Customs, Excise and Gold Tribunal - Delhi
Jangra Engineering Works, Lalit ... vs Cce on 15 December, 2003
Equivalent citations: 2004(93)ECC45, 2004(177)ELT364(TRI-DEL)
JUDGMENT P.S. Bajaj, Member (J)
1. The above captioned appeals have been directed against the common Order-in-Original vide which the adjudicating authority had confirmed the duty of Rs. 20,67,735 with equal amount of penalty and interest thereon against the firm appellant No. 1 and further imposed penalty of Rs. 3,00,000 on firm appellant No. 2 and also of this much amount on Bishan Sharma the appellant No. 3, partner of the firm Appellant No. 1 and Lalit Sharma, partner of the firm Appellant No. 2, as detailed therein.
2. The duty has been confirmed on the firm appellant No. 1 M/s. Jangra Engineering Works (in short JEW) for having manufactured and cleared the excisable goods (fire extinguishers) during the period 1.4.96 to 5.5.98 under the invoices of the firm appellant No. 2 M/s. Lalit Engineering Works (in short LEW) at their premises No. 4/1, New Rohtak Road, New Delhi, without payment of duty on those goods and availed he benefit of SSI exemption Notification No. 1/93 illegally. The penalty of the amount equal to that of duty had been confirmed against them and on their partner appellant No. 3, penalty of Rs. 3,00,000 has been imposed, while on the other firm M/s. LEW and its partner appellant No. 4, the penalty of Rs. 3,00,000 each has been confirmed under Rule 209A of the Rules, by taking into consideration these facts and circumstances (i) the factory premises of the firm M/s. LEW remained sealed during the entire disputed period, (ii) the entire correspondence regarding receipt of raw material and clearances of the goods was made from the address of the firm JEW, (iii) inspection of the goods cleared under the invoices of the firm LEW was made by the purchaser at the address of the firm JEW, and (v) no evidence was brought to prove the actual working of the factory of the firm LEW during the period in dispute.
3. The learned counsel has contended that on the strength of the above referred facts and circumstances though not even proved on record, no presumption that the goods during the period in dispute were manufactured by the firm JEW, could be drawn for want of any other tangible evidence to prove the receipt of excess raw material, excess manufacture of the final products and even excess consumption of electricity and also for want of any other evidence to prove the flow back of money from the firm M/s. JEW to the firm LEW or vice versa. He has also contended that there is ample evidence on record to prove that the firm LEW is an independent unit established in the year 1992 and is manufacturing the goods since then and supplying the same to the Ministry of Defence. According to the counsel, the impugned order deserves to be set aside being based on conjuctures and assumptions without corroboration from the reliable evidence.
4. On the other hand, the learned SDR has reiterated the correctness of the impugned order and maintained that facts and circumstances, detailed above, had been rightly relied upon by the adjudicating authority for saddling all the appellants with duty and penalty respectively, as detailed therein.
5. We have heard both sides and gone through the record.
6. We find from the record that the firm JEW came into existence in the year 1965, while the other firm LEW in the year 1992. The factory premises of the firm JEW is located on the ground floor of premises No. 4/1, New Rohtak Road, New Delhi, while the office of the other firm LEW is housed on the first floor of that very premises but the factory was put up by this firm at village Kamaruddin, Nangloi, in the rural area in Khasra No. 14/7/1 and 14/6/1 and had been manufacturing fire extinguishers and supplying the same to the Defence Ministry against DGS&D rate contract as per their specification after inspection and approval. This firm LEW got Central Excise registration from the Central Excise department by submitting proper application alongwith the site plans (copies at pages 174 to 176 of the paper book). The perusal of these documents show that they intimated to the department the place of their manufacture at plot No. 15, Khasra No. 13/7/1, Ram Nagar Colony, Najafgarh Road, Nangloi. The office address given by them was 4/1, New Rohtak Road Industrial Area, New Delhi. In the site plan they had shown sheds and open land having boundary walls on all the sides where they had put up factory. After due verification of the correctness of the contents of the application and site plan, the department issued Central Excise Certificate to them for manufacturing the fire extinguishers and their parts classifiable under tariff Heading 8423.10 of the CETA.
7. True that from the record we find that the dispute arose between the firm LEW and the development authority of Delhi and their godown in the land was sealed by the SDM, as is clear from the copy of the letter dated 7.8.1997 sent by BDO, to appellant No. 4 partner of the firm LEW. But from this fact, no presumption that the firm LEW stopped their manufacturing unit especially when they had alleged that their manufacturing work continued in the open area adjoining godown. They had been manufacturing and supplying the goods to the Ministry of Defence without any interruption. The fact that raw material used to be received by them at their office on the first floor of premises No. 4/1, New Rohtak Road, New Delhi and had been also clearing the goods to the Ministry of Defence from that office, did not lead to an irresistible conclusion that not they but the firm JEW located on the ground floor of that premises which is an independent firm having separate Central Excise and Sales Tax numbers, manufacturing the goods and supplied to the Ministry of Defence, as concluded by the adjudicating authority. There is nothing on the record to suggest if any extra raw material or finished goods (unaccounted) were found in the factory premises of the firm JEW. No evidence has been brought on record to suggest that there was extra consumption of electricity and employment of labour or installation of machinery by the firm JEW during the period in dispute, for manufacturing the goods as alleged in the show cause notice. No evidence has also been brought on record to prove that the goods during the period in question were actually manufactured and cleared by the firm JEW under the invoices of the firm LEW to the Ministry of Defence. None from the Ministry of Defence has come forward to corroborate these allegations of the department. No statement of any official who used to visit and inspect the goods manufactured by the firm LEW before receiving the supply, had been recorded to the effect that those goods were in fact inspected at the factory premises not of LEW but of JEW and the same were also manufactured by the firm JEW.
8. The firm LEW had independent office from the very beginning on the first floor of premises No. 4/1, New Rohtak Road, New Delhi, Therefore, mere receipt of the raw material at the address of their office and clearance of the final products from that address, could not be made basis for saddling the firm JEW with the duty liability, by raising presumption that the said raw material was in fact received by the firm JEW and the goods were also manufactured out of that raw material by that firm for supply to the Ministry of Defence, as has been done by the adjudicating authority. None of the inspection notes, as referred in the impugned order, which were supplied by the Ministry of Defence to the department, indicated that the inspection of the goods supplied by the firm LEW during the period in question, was done at the factory premises not of that firm, but at the premises of firm JEW. Mere inability of the partner of the firm LEW to explain how the raw material was transported from office to the factory premises also could not provide any basis for raising any presumption against the firm JEW of having utilized the raw material in the manufacture of the final products supplied to the Ministry of Defence during the period in dispute. The stand of the firm LEW throughout had been that the goods were manufactured and supplied by them to the Ministry of Defence, during the period in dispute and not by the firm JEW. This stand finds corroboration from the fact that the goods during this period were received by the Ministry of Defence from them after approval. The letter of the Ministry of Defence dated 26.9.97 addressed to their office at Pune did not in any manner advance the case of the department for proving the allegations against the firm JEW against whom the duty has been firm confirmed by the Adjudicating Authority. The perusal of that letter only shows that the firm LEW was registered with Ministry for supply of goods and their registration was not approved on account of their dispute regarding land on which they had put up their factory and the labour problem and power shortage. There is no evidence on record to suggest that in response to this letter, the Pune office ever sent any intimation to the Ministry that the firm LEW had closed the manufacturing unit and that the goods during the period in dispute were supplied under their invoices, by the firm JEW.
9. The plea of the department that the brand name "Lalit" belonging to the firm LEW was also used by the firm JEW on their products supplied to the Ministry of Defence and as such, it could be presumed that the supply of the goods was made by them to the Ministry on behalf pf that firm after manufacturing the same in their factory, in order to evade payment of duty on the belief that they will be otherwise crossing the SSI exemption limitation, cannot be accepted for the simple reason that SSI exemption benefit had not been denied to the firm JEW for having used the brand name of another person. Even in the present show cause notice, the duty demand has not been raised on that account. Rather, it has been raised solely on the ground that they in fact manufactured the goods and supplied the same to the Ministry of Defence under the invoices of the firm LEW in order to remain within the SSI exemption limitation. But these allegations do not at all stand substantiated from any cogent and convincing evidence on record.
10. It is also evident on record that the firm LEW in fact shifted their factory premises on account of dispute with the Panchayat of Village Nangoli to premises No. 5-B, New Rohtak Road Industrial Area, in May, 1998. Even while carrying out the manufacturing activity at this new premises, they had been receiving raw material and clearing their final products from the address of their office i.e. 4/1, New Rohtak Road (first floor), New Delhi. The raid was conducted at this premises and record was seized but no incriminating circumstances/evidence/document has been found from their possession to prove that during the period in dispute they never manufactured the goods for supply to the Ministry of Defence. Similarly, no discrepancy in the statutory record of the firm JEW regarding receipt of raw material and clearance of finished products had been detected. Mere presence of some empty invoices with the printing name of the firm LEW, from the premises of the firm JEW could not provide conclusive proof to the effect that they had been clearing the goods on the basis of those invoices especially when at no time their goods with such invoices were ever intercepted in transit and none from the Ministry of Defence to whom they had supplied the goods, had come forward to depose that the goods were actually manufactured by the firm JEW but were supplied under the invoices of LEW.
11. There is no evidence on record to prove that the firm LEW was a dummy firm flouted by the firm JEW and there was any flow back of money from one firm to another. The Central Excise registration of the firm LEW and never been revoked at any time during the period in dispute for having become non-existent.
12. It is well settled that conjuctures and surmises cannot take place of legal proof. The allegations of clandestine manufacture and removal of the goods have to be established by the department by cogent and convincing evidence.
The duty demand on such allegations cannot be based on assumptions and presumptions drawn from stray facts and circumstances.
13. Consequently, the impugned order of the Adjudicating Authority is set aside in toto. The appeals of the appellants are allowed with consequential relief, if any, permissible under the law.