Customs, Excise and Gold Tribunal - Tamil Nadu
Mpr Refractories Ltd. vs Commissioner Of C. Excise on 10 October, 2000
Equivalent citations: 2001(128)ELT229(TRI-CHENNAI)
ORDER S.S. Sekhon, Member (T)
1. These appeals are against the order of the Commissioner who in a SCN issued pursuant to an anti evasion operation has come to the finding that one M/s. Polygon Refractories Ltd. who are one of the appellants before us is a sham, facade, shadow and dummy unit and thereafter came to a finding that the SSI exemption availed by them was not eligible if the clearances of the other unit i.e. M/s. MPR Refractories Ltd. was required to be clubbed since it was found that certain consignments were intercepted in the process of removal from the premises of M/s. Polygon, by officers of anti evasion which were found to be carrying duty paying documents showing debit of these goods in the account of M/s. MPR Refractories. Enquiries revealed that certain clearances which were effected by M/s. MPR Refratories Ltd. were debited in the duty paying registers of M/s. Polygon. The Commissioner after coming to this finding has demanded duty of Rs. 37 lakhs under the provisions of Rule 9(2) read with Section 173F of the CE Rules, 1944 read with sub-section (1) of Section 11A of the CE Act, 1944. He has also demanded duty of Rs. 18,27,154/- under the same provisions from M/s. Polygon for the goods which were found carrying on the documents of duty payment of M/s. MPR Refractories Ltd. He has also demanded duty of Rs. 68,200/- under the same provisions from M/s. Polygon wherein removals were to be debited in the registers of duly payment being maintained by M/s. MPR Refractories. Mandatory penalties were also imposed under law on other co-noticees. Duty of Rs. 24,000/- has also been demanded from MPR Refractories for clearances of 20 MT of mortar cleared without payment of duty as alleged in the show cause notice.
2. We have heard Shri V.J. Sankaram, learned Counsel for the appellants who submits that there is total non application of mind in determining the order which has been passed in gross violation of law. He also submits that the submissions made by them before the Commissioner have not been considered. Duties have been determined and demanded on dummy, sham and shadow unit which is against the catena of judgments of this Tribunal itself wherein it has been clearly held that if a unit is dummy and clubbing is resorted to, then, duty cannot be demanded from such dummy unit. He also submits that this is a case of denial of SSI exemption as the units are existing unit. In the case of M/s. Polygon, it was an old established unit and M/s. MPR Refractories came later in existence. They are independent units and the Commissioner's finding of clubbing the clearances and/or dummy units is not correct in law. He further submits that demands made under Rule 9(2) in the present case is bad in law inasmuch as there was no clandestine removal of goods since it is an admitted fact that documents evidencing payment of duty and its proper discharge accompanied the goods when the officers intercepted the truck and hence should not fall for payment of duty once again. He submits that in the facts and circumstances not only waiver of pre-deposit should be allowed but also the entire appeals should be allowed as the order suffers from gross violation of the law.
3. The learned DR S. Kannan, on the other hand submits that the Commissioner has given a very clear finding about flow back and mutuality of interest has been established and correctly clubbed the clearances of the two units. Even if duty paying documents were found with the goods, which were being removed and intercepted by the officers of anti evasion, the debits of the goods were made in the registers maintained by M/s. MPR Refractories and therefore, it can be established that there was no duty discharge by the manufacturer of the goods and it is not a case of job working as has been made out by the appellants. Duty discharge liability may be on the goods but it has to be discharged by the manufacturer and therefore, the demands made on the two manufacturers even though the goods were having duty paying documents is incorrect. He further submits that the Commissioner has correctly denied the SSI exemption to M/s. Polygon and the appellants may be put to strictly comply with the duty demands along with interest demanded before the appeals can be heard as the appellants have not pleaded any financial hardship.
4. Since the issue to be decided in the appeal lies in a short compass and since we propose to dispose of the appeals by remand, we grant waiver of pre-deposit the amounts involved, and take up the appeals for disposal with the consent of the parties.
5. We have carefully considered the submissions made by both the sides and the material on record and we find that:
(a) For clubbing of the clearances of two more units to deny the SSI exemption benefit, Section 37B order issued by the Central Board should have been applied. In the present case we find that there is no finding about the applicability and/or compliance with this order by the assessing officer. Therefore, this order is bad in law and is required to be set aside and remanded back for re-adjudication in terms of Section 37B order.
(b) Having come to a finding that M/s. Polygon is a sham, facade and dummy unit, and thereafter demanding duty from them by considering it as an independently existing manufacturer is not in terms and in violation of the law laid down by the Tribunal in a catena of decisions. The order determining and demanding duty on units found to be dummy, sham, and facade is required to be set-aside on this ground.
(c) We find that there is no clear cut finding as to why and how the clearances are being considered to be clandestine and in contravention of Rule 9(2). Therefore, prima facie, to us the demands made under Rule 9(2) read with Section 11A proviso appears to be not applicable in the facts of this case.
(d) The impugned order is therefore, required to be set aside and remanded back for re-determination of the demands as per law. The Commissioner should give a finding as to how he was considering the removal to be clandestine when admittedly there was duty paying documents when the trucks were intercepted.
In view of our findings above, we set aside the impugned order and remand the matter for de novo consideration in the light of the findings above.