Monica Steels Pvt Ltd as Director, M/s D.D. Hardware Pvt Ltd as Director, M/s Jai Hardware Pvt Ltd as Director and unit - 1 & unit-III of Garg Industries as proprietor. Many of these units are Pvt Limited company and Shri Garg was controlling director of these company. The impugned penalty on Shri Garg was imposed only once and not separately for managing different units. Hence, Commissioner (Appeals)'s observation that he was the proprietor of only M/s Garg Industries, is not correct (Details of allegations can be seen in show cause notice dated 04.05.2016 placed at page 68, Annex- A2 of appeal memo). Likewise, details of findings by the original adjudicating authority order dated 31.03.2017 may be seen at page 32, Annex- Al of appeal memo. Commissioner (Appeals) has ignored Hon'ble Supreme Court decision in this matter. In the case of Prakash Metal Works vs CCE reported as 2007 (216) ELT 660 (SC), the Hon'ble Supreme Court has specifically held even the separate penalty imposed on partner and partnership firm (para 4,5). More or less same view has been expressed by the Hon'ble Tribunals as mentioned below-
o 2009(245)ELT379(T)- CCE vs Rajnikant Ratilal Kadiwala o 2012(275)ELT465(T)- CCE vs Mohd. Amin A.S. Lakha o 2016(334)ELT120(T)- Yunus Bhai Shamsuddin Devdiwala vs CCE.
4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument.
14 Excise Appeal Nos.70222, 70348-70354,70444-70446, 71039 & 71234 of 2018 4.2 The fact that all these proceedings are arising out of same investigations has been recorded in the Order-in-Original whereby in para 2.3 following has been stated:-
SCN No. Date Period Amount
Demanded
in (Rs.)
IV-CE(9)CP/ 20.02.200 Feb'03 to Dec'07 1,70,51,187.00
66/Pt.B/458 8
V(15)SCN/ 10.12.201 Nov'09 to Nov'10 1,22,659.00
ADJ/GARG BMG/N- 0
III/590/10
V(15)ADJ/ SCN/N- 22.12.201 Dec'10 to Aug'11 2,96,768.00
III/41/ 1
706/2011/5300
V(15)ADJ/SCN/N- 04.10.201 Sep'11 to Aug'12 1,50,886.00
III/GARG/ 1402/12 1
V(15)ADJ/ SCN/N- 11.09.201 Sep'12 to Jul'13 2,35,380.00
III/GARG/ 3
462/2013
V(15)ADJ/ 30.09.201 Aug' 13 to Jun'14 38,14,084.00
SCN/GARG 4
IND/183/2014
V(15)ADJ/ 03.08.201 Jul'14 to Jan'15 25,88,225.00
SCN/GARG 5
IND/NOIDA-
1/33/2015
V(15)ADJ/ Noida- 04.03.201 Feb'15 to Mar'15 7,40,996.00
I/GARG/67/2015/2 6
005
4.3 Admittedly, Tribunal has vide Final Order Nos.51455-
51456/2015 dated 09.04.2015 has set aside the demands. Appeal filed by the revenue against the said order has been dismissed by Hon'ble High Court of Allahabad by observing as follows:-
"The Department issued a notice to the assessee to show cause why the turnover will not include the turn over of six units as in their opinion six different units were established for the purpose of SSI exemption and that all the six units were owned and controlled by one person, namely, Sri B.M.Garg.
We find that the Tribunal has set aside the order in original on the ground that for clubbing of different units notices are essential to be issued to all the units and in support of this contention the Tribunal has relied upon various case laws. We also find that all the units are located at different places and the mere fact that the units are owned and controlled by one person does not allow clubbing of the 15 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 clearances. Merely because the proprietor of the present concern has interest in other six units does not entitle the Department to club all the shares of the assessee in other units.
We do not find any manifest error in the order of the Tribunal, which requires consideration. The appeal fails and is dismissed."
4.4 Commissioner (Appeals) has sought to distinguish the said decision in his order by stating that in earlier proceedings the show cause notice was not issued to all the person concerns and was issued only to Shri B.M. Garg whereas the present case show cause notices have been issued to each and every unit who was a dummy unit of Shri B.M. Garg proprietor of Garg Industries.
4.5 It is noted from the order of Hon'ble High Court that the decision is not limited to the issuance of show cause notice but also records that merely because proprietor of one concern has interest in other units, revenue will not be entitled to club the clearances.
4.6 Interestingly in the present set of appeals, Commissioner (Appeal) has himself considered each of the person whose clearance have been sought to be cleared with the clearances made by Shri B M Garg as separate legal entity and have entertained the appeals filed by each of the said entity which were sought to be dummy units of Shri B M Garg. Not only he entertained the said appeals separately but have also each of the appeal of each entity separately, upholding the demand confirmed against by treating them separate entity. In case each of the unit was considered a separate legal entity as has been done by the Commissioner (Appeal) then the case of clubbing, of the clearance of these units for availing the Small Scale Exemption could not be upheld, as each of these entity was entitled to claim the benefit of Small scale exemption separately. 4.7 Further Commissioner (Appeal) has dropped the proceedings against Shri B M Garg, by setting aside the penalties imposed upon him. In the appeals filed by him. Thus 16 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 when there is no case against the Shri B M Garg alleged to be the mastermind in floating these units to avail the benefit of Small Scale Exemption, then Commissioner (Appeal) could not have proceeded to uphold the demand made. From the perusal of the order in originals it is evident that, Vide order No.55/JC/NOIDA-I/2016-17 dated 31.03.2017, demand have been confirmed against M/s Garg Industries, indicating in parenthesis the breakup of demand against each of the unit whose clearance have been clubbed. Penalty has been in the same manner imposed upon M/s Garg Industries giving the breakup of penalty relatable to each of dummy entity. Vide Order-in-Original No. 6/AC/D-IV/N-I/16-17 dated 31.03.2017 demand has been confirmed jointly and severally against each of the entity and the penalty also imposed jointly and severally.
4.8 Commissioner (Appeal) has misdirected himself in the present case by treating each of unit as separate entity for the reason that earlier demand was set aside for the reason that no show cause notice was issued in the name of the dummy units whose clearances were sought to be clubbed. In the impugned order, it has been recorded to distinguish the decision of Hon'ble high Court, that the notices were issued to the each of the unit whose clearances were sought to be clubbed with the clearances of M/s Garg Industries of Shri B M Garg. However, after considering the response to the show cause notice, the demand can be confirmed only if each of the unit was found to be dummy after lifting the corporate viel. Interestingly Commissioner (Appeal) has in the impugned orders have considered the decided appeals treating each of the alleged dummy unit as separate independent legal entity. Revenue also do not challenges these order in appeals except the order in appeal in case of Shri B M Garg whereby he has been totally exonerated and the penalties imposed on his have been dropped. More so ever, Commissioner (Appeals) has recorded as follows in the impugned order:-
17 Excise Appeal Nos.70222, 70348-70354,70444-70446, 71039 & 71234 of 2018 "8. I observe that penalty on M/S Garg Industries, B-18, Sector 8, has been imposed under section 11AC of the Central Excise Act, 1944. It is set legal jurisprudence that Proprietorship firm or proprietor thereof cannot be treated as two different legal entities. Partnership firm is a firm in mercantile usage however penalty imposed on the proprietorship or partnership firms would mean penalty on the proprietor or partners thereof, therefore imposition of penalties one on the proprietorship firm and second on the proprietor would amount to imposition of penalty twice which cannot be sustained in the eyes of law. I rely on Calcutta High Court in the case of Tarak Nath Sen and Others v. Union of India and Others, AIR 1975 Calcutta 337, wherein it was observed as under"
"17. Thus, these decisions make it clear that although a firm in mercantile usage has a personality of its own, strictly in the eye of law, it is not a legal entity like a natural person. Therefore, the rights and obligations of a firm are really rights and obligations of the individual partners of the firm. In the instant case, according to the findings made by the Additional Collector of Customs in his adjudication order the petitioners 2 to 4 carrying on business as a partnership firm had contravened provisions of the Customs Act and the Gold Control Rules and were liable for penalties under Section 112 of the Customs Act and under Rule 126-L(16) of the Defence of India (Gold Control) Rules. Therefore, no exception can be taken to imposition of penalties individually upon them. But since the firm is not a legal entity and Section 140 of the Customs Act was inapplicable to the adjudication proceeding, the Additional Collector of Customs by imposing penalties also upon the firm has really twice punished the petitioners Nos. 1 to 4 for the same sets of acts. Therefore, although I propose to sustain the imposition of penalties under the Customs Act and the Defence of India (Gold Control) Rules upon the petitioners 18 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 2 to 4, the penalties of fine imposed upon the petitioner No. 5 firm should be quashed."
In view of the discussion, Appeals are allowed. Imposition of penalty on the appellant stands set aside." 4.9 It is also noted that in case of show cause notices have been issued and adjudicated to various units including those in appeal before us. On the same grounds Tribunal vide Final Order No.71846-71908/2018 dated 07.08.2018 records as follows:-
"The aforementioned appeals have been filed by the appellants, challenging the Order-in-Original No.39/Commissioner/ Noida/2015-16 dated 29.01.2016 passed by CC & CE, Noida, confirming duty and penalty jointly and severally along with interest and also against Order-in-Appeal No.NOI-EXCUS-001- APP-0215 to 0223-15-16 dated 30.12.2015 passed by CC & CE (Appeals), Noida, upholding duty, redemption fine and penalty on the appellants. As common facts and circumstances are involved in all the appeals being, the entire case of the Department is that, all the Appellant firms/companies are the dummy units of one Shri B.M. Garg (proprietor of Garg industries), - which have been created to fragment and/or bifurcate the total clearances so as to fall within the exemption limit of SSI benefit. For the sake of convenience we are referring to the facts involved in the case of Deepak Hinges Private Ltd (appeal number E/70265/16). So far as other appeals are concerned the facts are similar and the difference is only of duty and penalty amount and further the evidence relied upon in all the appeals is more or less the same arising from the same facts and circumstances and the evidences collected in the search of the premises of the appellants on 3/4 July 2013.
2. The appellant Deepak Hinges private Ltd is engaged in the manufacturing of building hardware namely- butt hinges, piano hinges, cut hinges, hinges & gauge, hook & band, boards, et cetera falling under chapter 83 of the Central excise tariff act 1985. The appellant clears its goods either for export under form H or clears in the domestic market, without payment of duty availing the SSI exemption granted under notification number 8/2003 - CE dated 01/03/2003 as amended.19 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
3. The factory premises of the appellant was searched by the C.Ex. Officers on 03/04.07.13 which resulted into issuance of SCN dated 19.07.14 [Period June 2009 - 02.07.13] proposing demand of C.Ex.Duty of Rs.3,72,02,700/- along with interest and penalty. The entire basis of the demand raised in the SCN is certain alleged private records recovered by the department from one premises located at 11/30, 2nd Floor, Ambey Complex, Sharma Market, Harola, Sector-5, Noida which was also searched on 03/04.07.13 and the proceedings were recorded vide Panchnama dated 03/04.07.13 as per which following documents were recovered:
Annexure „1‟ - File No. 1, titled in the Panchnama as "File containing Misc. loose papers"
Annexure „2‟ - File Nos. 10 & 11,both titled in the Panchnama as "File containing Misc. loose papers Annexure „3‟ & „4‟- File No. 12 titled in the Panchnama as "File containing Misc.
Invoices/Challans] Annexure „5‟ - Three Note books mentioned at Sl.
Nos. 41, 43 & 50 titled in the Panchnama as "Note book containing used pages‟. The said pages contained details of the customers. The SCN had taken entire sales made by the said customers (dealers) as purchases from the appellant and other named parties.
4. Relying upon the said Panchnama and statements recorded during investigation, it is the case of the revenue that the recovered documents contained details of clandestine manufacture and clearances made by the appellant as well as other named companies/firms which were created by one Shri B.M. Garg, proprietor of M/s Garg Industries, only to fragment the total clearances so as to fall within the purview of SSI benefit. As the documents recovered were not companywise/firmwise, therefore, for the purpose of quantifying the duty demand individually against the appellant and other named companies/firms, the SCN had relied upon statement dated 29.08.13 of Shri Sh. K.D. Shukla (despatch Supervisor of Deepak Hinges). Further, relying upon the alleged statement of Shri Sunil Kumar - Security Guard dated 27.08.13, it is the 20 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 case of department that the term „piece‟ mentioned in the recovered documents would mean „box‟ and the term „box‟ would mean „carton‟. Relying upon the aforesaid, in the SCN demand of Central excise duty from the appellant is calculated in the following manner:
Annexure „1‟ - Rs. 15,40,861/- [Period : 2012 -
02.07.13] Annexure „2‟ - Rs. 2,06,52,363/- [Period : 01.10.12 -
02.07.13] Annexure „3‟ - Rs. 5,72,788/- [Period : June 2009
- June 2013] Annexure „4‟ - Rs. 32,76,162/- [Period : June 2009
- June 2013] Annexure „5‟ - Rs. 1,11,60,526/- [Period : June 2009
- June 2013] Rs. 3,72,02,700/-
5. The said SCN was adjudicated by the ld. CCE, Noida vide impugned OiO dated 29.01.16 confirming the allegations of clandestine manufacture and removal, as alleged in the SCN and, consequently, confirming the entire duty as proposed in the SCN on the appellant along with interest and imposed penalty of equal amount u/s 11AC o f the Act r.w. Rule 25 of C.Ex. Rules. Thus, the present Appeal by the appellant.
6. The appellants, in all the appeals, are represented by Shri Rupesh Kumar, Advocate with Shri Jitin Singhal and Shri Pravesh Bahuguna who have made detailed submissions pointing out infirmities in the evidence relied upon in the show cause notice as well as the error committed by the Commissioner. For the department, we have heard Shri Rajeev Ranjan, Joint Commissioner (AR) who, in response, has reiterated the findings of the Commissioner.
7. The first submission of Mr Rupesh Kumar, Advocate is that the Panchnama proceedings dated 03/04.07.13 of Harola Premises from where the private records, which form basis of entire demand, were recovered, was wholly illegal and against the settled principles of law and, therefore, the Commissioner was not correct in fastening the duty, interest and penal liability on the appellant relying upon the said private records even on the principles of preponderance of probability. While challenging 21 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 the authenticity of the Panchnama proceedings, it was submitted that the documents recovered thereunder were manipulated and fabricated to falsely implicate the appellant as the appellant does not even have the production capacity to manufacture the quantities on which the demand has been confirmed on the charge of clandestine manufacture and removal. In support, the appellant had relied upon the fact that the Panchnama does not give any description of the documents recovered and, instead uses the expression "file containing misc. loose pages". The Panchnama does not specifically state who had actually found the documents sought to be relied upon and from where he had found them. The Panchnama simply states that documents pertaining to sale and purchase, manufacture and clearance of goods were found in the room. Moreover, the panchnama is totally silent on the aspect whether the documents recovered were sealed or not, so as to avoid any manipulation and, in case they were sealed, whether any panchnama proceedings were recorded while de-sealing the said records. Even though the panchanama stated to have recovered the CPU of the computer found in the premises for further investigation and the said CPU was sealed with paper seal containing signatures of panchas, department officers and Shri Shukla however, there is nothing in the SCN as to the manner in which the said seal was broken i.e. whether any panchnama proceedings were carried or not. The appellant, in support, relied upon the decision of this Tribunal in the case of Kuber Tobacco Products Ltd. v CCE, Delhi - (2013) 290 ELT 545 (T).
8. We find that this Tribunal in the aforesaid case laid down detailed guidelines to be followed by the officers while preparing Panchnama, in order to verify the truthfulness of the case put forth by the Department and the defence sought to be raised by the persons proceeded against. The said guidelines are reproduced hereunder, for ready reference:
a. The panchnama has to be specific and clear about the location and the description of the premises irrespective of the fact whether it is in the course of criminal investigation or tax evasion investigation.22 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018 Thus, the panchnama ought to describe the premises or the location of the premises with reference to the neighbouring surroundings; the interior of the premises; number of accesses available to the premises and whether the premises were accessible or not from any of those accesses before unlocking the rooms. There should be description of the entire building vis-a-vis the portion of the building which was allegedly used for impugned activities. The panchnama should also specify the location of the documents alleged to have been found in the premises. b. The panchnama ought to disclose as to who had found the documents in question and where exactly those documents were located in the said premises. It should clearly state whether the documents were seized by concerned officers as also whether the officers seizing the documents had taken any care to ensure that the documents are properly enclosed in an envelope or some other packing material, so as to avoid the possibility of access to or interference with those documents by any stranger. The panchnama should also disclose the time period during which it is conducted.
c. The panchnama ought to disclose as to from where the keys of the premises were acquired and whether there was only one key or there were more keys. The panchnama should also disclose as to whether after the conclusion of the panchnama proceedings, the premises were closed or possessed by some official. The panchnama should also mention whether there was any person or persons in the premises before entering the premises or after completion of the panchnama proceedings. It should also describe the number and names of the officers who had allegedly conducted the search in the premises and whether the search was conducted in the presence of the panchas and/or any officials.
d. The panchnama ought to disclose the nature of the use to which the premises in question were put to. The 23 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 investigating agency should establish a link between the concerned premises and the occupants thereof being the persons proceeded against. It should also be disclosed in the panchnama as to whether the premises were at all being used for any purpose or not.
e. It is not enough that the panchnama merely records that the officers on search found certain records and that the same are described in some Annexure but it must also give the description of the so-called records. It is absolutely necessary to do so in order to give credibility to the panchnama, particularly when the entire proceedings in that regard are sought to be challenged and disputed.
f. It is not sufficient that the Annexure to the panchnama contains a list of documents found but it must give details of the documents stated to have been found in the premises. Thus, in relation to the seizure of documents, it is necessary not only to record that the documents were recovered from the premises but it is also necessary to record a brief description of the exact place where the documents were located in the premises and from where they were seized by the seizing officer. It is further necessary to record as to what steps the seizing officer had taken so as to refrain himself and persons accompanying him from causing any damage to the documents as also to avoid any interpolation or inference in any manner with such documents and contents thereof. It is also necessary to record as to what steps were taken to safeguard the documents and to avoid possibility of any stranger‟s interference with the seized materials. In other words, when any document is seized, it is necessary to enclose the same in a cover and to seal such cover so that no other person gets opportunity to interfere with such document.24 Excise Appeal Nos.70222, 70348-70354,
70444-70446, 71039 & 71234 of 2018
9. We find force in the submission of the counsel for the appellant. Upon perusing the Panchnama, we find that the same does not give any description of the documents recovered and, instead uses the expression "file containing misc. loose pages"
without indicating what the said misc. loose papers are. The Panchnama does not specifically state who had actually found the documents sought to be relied upon and from where he had found them. The Panchnama simply states that documents pertaining to sale and purchase, manufacture and clearance of goods were found in the room. Moreover, there is nothing stated in the panchnama as to whether the documents recovered were sealed or not, so as to avoid any manipulation and, in case they were sealed, whether any panchnama proceedings were recorded while de-sealing the said records. Even though the panchanama stated to have recovered the CPU of the computer found in the premises for further investigation and the said CPU was sealed with paper seal containing signatures of panchas, department officers and Shri Shukla. However, there is nothing in the SCN as to the manner in which the said seal was broken i.e. whether any panchnama proceedings were carried or not. Under these circumstances, the documents relied upon in the SCN, on the basis of which demand has been confirmed, creates serious doubts.
10. We also find that the Commissioner had accepted the authenticity of the said documents in view of the fact that various persons whose statements were recorded during the course of investigation, had admitted the contents of the said private record. The appellant, in order to establish its defence, has specifically requested in the reply to the SCN that in case the Commissioner wants to rely upon the private record which have been corroborated only by statements recorded during the course of investigation, the authenticity of which the appellant had seriously disputed, opportunity may be given to them to cross examine. We find that the appellant had given the reasons pointing out certain infirmities, as to why the statements could not be relied upon. The appellant had also referred to various statements which shows that during the course of their recording, documents/record which are voluminous and not feasible to verify at one go, were made to affirm. In this regard, while referring to the statement dated 25.10.13 of Shri B.M. 25 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 Garg, it was pointed out that, as per his statement, he had read and verified the contents of following statements and documents viz., Panchnama dated 3/4.7.2013 drawn at the office premises at Ambey Complex;Statements of Shri Krishan Dev Shukla, Shri Ramesh Chander, and Shri Rakesh Kumar Tiwari, all dated 4.7.2013;File no.1 allegedly containing 659 pages; File no. 12 allegedly containing 253 pages;File No. 10 and 11 allegedly containing 261 and 381 pages respectively; Statements of 11 employees, in total 17 statements; Statements of 20 customers; Statements dated 6.7.2013 and 5.9.2013 of Shri V.P.Garg;Statements dated 27.8.2013 of Shri Sunil Kumar and Shri Adesh Tiwari; Quantification charts (Annexure-1 and 2 to the SCN) for computation of central excise duty proposed to be demanded on the basis of Files nos. 1, 10 and 11;Statement dated 19.7.2013 and 2.8.2013 of Shri Sunil Kumar
11. On the issue of cross-examination, we find that the assessee cannot as a matter of right ask for cross examination and it is only in case the department wants to rely upon the statements that the opportunity to cross-examine needs to be afforded in compliance of the principles of natural justice as held by the Apex Court in the case of Andaman Timber Industries v CCE, Kolkata - 2015 (324) ELT 641 (SC) as well as the Allahabad High Court in the case of CCE v Kurele Pan Products Pvt. Ltd. - 2014 (307) ELT 42 (All). As no opportunity of cross- examine has been given to the appellant, we hold that the Commissioner has committed error in law in relying upon the statements.
12. However, it has been argued on behalf of the department that the case of the department would stand even without the statements also. On the other hand, counsel for the appellant had argued that the entire demand has been confirmed only on assumption and presumption. We agree with the submission of the appellant that it is not humanly possible for a person to verify and confirm such voluminous facts pertaining to five companies and 22 customers for the last four years, without even checking any record of any of the said companies. We are surprised to find that this fact has been accepted by the Commissioner in his order that "Shri B.M. Garg in the 26 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 statements have verified the mentioned records only on sample basis and he has not verified each and every entry of records..." This clearly establishes the point of the appellant, beyond any doubt, that the statements cannot be relied upon, being not voluntary. Similar is the fact regarding all the statements wherein, voluminious documents were stated to have been verified, relying upon which the entire case has been built by the department. Therefore, for this reason also, no reliance can be placed on the statements.
13. We find that the charge of clandestine clearance is a serious charge and the department is required to prove the allegations of clandestine clearance by producing sufficient positive and cogent evidence. In the present case, the case of the department is based upon certain private records which are seriously disputed by the appellant and, corroborating the same by statements for which the appellant had not been afforded opportunity to rebut. We find that even though the private record relied upon was common but, for the purpose of quantifying the demand on individual appellant, reliance was placed on statement of Shri K.D. Shukla, wherein he had stated to have identified the variety of finished goods manufactured by each company/firm, in the private records recovered during the panchanama dated 03/04.07.13 of Harola Premises. However, the counsel for the appellant had pointed from the record that that the appellant has been manufacturing and clearing the variety of Hinges which, though not indicated in the statement of Shri Shukla, but the statutory invoices recovered by the department from the factory premises of the appellant, clearly shows the manufacture and clearances of such variety. This itself shows that quantification of demand cannot be based relying upon statements and the same is without any basis. There is clear assumption and presumption by the department regarding alleged clandestine activities. In the absence of any positive evidence brought on record by the department except for private record the authenticity of which have been doubted and the statements which we have already held to be not voluntary, the allegations of clandestine clearance cannot be upheld in the present case. On this issue we are guided by the principles laid down by the Apex Court in the case of Oudh 27 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 Sugar Mills Ltd. v Union of India, 1978 (2) E.L.T. J172 (S.C.) which has been consistently followed by the Tribunal.
14. Another issue raised in these appeals relates to availability of SSI benefit under Notification No. 8/2003-CE as amended. As all the appellants firms/companies have availed the benefit of SSI exemption except M/s Garg Industries, the SCN had proposed to deny the benefit of the said Notification on grounds viz., use of the brand name "Deepak"/"Maruti"/"BMG" by the appellant which were owned by Shri B.M. Garg; value of all the companies/firms in the present proceedings are liable to be clubbed for the purpose of determining the total value of clearances in terms of Notification No. 8/2003-CE, as Shri B.M. Garg is the person behind all the companies/firms [by lifting corporate veil] having total pervasive financial control and management control over them. Reliance was also placed on earlier SCN dated 20.02.08 r.w. addendum dated 16.09.11, which was confirmed against the appellants by OIO dated 31.03.13.
15. It is submitted by the appellant that to deny the SSI exemption benefit on the ground of use of brand name belonging to some other person, the onus is on the department to establish as to who is the other person who owned the brand name. The appellant has placed reliance on various decisions viz., CCE, Ahmedabad-II Vs. Gujarat Healthcare, 2010 (259) ELT 140 (Tri), Ample Industries Vs CCE, Rajkot, 2007 (218) ELT 456 (Tri), Hukum Aqua Minerals (P) Ltd. Vs. CCE, Banglore, 2006 (195) ELT 289 (Tri) and CCE, Visakhapatnam Vs. Balaji Electrodes (P) Ltd, 2005 (191) ELT 204.
16. We find from the records that since beginning, it is the stand of all the appellants that neither of them nor Shri B.M. Garg or any other individual are owner of the brand names in issue. Shri Adesh Tiwari- Manager of Deepak Hinges, had also confirmed this fact in his statement dated 25.06.14. Nothing has been brought on record by the department to establish that the said brand names belonged to any "other person". Thus, SSI benefit cannot be denied to the appellant(s) on the ground of using the brand name of other person, in view of settled position of law, as relied upon by the appellant.
28 Excise Appeal Nos.70222, 70348-70354,70444-70446, 71039 & 71234 of 2018
17. On the issue of clubbing of clearances, it has been held by the Commissioner that all the companies including the appellant were only a façade created by Shri B.M. Garg, just to avail unauthorized SSI benefit. Reliance is also placed on the SCN dated 20.02.08 r.w. addendum dated 16.09.11 which was affirmed vide OiO No. 73-81/Commissioner/Noida/2012-13 dated 31.03.13. However, the facts of the case does not warrant clubbing of clearances of all the units as we find that the Commissioner has confirmed the demand jointly as well as severally on each of the companies/firms thus accepting their separate and independent identity, as held by this Tribunal in the case of Punjab General Manufacturing Works Vs. CCE, Lucknow, 2017-TIOL-1837-CESTAT-ALL, and in the case of Bentex Industries v CCE, New Delhi - 2003 (151) ELT 695 (T) affirmed by the Apex Court reported in 2004 (173) ELT A79 (SC). Further, the issue is also covered by the decision of the Allahabad High Court in the case of CCE, Noida-I versus M/s Garg Industries - C. Ex. Appeal No. 281 of 2015 decided vide order dated 06.11.15 pertaining to parties before us wherein it has been held, under identical facts, that merely because Shri B.M.Garg is the person behind all the companies/firms, including the appellant, cannot be a ground to club the clearances of all the companies/firms in question and further held that merely because the proprietor of Garg Industries has interest in the other six units (Pvt. Ltd. Companies) does not entitle the department to club all the shares of the assessee in other units. Further, the earlier OiO dated 31.03.13 has already been set aside by this Tribunal vide Final Order dated 71748- 71756/2017-Ex (DB) dated 8.6.2017, reported as 2018-TIOL- 651-CESTAT-ALL.
18. For the purpose of denying SSI benefit, the Commissioner has relied upon para 2(v) of Notification No. 8/2003-CE which refers to „manufacturer clearing specified goods from one or more factories‟. However, we find that for the applicability of this para, the Commissioner should have decided as to who the „manufacturer‟ is, who is having one or more factories. However, the fact is that, the Commissioner has confirmed demand against individual (assesses)/appellants, which would only mean accepting the identity of individual (assessee) or each appellant as manufacturer because under section 3 of the 29 Excise Appeal Nos.70222, 70348-70354, 70444-70446, 71039 & 71234 of 2018 Central Excise Act, 1944, central excise duty is payable by manufacturer. Our view also gets support from the decision of the Apex Court in the case of Asstt. Collector of C.Ex. & Cus & Ors v Shri J.C. Shah &Ors - 1978 ELT (J317)."
4.10 From the above decision, we find that the Tribunal has specifically recorded the findings that clearances could not have been clubbed in these circumstances and have allowed the benefit of SSI exemption. That being so there appears no merits in the order of Commissioner (Appeals) whereby he denies the benefit for only a period from February, 2015 to March, 2016. It is further noted that for the same period proceedings were initiated by issuance of the periodical show cause notices and also on the basis of investigations undertaken. 4.11 Accordingly, we do not find any merits in the order confirming the demand during these periods. 4.12 As we are setting aside the impugned orders, confirming the duty demanded treating each of the unit as separate legal entity entitled to small scale exemption, we do not find any merits in the appeal filed by the revenue.
5.1 Appeals filed by the appellants are allowed and appeal filed by the revenue is dismissed.
(Pronounced in open court on-04 June, 2024) (P.K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) akp