Customs, Excise and Gold Tribunal - Bangalore
Sapthagiri Cements Pvt. Ltd., ... vs Cce on 12 January, 2005
Equivalent citations: 2005(183)ELT385(TRI-BANG)
ORDER T.K. Jayaraman, Member (T)
1. Since all these five appeals are against the adjudication order dated 27.09.2002 passed by the Commissioner of Central Excise & Customs, Visakhapatnam, the matter is taken up in this order for consideration and disposal. Two of the appeals are by the Revenue.
2. The appellants Nos. 1 and 2 are Private Limited Companies engaged in the manufacture of Cement. Both the appellants availed the benefit of SSI Exemption. The third appellant is the Managing Director of the first appellant unit. The Revenue proceeded against the first three appellants for suppression of production, clandestine removal and irregular availment of separate SSI exemption. The period involved in respect of clandestine removal is from 04/1998 to 10/1998. The period involved in respect of irregular availment of SSI exemption is 98-99 and 99-2000. The adjudicating authority confirmed the demand in respect of clandestine removals on both the appellants 1 and 2 and imposed mandatory penalty under Section 11AC of the CE Act. Interest under 11AB was also demanded. A penalty of Rs. 50,000/- was imposed on the third appellant under Rule 209A of the CE Rules. As regards the irregular availment of SSI exemption, the adjudicating authority held that the clearances of both the units need not be clubbed and had dropped the proceedings in respect of the clubbing of the clearances. The Revenue, aggrieved over the decision of the adjudicating authority in dropping the proceedings with regard to the clubbing, has come before this Tribunal in the last two appeals.
3. Shri G. Shiva Dass, learned Advocate, appeared for the first three appellants and Shri L. Narasimha Murthy, learned SDR appeared for the Revenue.
4. We take up the Revenue's appeals first. The departmental investigations reveal that the appellant 1 and the appellant 2 were having mutual interest in the business of each other. The third appellant is the Managing Director of the first appellant and the Director of the second appellant. It was alleged that there was one cheque book for both the appellants 1 and 2. There was further allegation that appellant no. 2 was using the brand name of appellant no. 1 viz. `Sapthagiri'. In our view, the value of the two SSI units cannot be clubbed on account of the above factors. The provisions relating to clubbing in the SSI notification are as follows:
(i) Where a manufacturer clears the specified goods from one or more factories, the exemption in his case shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table, and not separately for each factory.
(ii) Where the specified goods are cleared by one or more manufacturers from a factory, the exemption shall apply to the aggregate value of clearances mentioned against each of the serial numbers in the said Table and not separately for each manufacturer.
5. From the above it is very clear that the clearances can be clubbed if a manufacturer clears from more than one factory belonging to him or if there is clearance by more than one manufacturer from a factory. In the present case, the appellant no. 1 is a Private Limited Company and appellant No. 2 is also a Private Limited Company. Hence, they are distinct legal entities. They may have mutual interest. That is a different thing. Mutuality of interest will have a bearing on the value in accordance with Section 4 of the CE Act, 1944. In our view, the entire basis in the Show Cause Notice for clubbing the clearances is wrong and, therefore, the Show Cause Notice itself is liable to be set aside on this ground alone. In view of this, the adjudicating authority's decision to drop the proceedings as far as clubbing is concerned is legal and proper. Revenue's appeals have no merit. Hence, they are dismissed.
6. As regards the suppression of production and clandestine removal, the learned Advocate took us through the various documents to convince the Bench that there was no clandestine removal at all. The departmental officers recovered an unauthenticated computer sheet from appellant 1. This computer sheet indicates the details of purchase of one of the raw materials for manufacture of cement viz. clinker. According to the Revenue, the quantity purchased by appellant 1 during the period from 01.04.1998 to 31.10.1998 has not been correctly reflected in Form-IV Register. In other words, according to the Revenue, 1806.355 MTs of Clinker has not been reflected in Form-IV by the first appellant. Similarly, a quantity of 1384.930 MTs of Slag and 27.870 MTs of Gypsum have not been accounted for. The case of the Revenue is that cement has been manufactured out of these unaccounted raw materials and cleared clandestinely. Similarly, in respect of the second appellant, the Show Cause Notice alleged that the quantity of 2170.280 MTs of Clinker, 257.035 MTs of Slag and 98.955 MTs of Gypsum have not been reflected in Form-IV Register. It was urged by the learned Advocate that even though the computer statement indicated 600 MTs of Clinker from M/s. P.R. Cements Ltd., Vijayawada, the factual position is that they had not received the same from them. The indication in the computer statement is only a proposal. Similarly, even though the computer statement indicates 300 MTs of Clinker from M/s. Kohinoor Cements Ltd., they had not supplied any clinker to the appellants for the last five years. A quantity of 380 MTs had not been indicated to have been received by the appellants in the computer sheet itself. A quantity of 200 MTs of Clinker against order acceptance No. 181 of M/s. Sugar Cements, cannot be considered against the account of the appellant as this transaction related to purchase by M/s. Srinivasa Cements, who is appellant no. 2. Appellant no. 2 has already accounted for the said quantity in their accounts. When the above facts are taken into account and the production loss of 10% as allowed by the Commissioner is also adjusted, there will not be any unaccounted raw material. Further, the learned Advocate took us through the relevant documents to show that all the raw materials had been properly accounted for. It was also urged that certain quantity of raw materials indicated in the computer sheets have been received later and they have been taken into account for further production. The only source of supply of slag is the Public Sector organizations viz. Rashtriya Ispat Nigam Ltd., Visakhapatnam Steel Plant and they could not have purchased any slag from other parties. The entire purchase ledger has been scrutinized by Sales Tax Department and they have authenticated their ledger after scrutinizing the accounting of all purchases of slag and gypsum. Moreover the department had not found any evidence for excess purchase during the subsequent period. In respect of the second appellant also, the entire quantity of clinker, slag and gypsum have been accounted. No customer verification has been conducted to show that the appellants have cleared any quantity of cement without payment of duty. No charges of higher consumption of electricity, labour, packing material have been alleged. The learned Advocate stated that production and removal without payment of duty has to be established beyond reasonable doubt and cannot be based on surmises and conjectures as has been held by various judicial fora. He relied on the following cases.
1. Amba Cement & Chemicals v. CCE, 2000 (115) ELT 502 (Tribunal)
2. M.T.K. Gurusamy v. CCE, 2001 (130) ELT 344 (Tri.-Chennai)
3. Deccan Granites v. CCE, 2003 (151) ELT 582 (Tri.-Bang.)
4. Krishna Bottlers (Vijayawada) Pvt. Ltd. v. CCE, 1999 (32) RLT 845 (CEGAT)
5. CCE v. Jindal Aluminiam Ltd., 1998 (29) RLT 183 (CEGAT)
6. Ambika Chemicals v. CCE, 2002 (148) ELT 101(Tri.-Chennai)
7. Suvarna Polymers Pvt. Ltd. v. CCE, 2000 (38) RLT 891 (CEGAT)
8. Ashwin Vanaspati Industries Pvt. Ltd v. CCE, 1992 (59) ELT 175 (Tribunal)
9. CCE v. Brindavan Beverages (P) Ltd., 1999 (106) ELT 403 (Tribunal)
7. The learned SDR reiterated the findings of the adjudicating authority.
8. We have heard the rival contentions. The case of Revenue rests on the discrepancy between the quantities of raw material in the Form-IV Register and the private document seized from appellant no. 1. There is no other corroborative evidence at all. It is also seen that the appellants have satisfactorily explained the discrepancy between the private records and Form-IV register. The Revenue has not carried out a thorough investigation to unearth atleast few evidences of buyers receiving the alleged clandestine removals of the appellants. There is no case of excessive consumption of electricity, etc. Revenue has not at all made a strong case against the appellants. Under these circumstances, the confirmation of demand on the alleged excess production cannot be sustained. Hence, there is no case for demanding duty and levying penalties on appellants 1, 2 and 3. Therefore, we allow the appeals of the appellants 1, 2 and 3 with consequential relief, if any.