Custom, Excise & Service Tax Tribunal
Anil Hans vs Delhi-Iv on 13 November, 2019
1
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
CHANDIGARH
REGIONAL BENCH - COURT NO. 1
Appeal No.E/51176/2014
[Arising out of OIO-09-COMMR-FBD-CX-2013 dated 21.11.2013 passed by
the Commissioner of Central Excise, Delhi-IV]
Anil Hans : Appellant (s)
Prop.of M/s Hans Udyog,Plot No-199,sec-24
FARIDABAD
HARYANA
Vs
CCE-Delhi-IV : Respondent (s)
Plot No. 36-37,Sector 32 Opp. Medanta Hospital NH-IV GURGAON, HARYANA 121001 WITH Appeal No. E/51177/2014 [Arising out of OIO-09-COMMR-FBD-CX-2013 dated 21.11.2013 passed by the Commissioner of Central Excise, Delhi-IV] Vidya Sagar Hans : Appellant (s) Husband Of Asha Hans, Prop,of M/s Hans Industries, Plot No-199,Sec-24 FARIDABAD HARYANA Vs CCE-Delhi-IV : Respondent (s) Plot No. 36-37,Sector 32 Opp. Medanta Hospital NH-IV GURGAON, HARYANA 121001 AND Appeal No. E/51178,51217-51227/2014 [Arising out of OIO-09-COMMR-FBD-CX-2013 dated 21.11.2013 passed by the Commissioner of Central Excise, Delhi-IV] Dharmendra Driver : Appellant (s) M/s Hans Industries, plot No-199,Sec-24 FARIDABAD HARYANA 2 Mech Well Foundry Gali No-8A,Sarurpur Industrial Area ,Sohna Road FARIDABAD, HARYANA, 121004 S G Ferro Engineering Pvt Ltd Gali No-w-8,sarurpur Industrial Area Sohna Road FARIDABAD, HARYANA 121004 Saurabh Gupta Prop Of M/s Gautam Industries,plot No-15,Sarurpur More,sohna Road FARIDABAD, HARYANA, 121004 Gautam Industries Plot No-15,sarurpur More,Sohna Road FARIDABAD, HARYANA, 121004 Industrial Thermopac Plot No-12,Gali No-w-6,Sarurpur Industrial Area ,Sohna Road FARIDABAD, HARYANA, 121004 Shri Gaurav Gupta Prop Of M/s Mechwell Foundry,Gali No-
8A,Sarurpur,industrial Area,Sohna Road FARIDABAD, HARYANA, 121004 Shri Vijay Gupta Prop. of M/s Industrial Theropac,Plot No-12,Gali No-W-6,Sarurpur Industrial, Area ,Sohna Road, FARIDABAD HARYANA, 121004 Shri Mool Chand Prop Of M/s Premier Casting,Plot No-
12,Gali No-W-6,Sarurpur Industrial Area ,Sohna Road, FARIDABAD HARYANA, 121004 Industrial Casting Plot No-12,13,14,sarurpur Industrial Area,Sohna Road, FARIDABAD HARYANA, 121004 Nirmal Kumar Gupta Director M/s,S.G.Ferro Engineering Pvt. Ltd,Gali No-W-8,Sarurpur Industrial Area, Sohna Road, FARIDABAD HARYANA, 121004 Pritimesh Kumar Sharma Prop Of M/s Dynocast Industries, Gali No-W-8,Sarurpur Industrial Area,Sohna Road, FARIDABAD, HARYANA, 121004 3 Versus CCE-Delhi-IV : Respondent (s) Plot No. 36-37,Sector 32 Opp. Medanta Hospital NH-IV GURGAON, HARYANA 121001 APPEARANCE:
Shri K. K. Anand, Shri N. K. Sharma, Advocates for the Appellant Shri Basha Ram, Authorised Representative for the Respondent CORAM : HON'BLE Mr. ASHOK JINDAL, MEMBER (JUDICIAL) HON'BLE Mr. C L MAHAR, MEMBER (TECHNICAL) FINAL ORDER No.60997-61009/2019 Date of Hearing:04.09.2019 Date of Decision:13.11.2019 Per :Mr.Ashok Jindal The appellants are in appeal against the impugned order wherein the duty has been demanded from them to deny the benefit of exemption Notification No.08/03-CE dt.1.3.2003 by clubbing clearances made by co-noticees.
2. The facts of the case are that the appellant, namely, M/s. Mech- well Foundry (M/s.MWF) and is registered with Central Excise Department to manufacture of C.I. Castings and Machine parts. An intelligence was gathered that M/s. MWF by were engaged in evasion of duty by floating various dummy units, so as to avail the benefit of duty free clearances under SSI exemption Notification No.08/03-CE dt.1.3.2003 as amended. On the basis of that intelligence, the search operations were conducted by the officers of Anti-Evasion branch of Delhi-IV Central Excise Commissionerate, Faridabad on 03.08.2010 at various business/residential premises belonging to M/s.Mech-Well Group. Shri Gaurav Gupta, who was qualified engineer, started the C.I.Castings manufacturing business with his proprietorship firm M/s. MWF and got the same registered with Central Excise department in 4 2003. He was assisted in his business by his accountant Shri Sunil Goel and his factory in-charge Shri P.K.Sharma and thereafter his father, Shri Vijay Gupta and his younger brother Shri Saurabh Gupta, who were staying with him in the same house as a joint family, one more unit namely, M/s. Industrial Thermopac (M/s.IT) was also got registered by him with Central Excise department in 2003 for manufacture of Thermopac Packing materials as his father was having proprietorship of the same. Both units were availing the Cenvat credit on their inputs and were paying duty on their finished goods.
3. As their sales increased, with an intention of evading payment of duty, Shri Gaurav Gupta started another unit in the name of Industrial Castings (M/s. IC) for manufacturing C.I.Castings from a rented premises known as Gali No.6, Sarupur, Industrial Area, Sohna Road, Faridabad with his brother Shri Saurabh Gupta as proprietor, which was later on converted by them into a partnership firm. The said unit was clearing C.I.Castings without payment of duty. A firm in the name of M/s. Gautam Industries (M/s. GI) was also floated at another rented premises for manufacture of planomiller machines, etc. in the year 2004 with his brother Shri Saurav Gupta as the proprietor. As per the Revenue, this unit was also not having sufficient manufacturing facility. Thereafter, 3 more firms namely, M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) were also floated in the year 2004, 2006 to 2008 respectively in the name of three employees namely, Shri Mool Chand, Shri Sunil Goel and Shri P.K.Sharma respectively.
4. It is alleged that these firms found to be dummy and with no premises or plant and machinery in existence. Shri Vijay Gupta, father of Shri Gaurav Gupta, in blatant contravention of Central Excise Act/Rules entered into false rent agreements with the said three firms and they also submitted such false documents to take Sales Tax Registration numbers and also fabricated various other documents to apparently comply with various other formalities in respect of said three dummy units.
5. It is also alleged that Shri Gaurav Gupta, his father Shri Vijay Gupta and his brother Shri Saurabh Gupta floated one more non 5 Central Excise registered unit namely,M/s. S.G.Ferro Engineering Pvt.Ltd. (M/s. SGFEPL) to manufacture of C.I.Casting as a private limited company with his father and one more person namely, Shri Nirmal Kumar Gupta as the directors. There are total eight number of business entities, (six shown as manufacturing CI Castings, one for machines and one for manufacturing thermocole packing materials) under Mech-well Group, which was controlled and managed primarily by Shri Gaurav Gupta. Six of the said concerns were found to be un- registered and were showing their annual sales below the exemption limit of Rs.1.50 crore as prescribed under Notification No.08/03-CE dt.1.3.2003 for taking benefit of duty free clearances.
6. It is alleged that this showed the deliberate intention of Shri Gaurav Gupta to evade payment of duty since he was well versed with the Central Excise provisions, being Central Excise registrant for long time. It was also found that free flow funds among all the said eight entities and there was heavy cash withdrawals in the bank accounts of the respective firms, which were reaching the ultimate beneficiary i.e. Shri Gaurav Gupta. The fact regarding free flow of funds has also been admitted by Shri Gaurav Gupta in his statement and it was also admitted by him in the said statement that the funds were transferred from one unit to another unit as per their requirement, it was the same where their family owned concerns. Shri Gaurav Gupta was getting active assistance from his father, his brother, his accountant, Shri Sunil Goel, his factory in-charge, Shri P.K.Sharma, their foreman Shri Manoj and his father‟s trusted man and employee of IT, Shri Mool Chand and Shri N.K.Gupta. Therefore, it is alleged that MWF and IT suppressed their production and sale figures of excisable goods in their ER-1 returns. The value of clearances of excisable goods removed by them without payment of Central Excise duty from 01.04.2006 onwards from their respective factories against the invoices of the said three dummy concerns i.e. PC CTI and DCI were also not declared by them in the said ER-1 returns. The production and sale figures of the other units namely, GI, IC and SGFEPL were also suppressed from the department and the said units were not registered by them with department, even though the same were not 6 eligible for the benefit of duty free clearances in view of provisions of Para 2 (v) of Notification No.08/03-CE dt.1.3.2003 since their values of clearances were required to be clubbed with that MWF and IT for determining their exemption eligibility criteria and also because such clubbed values were well beyond the thrash hold limit of Rs.4 crore as prescribed under sub-para 2(vii) of Notification No.08/03-CE dt.1.3.2003.
7. It was also alleged that all the said eight units including the three dummy units were known in the trade circles by name of MWF only and the buyers and the suppliers were having dealings with Shri Gaurav Gupta in respect of business transactions with the said eight units. Payments for the goods sold were also being received by Shri Gaurav Gupta in respect of the said eight units. The records and finances of the said eight units including the three dummy units were maintained jointly by accountant of MWF, Shri Sunil Goel as per directions of Shri Gaurav Gupta. The premises, plant and machinery and even raw materials of one unit/individual were utilized by another unit/individual without paying for the same since all the said units were family owned concerns and further their finances were also being managed jointly. Therefore, it was alleged that MWF have indulged in blatant contravention of Central Excise Act/Rules in as much has that they wilfully floated the said three dummy units through their proprietor Shri Gaurav Gupta and later used the said three units as a cover for clandestine removal of excisable goods from their factories. Therefore, they evaded the duty during the period 1.4.2006 to 3.8.2010. Further, the units, namely, IC, GI and SGFEPL were not eligible for the benefit of duty free clearances under Notification No.08/03-CE dt.1.3.2003, due to the reasons mentioned in the notice, that these dummy units floated by Shri Gaurav Gupta, therefore, they are liable to pay duty on their clearances and the duty was demanded from them. In these set of facts, a show cause notice dt. 6.5.2011 was issued for demand of duty for the period 12.4.2006 to 30.07.2010. The matter was adjudicated and following order has been passed:-
7 8 9 10 11 12 13 14 15Against the said order, the appellants are in appeal before us.
8. Ld. Counsel for the appellants submits as under:-
9 The issue involved is the denial of benefit of Notification No.8/2003-CE dated 01-03-2003 to six units. The three units mainly M/s. Premier Castings (M/s. PC), M/s. Castech Industries (M/s. CTI) and M/s. Dynocast Industries (M/s. DI) have been treated as dummy units of M/s. Mech-Well Foundry (M/s. MWF). Their respective clearances have been clubbed with that of M/s. MWF on the ground that the goods i.e. CI castings were actually manufactured by M/s.
MWF and cleared on the invoices of these three dummy units. The other three firms namely M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI) and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s. SGFEPL) have also been denied the benefit of SSI exemption notification on the ground that the same were being controlled by Shri Gaurav Gupta, Proprietor of M/s. MWF and that the same were family concerns of Gupta family consisting of Shri Vijay Gupta and his two sons namely Shri Gaurav Gupta and Shri Saurabh Gupta.
10. That whole case was made out on the basis of inculpatory statements recorded from Shri Gaurav Gupta, Shri Saurabh Gupta , Vijay Gupta, Sh.Mool Chand, Proprietor of M/s. PC, Shri Sunil Goel, Proprietor of CI, Shri Pritmesh Kumar Sharma, Proprietor of M/s. DI, Shri Nirmal Kumar Gupta , Director of M/s. SGFEPL, some of the suppliers of raw material and buyers of finished goods. All the persons who were connected with the eight units had filed their retractions before the Commissioner in respect of each and every 16 statement. Shri Gaurav Gupta and Shri P.K. Sharma, Proprietor of M/s. DI had also submitted their duly sworn Affidavits dated 28-12- 2012 wherein they had stated that their statements were recorded under threat and coercion and they had retracted from the said statements. The Appellants had sought cross-examination of 14 witnesses. Out of 14 witnesses, 6 witnesses appeared for cross- examination on 24-12-2012. All the witnesses who appeared for cross-examination resiled from original statements and clearly stated that inculpatory portion of their statements were recorded under threat by the officers. The Revenue also cross-examined Shri Gaurav Gupta and Shri P.K. Sharma since they had submitted duly sworn Affidavits aforementioned.
11. That it is well settled law that if the statements are promptly retracted the same cannot be relied upon unless it is proved that these statements were recorded without threat or inducement. It is also a well settled law that when a witnesses resiles during the cross- examination from his original statement, the said original statement loses its evidentiary value. Further it is also well settled law that when a witness is called for cross-examination but does not appear for such cross-examination, his statement has to be eschewed from the evidence.
12. That apart from the above position on the issue of statements the Commissioner has relied upon the original statements without following the procedure as envisaged under Section 9D of the CEA which is of a mandatory nature. Section 9D (1) of the CEA,1944 clearly mandates that before admitting a statement in evidence the evidence of a witness must be recorded before the Adjudicating Authority. Only after recording of such statement before the Adjudicating Authority the said evidence can be admitted in evidence. However, in the present case the Adjudicating Authority has straightway relied upon the statements recorded during investigation of enquiry without following the procedure laid down under Section 9D of the CEA,1944.
13. That in respect of the alleged three dummy units M/s. PC, M/s. CTI and M/s. DI the respective Appellant had brought on record lot of 17 documentary evidences which clearly prove that all the three units were not dummy units but were very much in existence. In this regard, the details of the documentary evidence have been highlighted which were brought on record before the Adjudicating Authority. In fact these records mainly consisted the details of the Bank Accounts which showed the funds which were invested to setup the respective units, the details of purchase of plant and machinery, rent agreement, sale tax registration, assessment orders by the Sale Tax Authorities and Income Tax returns including balance sheets of each unit. There is not even a single finding by the Adjudicating Authority doubting the genuineness or veracity of these documents. The three alleged dummy concerns were purchasing the raw material on the strength of invoices which were raised upon them by the suppliers of the raw material and the same were duly entered in their Books of Accounts. These units had requisite plant and machinery to manufacture of finished goods which were cleared on the strength of invoices. That majority of the invoices under which the raw material was received contained the vehicle number through which the said raw material was received. The majority of the invoices through which the goods were cleared to buyers also contained the vehicle numbers. If the case of the department is treated to be correct that would mean that neither any vehicle entered in the premises of these dummy units nor any finished goods were cleared therefrom. In that case the entire raw material would have been received in the factory of M/s. MWF instead of three units and finished goods would have also been cleared from M/s. MWF. No such evidence has been brought on record except for retracted oral evidence or the oral evidence from which the witnesses resiled during cross-examination or some of the witnesses did not appear for cross-examination. He further submitted that the invoices under which the raw material was received by these units and finished goods were cleared on the strength of these invoices. The details of some of such invoices is explained. For example a perusal of sale invoice dated 8-03-2008 would reveal that it is a sale invoice which contains vehicle number under which CI Casting sold the goods. Similar is the position with invoice dated 20-03-2008 and so on. The purchase register of CI reveals the details of the purchases made by 18 CI during the financial year 2008-09. Copies of the purchase invoices reveal that CI purchased various raw materials from different manufacturers/traders. These invoices contain the vehicle number and other details of the raw material purchased by them. The raw material was purchased against form D-1, in respect of the sales effected by CI during the financial year 2008-09, a perusal of various invoices would reveal that the sales were effected by CI on the strength of invoices. The names of the buyers are duly mentioned in the invoices with vehicle details. Some of the sales were effected outside the State of Haryana. As is evident from the invoice dated 15- 12-2008 wherein the sales were made to NOIDA, UP vide VAT D-3 form number 9810694. Similar is the case in respect of invoice dated 5-12-2008, wherein reference to form UP 38 and form D-3 are given. Similar is the case in respect of invoice dated 4-12-2008 . There is no evidence at all to prove that the raw materials which were purchased by the three dummy firms were off loaded at the premises of M/s. MWF and the finished goods were also cleared from the said premises. There is not even a single statement from the driver of the vehicle or the transporter disproving the contents of the details mentioned on the respective invoices both in respect of purchase of raw materials and sales of finished goods.
14. That the alleged dummy units were in existence is proved from the fact that the officers had seized the documents relating to these three units from the residence of Shri Sunil Goel on 3-8-2010. The officers drew a panchnama dated 3-8-2010 would reveal that these documents related to M/s. PC, M/s. CTI and M/s. DI which included their invoices files relating to Banking transactions, Stock Registers, Registration, Declaration forms and paper relating to Purchase Bills, sales bills, sales tax and Income Tax documents including Balance Sheet. These documents have in fact been relied upon as various RUDs by the department in the Show Cause Notice.
15. That the finding that M/s. PC was not in existence is also nullified from the fact that while recording the statements of the buyers of the finished goods the statement of one Shri Sumit Kumar, Proprietor of M/s. Web Master was recorded on 28-03-2011 wherein 19 he inter alia stated that M/s. Industrial Castings and Premier Castings were situated at Sarurpur Mor, Industrial Area, Sohna Road, Faridabad. That, he was visiting M/s. Premier Castings as per requirement for inspection of the CI Casting ordered by him.
16. That the authenticity of M/s. CI is proved from the fact that the purchase bills and sales bills clearly show the factum of receipt of raw material in the unit of M/s. CI and clearances of finished goods.
15. That in respect of M/s. DI there was an agreement between Shri N.K. Gupta and Shri P.K. Sharma Proprietor of M/s. DI revealed that Shri N.K. Gupta given his premises on rent to Sh. P.K. Sharma, Prop. Of M/s. DI which was fitted with a couple furnace for consideration of Rs.5500/- PM. Further Shri N.K. Gupta in his cross- examination dated 24-12-2012 stated that before starting M/s. S.G. Ferro Engineering Pvt. Ltd., he had rented the premises to Shri P.K. Sharma for four months and was charging a rent of Rs.5500/- per month which was duly reflected in his Income Tax return.
17. That all the three units whose clearances were clubbed with M/.s. MWF and M/s. IT were granted separate TIN number. The details of these TIN numbers are contained in the Show Cause Notice. TIN number stands for Tax identification number which is a eleven digit number assigned to dealers in India who were involved in manufacturing and trading of goods. In order to obtain the TIN number, the dealer has to furnish the documents such as proof of possession of premises such as electricity bills, property tax receipt, rent agreement etc. The dealer has also to submit PAN Card for the entry of bank statement, photograph of the promoter, address proof of the promoter, nature of the business and other information. Therefore, the allegations/findings that the three units were dummy units cannot be sustained as all the three units had their respective TIN numbers which could not be granted to them without providing the above information to the VAT authority.
18. That there were allegations in the Show Cause Notice that it was M/s. MWF which had cleared the finished goods under the invoices of 20 these three dummy firms. It was alleged that it was Shri Gaurav Gupta Proprietor of M/s. MWF who has created these three dummy units. It has been categorically alleged that M/s. PC, M/s. CI, and M/s. DI were dummy and sham units which were created by Shri Gaurav Gupta and his father Shri Vijay Gupta. In the Show Cause Notice again, it was alleged that the firms viz. Premier Castings, M/s. Castech Industries and M/s. Dynocast Industries, created under their respective proprietorships by Shri Gaurav Gupta and his father Shri Vijay Gupta, should not be treated as dummy and sham units. This contradictory nature of allegations are clear indicator that these three units were independent units.
19. Even in the Order-in-Original there is absolutely no finding that the sales proceeds of alleged three dummy units flowed back to Shri Gaurav Gupta or any of his family member. The only finding in this regard in the Order-in-Original is that "circumstantial evidence and documents on record clearly indicate that the sale proceeds of clandestine clearances made under the bills of these non-existent and dummy units had been routed back to the ultimate beneficiary i.e. Shri Gaurav Gupta."
20. Even there is contradiction about the investment made in these three firms. It was alleged that the initial investment in these three dummy units were made by Shri Gaurav Gupta whereas in the Order- in-Original it has been held that it is amply clear that promissory seed money to float the dummy units namely PC, CTI and DCI was invested by Shri Gaurav Gupta and family.
21. With regard the three other units namely M/s. Industrial Casing (M/s. IC), M/s. Gautam Industries (M/s. GI) and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s. SGFEPL) there is no allegation that the investment in starting these units was made by Shri Gaurav Gupta. The only allegation in the Show Cause Notice was that all the eight units were managed by Shri Gaurav Gupta.
22. The respective Appellants in reply to the Show Cause Notice had brought on record numerous documentary evidence. There is no 21 finding by the Commissioner that these documentary evidences are false or in unreliable in any manner. These documentary evidences included returns of EPF, ESI, Sales Tax registration, Sales Tax returns, copies of invoices through which the plant and machinery were purchased, rent agreement Sales Tax Assessment Orders, Income Tax returns including the Balance Sheets.
23. That all the three units namely M/s. IC, M/s. GI and M/s. SGFEPL were visited by the Central Excise officers on 3-8-2010. All the three units were found working and it is clear from the panchnamas drawn at the respective premises. The details of the three panchnamas are as under:--
(i) Panchnama dated 3-08-2010 drawn at the premises of IC.
(ii) Panchnama dated 3-8-2010 drawn at the premises of M/s.
GI.
(iii) Panchnama dated 3-08-2010 drawn in the premises of M/s. SGFEPL.
24. It is pertinent to state that M/s. IC and M/s. GI were registered by the department itself on 9-8-2010 when they were given Central Excise certificate. The registration certificates of M/s. GI and M/s. IC are placed on record. This would clearly mean that the department treated both the units as separate and independent. Further both the units were made to deposit Rs. 15 lakhs each at the time of search. Further the duty has also been confirmed against these two units which would mean that these are separate and independent units and had no relation whatsoever with M/s. MWF and M/s. IT. As regards the M/s. SGFEPL it is a private limited company and is separate juristic person. The duty demand has also been confirmed against them which would mean that it is a separate and independent unit.
25. That the Appellants have also relied upon the various judgments. The gist of the said judgments is discussed hereinunder:-
(i) Tele Brands (India) Pvt.Ltd. vs. CC (Imports), Mumbai-
2016 (336) ELT 97 (Tri.-Mum) pertain to the issue of 22 retraction of a statement. It has been held that a retracted statement cannot be considered as a confessional statement.
(ii) Rakesh Kumar Garg vs. CCE-2016 (331) ELT 321 (Del.)
(iii) Vinod Solanki vs. Union of India-2009 (233) ELT 157 (SC).
26. On the other hand, Ld. AR opposed the contention of the Ld. Counsel and submits as under:-
1. That the issue of Revenue in the case is clubbing of clearances of all units admittedly being controlled and managed by Sh. Gaurav Gupta, Proprietor of Mech-Well Foundry and denial of benefit of SSI exemption Notification No.8/2003-C.E. dated 1.3.2003 to units which were availing benefit of said exemption.
2. That it is well settled position of law that to deny benefit of SSI exemption and club clearances of other units, it is imperative to prove mutuality of interest and flow of financial transactions.
3. That on the basis of documents produced by Appellants during investigation/adjudicating proceedings and in 12 volumes before the Hon‟ble Tribunal, all 8 units are shown existed in Sarurpur Indl.Area, Faridabad and manufacturing C.I.Castings except two namely; Industrial Thermopac and Gautam Industries. Only Mech-
Well Foundry and Industrial Thermopac were registered with Central Excise and paying duty. Five units namely; Mech-Well Foundry, Industrial Thermopac, Industrial Castings, Gautam Industry, S.G.Ferrro Engineers Pvt. Ltd. are owned by S/Sh. Vijay Gupta (Father), Gaurav Gupta and Saurabh Gupta (real sons) and are living in joint family in House No.2028 Sector 9, Faridabad.
4. Investigations emerged that 3 dummy firms have been floated on papers in the name of their employees by Sh. Gaurav Gupta, Prop. of Mech-Well and his father Sh. Vijay Gupta, Prop. of Industrial Thermopac. Castech Industries, W-3, SarurpurIndl.Area has been floated in the name of Sh. Sunil Kumar Goel, Accountant of Mech- Well Foundry, Dynocast Industries, W-3, Sarurpur Indl.Area, in the name of Sh. Pritimesh K. Sharma of Mech-Well Foundry and 23 Premier Castings, Plot No.12, Gali No.6, Sarurpur Indl.Area in the name of Sh. Mool Chand, employee of Industrial Thermopac.
5. During investigation Proprietors of these dummy firms as well as Sh. Gaurav Gupta and Sh. Vijay Gupta have admitted floating of these three dummy firms. Thus, it is imperative to place on record some important facts of these statements, which are as under:-
1. M/s Dynocast Industries, Prop. Sh.Pritesh Kumar in his hand-
written statements 3.8.2010 and has inter alia stated that he joined Mech-Well in 2004; he drawing monthly salary of Rs.15,000/- in cash from his employer; he has not invested in the firm; Sh. Gaurav Gupta had asked his consent for starting a new firm in his name; being an employee of Mech-Well he could not deny; he had handed over his photographs/copy of ration card/PAN card to Sh. Gaurav Gupta; as per instructions of Sh. Gaurav Gupta he went to the P.N.B., Ballabgarh Branch for opening a current account in the name of Dynocast Industries; as per Sh. Gaurav Gupta‟s directions Sh. Sunil Goel, Accountant of Mech-Well accompanied him in said bank; as per Sh. Gaurav Gupta‟s directions he used to sign on blank cheques of Dynocast Industries; he does not know about amount withdrawn by using such blank cheques signed by him; he unaware as to whom these blank cheques are issued; only Sh. Gaurav Gupta himself was filling said blank cheques signed by him; he has not invested any money in the firm; Sh. Gaurav Gupta had not given him any money as profit earned by said firm; he was only a dummy proprietor and actual proprietor & beneficiary was Sh. Gaurav Gupta; he is unaware regarding the person preparing and signing invoices of Dynocast Industries and only Sh. Gaurav Gupta can explain; he is unable to explain reasons for mentioning of three different addresses of Dynocast Industries as he is proprietor of company only on papers and actual reason and intention of the same is known to Sh. Gaurav Gupta; he is unable to explain about rent agreement, property papers of Dynocast Industries, installed machinery, manufacturing capacity, electricity connection, buyers, suppliers, employees working etc.; he was only a dummy proprietor and actual beneficiary is Sh. Gaurav Gupta;
242. M/s Premier Castings, Prop. Sh. Mool Chand and employee of Industrial Thermopacin his hand-written statements 17.8.2010 and 18.8.2010 have inter alia stated that he is getting Rs.4000/- monthly salary in cash from Sh. Gaurav Gupta; Around 2004 Sh. Gaurav Gupta told that he intend to create a firm in his name; being an employee he given his consent; on his demand he given ration card/copy of driving licence and some photos; he got his signature on some documents; he visited bank accompanying Sh. Gaurav Gupta; for starting Premier Castings he neither given any cheque from his account nor got anything from company and nor invested any cash; Sh. Gaurav Gupta has all knowledge about this company; he never knows about address of company; Sh.Gaurav Gupta used to get his signatures on blank cheques of Premier Castings; he signed rent agreement on direction of Sh. Vijay Gupta; neither he got any space or machine on rent nor paid any rent to Sh. Vijay Gupta;
3. M/s Castech Industries, Prop. Sh. Sunil Kumar Goel and Accountant of Mech-Well in his statements 3.8.2010, 13.8.2010 and 8.4.2011 have inter alia stated that he is an accountant of Mech-Well; he is unable to state exact plot number of Premier Castings, Dynocast Industries; that he is Proprietor of Castech Industries and said firm is located at his House No.2024 Sector 3, Faridabad; he is drawing monthly salary of Rs.15,750/- which is paid in cash by Sh. Gaurav Gupta; looking after maintenance of accounts of Mech-Well Foundry, Industrial Castings, Gautam Industries, Premier Castings, Castech Industries, Industrial Thermopac, S.G.Ferro Engineering Pvt. Ltd. and Dynocast Industries; not getting any consideration in cash or kind from any of above stated units other than salary drawn from Mech-Well; he is looking after their work as per the directions of Sh. Gaurav Gupta; as per record Prop. of Premier Castings was Sh. Mool Chand, employee of Industrial Thermopac; C.I.Castings have been sold on the bills of Premier Castings and buyers are almost common with those of Mech-Well; premises of W-2, Sarurpur 25 Indl.Area was adjoining the premises of Mech-Well; he has not seen any manufacturing facilities or C.I. Castings being manufactured in said premises; he was making books of accounts of said firm only on the basis of documents given by Sh. Gaurav Gupta; the said sale bills and other records of Premier Castings were earlier kept in the office of Mech-Well; sale bills of Premier Castings were prepared mostly by him and were signed in the name of "Mool Chand" by him; some sale invoice of Premier Castings were also prepared and signed by Sh. Gaurav Gupta; he has seen invoices of Premier Castings as prepared by him and signed by him as Mool Chand; he identified invoices prepared and signed by Sh. Gaurav Gupta and appended his signature; he has not seen any manufacturing activity in declared premises; it is possible that C.I.Castings were manufactured and cleared from premises of Mech-Well Foundry; he prepared and singed said invoices since he was duty bound to do same as per directions of owner Sh. Gaurav Gupta; on record Dynocast Industries is Prop. concern of Sh. P.K.Sharma of Mech-Well; he has never seen these premises and as per his knowledge C.I.Castings shown cleared against invoices of Dynocast Industries were manufactured and cleared from Mech-Well; he is Prop. of Castech Industries and from 2008 address of firm is his house i.e. 2004 Sector 3, Faridabad; premises is owned by Sh. Vijay Gupta and no manufacturing facilities existed in said premises and goods as shown to be cleared against bills of Castech Industries were manufactured and cleared from Mech-Well; he has identified invoices of Castech Industries as prepared and signed by him; he is proprietor of Castech Industries only on paper and not beneficiary of profit in this firm; he consented to be a proprietor of this firm as requested by Sh. Gaurav Gupta; they were retaking such goods through bills of Castech Industries; however goods were directly being delivered from factory of Industrial Thermopac to buyers and there was no trading by Castech Industries as such; the said firm was existed on paper only; the salary and wages shown in the books of account of Castech Industries, Premier Castings and Dynocast Industries was maintained by him as per directions of Sh. Gaurav Gupta; he has 26 been showing expenditure towards wages & salary in the name of various persons, who were actually not existing and he does not have addresses or any other contact details of such persons shown by them as employees of above stated firms in books of accounts; he has prepared and signed sale invoices of Industrial Castings and Gautam Industries on the directions of Sh. Gaurav Gupta.
4. Important facts of statements of S/Sh. Gaurav Gupta, Vijay Gupta, Saurabh Gupta and Nirmal Kumar Gupta:-
Sh. Gaurav Gupta, Prop. of Mech-Well Foundry in his statements 3.8.2010, 24.8.2010, 12.1.2011 and 15.4.2011 have inter alia stated that he had started a firm Mech-Well in 1996; plot No.15 has been rented out by him to Gautam Industry owned by his brother; Plot No.13&14 were owned by him and earlier Mech-Well Unit-I was functioning from this premises but w.e.f. 1.4.2009 these premises are being used by Industrial Casting for manufacture of same items as was earlier being manufactured by Mech-Well; that over-head crane which were installed at Plot No.13,14 at the time of Mech-Well are being used by Industrial Casting along with some old machines of Mech-Well; Mech-Well are not charging anything from Industrial Castings for use of premises and over head cranes of machines; his brother Sh.
Saurabh Gupta and father Sh. Vijay Gupta are living in a joint family in H.No.2028/9, Faridabad; he is voluntarily tendering two post-dated cheques as payment of duty involved on goods cleared from Industrial Castings and Gautam Industries; said cheques have been tendered after discussing with his brother and father; they are not paying any rent to Sh. Saurabh Gupta for use of premises of Mech-Well; electricity connection of Mech-Well is in name of Sh. Saurabh Gupta; Sh. Sunil Goel is Accountant of Mech- Well and getting a monthly salary of Rs.15,750/- in cash from account of Mech-Well; he is looking after maintenance of accounts of Gautam Industries, Industrial Castings, Industrial Thermopac & S.G.Ferro Engineering and not getting any consideration in cash or in kind from them; he is looking after maintenance of account of these firms on his directions; Sh.Mool Chand was given 27 employment in Industrial Thermopac; his father had vacant industrial plot at W-3, Sarurpur Indl. Area; said plot was not being used; he got completed all formalities for setting up of a casting manufacturing unit by name of Premier Casting with Sh. Mool Chand as proprietor, who accompanied him to bank and signed account opening forms and other records; plot bearing Gali No.4, Sarurpur Indl. Area, Gali No.W-2, Sarurpur Indl.Area, Gali No.W-3, Sarurpur Indl. Area, are one and same; Sh. Mool Chand did not make any investment for setting up Premier Castings; no electricity connection and meter was installed in said premises; there was no overhead cranes or other material handling equipments in said premises of Premier Castings; business affairs of production and sale of Premier castings were looked after by him and he was assisted by Accountant, Sh. Sunil Goel in accounts works of said firms and most of sale bills of Premier Castings have been prepared and signed by him; for banking transactions cheque leaves were got signed by him from Sh. Mool Chand in advance and as per requirements details in the cheques were filled by Sh. Sunil Goel or him and cheques were given to suppliers or cash was withdrawn from banks; no telephone connection was installed in said premises of Premier Castings; orders for raw-materials were placed by him from his office; all purchase, production and sale records of Premier Casting were maintained in the office of Mech- Well by his accountant Sh. Sunil Goel; he has been shown statements 13.8.2010 of Sh. Sunil Goel, 17.8.2010 and 18.8.2010 of Sh. Mool Chand and after going through contents he expressed conformity with the facts stated in these statements. They started one unit for manufacture of C.I. Castings with Sh. Sunil Goel, Accountant of Mech-Well by name of Castech Industries; all formalities for opening this unit were completed by him and bank account opening forms and other relevant documents were signed by Sh. Sunil Goel; declared premises of Castech Industries is same as that of Premier Castings and as per records the said premises was rented out by his father to Castech Industries for manufacture of C.I. Castings on a monthly rent of Rs.3500/-; the said premises being utilized by Premier Castings;
28Castech Industries could not found enough place in the same premises for installation of plant & machinery; manufacturing facilities of Mech-Well were utilized for manufacture of C.I. Castings sold against invoices of Castech Industries; he was procuring purchase orders for this firm and was responsible for all business affairs of the same.
They started Dynocast Industries in December, 2008 in name of Sh. Pratimesh K. Sharma of Mech-Well; said unit was started for manufacture of C.I. Castings; C.I. Castings sold against bills of Dynocast Industries were manufactured with manufacturing facilities of Mech-Well; address in bank records is residential address of Prop. of Dynocast Industries; he has gone through statement 18.8.2010 of Sh. Pratimesh K. Sharma and express conformity with contents of the same; owning up duty involved on excisable goods cleared on sale invoices of Premier Castings, Castech Industries and Dynocast Industries in past, he voluntarily tender following post-dated account payee cheques as voluntary part payment of said Central Excise duty; any further Central Excise duty in respect of above stated units will be paid by them once the same is determined; he was shown statement 12.1.2011 of his father Sh. Vijay Gupta as well as statement 12.1.2011 of his brother Sh. Saurabh Gupta and after going through contents appended his dated signatures on last pages of both the statements; he confirmed facts stated in both these statements; regarding expenses towards rent, electricity wages & salary etc. as shown in books of accounts of Castech Industries, Premier Castings and Dynocast Industries, which were floated by them in the name of their employees, the stated expenses were shown in the books of accounts of such concerns by Accountant, Sh. Sunil Goel as per his directions to complete paper formalities of such firms because the same were not having any manufacturing facilities of their own; the goods shown as sold by them against their bills were in fact cleared from Mech-Well and Industrial Thermopac, which were both their registered units; they do not have any contact number and whereabouts of persons shown as employees of said three concerns because they do not exist; he 29 has been shown Ann. A to An. H, which have been compiled by officers from their books of accounts and bank statements containing details of inter-unit transfer of funds of Mech-Well and their other concerns and after going through contents of said printouts he has appended his dated signatures; he has also been shown details of cash withdrawals from bank account of their various units, including dummy concerns, which is a computerized print-out marked as Ann.I and he has appended dated signature after going through it; about inter-unit fund transfer and cash withdrawals from each unit to another unit these were their family owned concerns and as per requirement of funds, same were transferred from the account of one unit to account of another; about funds transfer to & from three dummy concerns he stated that since they were showing sale of goods against bills of such firms as per accounting requirement funds were transferred to and from their other units to accounts of such dummy concern. Sh. Vijay Gupta, Prop. of Industrial Thermopac in his statements 3.8.2010, 12.1.2011 and 15.4.2011 have inter alia stated that his two sons Sh. Gaurav Gupta and Sh. Saurabh Gupta resides in House No.2028 Sector 9, Faridabad; premises W-3 and Gali No.4, Sarurpur for the purpose of rent deed in respect of Castech Industries and Premier Castings was same and different address was marked to give impression that said premises was different; no machinery/fixture as mentioned in agreement between himself and Mr.Mool Chand were installed in said premises rented out by him; Sh. Mool Chand is employee of Industrial Thermopac; his monthly salary is Rs.5300/-; in 2009 his son Gaurav Gupta started a firm by name of Premier Castings mentioning address as W-2, Sarurpur Indl.Area with Sh.Mool Chand as Prop. for manufacture of C.I. Castings; they could not commence any production whatsoever in Premier Castings and raw-material against Premier Castings were in-fact utilised in own existing unit that is Mech- Well; C.I. Castings shown to be cleared against sale bills of Premier Castings were in-fact manufactured and cleared from Mech-Well; as per knowledge no premises by name of Premier Castings W-2, Sarurpur Indl. Area ever existed; in 2006 one more 30 unit by name of Castech Industries with Sh. Sunil Goel, Accountant of Mech-Well was started by him and his son Sh. Gaurav Gupta with address W-3, Sarurpur Indl. Area; he was partly owner of said premises; he and Sh. Sunil Goel entered into a rent deed for same premises for which he has already entered into rent agreement with Sh. Mool Chand; as in case of Premier Castings, Castech Industries also did not commence any production from premises W-3, Sarurpur Indl. Area and raw-material purchased in name of Castech Industries was utilised by Mech-Well for production of C.I. Castings and same were cleared from Mech-Well against bills of Castech Industries; no rent was received by them through cheques from either Premier Castings or Castech Industries, however, to complete records rent payments by cash have been shown; electricity meter installed at the premises of Gautam Industries was in his name; purchase bills of their seven firms including three dummy concerns were passed by him under his signature; on seeing the above number invoices he identified his signature on the same; it was his responsibility to check purchase bills of all said firms and after checking payments to respective suppliers were issued; he identified signature on two invoices of that of his younger son Sh. Saurabh Gupta.
Sh. Saurabh Gupta, Prop. of Gautam Industries in his statements 3.8.2010, 12.1.2011 and 15.4.2011 have inter alia stated that premises taken on rent from his brother Sh. Gaurav Gupta; prior to December, 2008 Mech-Well was working at this premises and they shifted to Gali No.8; at this premises electricity meter installed in the name of Sunder Dass; at present no electricity meter is installed; Industrial Casting is not paying any rent to Sh. Vijay Gupta or Sh. Gaurv Gupta; he checked accounts and confirm that they neither paid any rent amount nor shown payable; all rent payments have been paid as cash and booked after 3.8.2010 after search; meter installed in premises was in name of Sh. Chander Prakash; neither generator nor crane was there; they were not getting any job work done from outside; bills of capital goods of Gautam Industry & Industrial Castings are not 31 traceable; sale bill of Gautam Industries for 1.4.06 to 23.4.10 appears to have been misplaced.
Sh. Nirmal Kumar Gupta, Director of S.G.Ferro Engg. Pvt. Ltd. in his hand written statement 14.3.2011 has inter alia stated that plot Gali No.8, Sarurpur Indl. Area was purchased by him on the advice of Sh. Gaurav Gupta to start a C.I. Casting manufacturing unit; he become one of the Director; setting of plant & machinery was organised by Sh. Gaurav Gupta; he has no idea from where they have purchased plant & machinery; he has no idea about production and manufacturing process of C.I. Castings manufactured by S.G.Ferro; he is only passive Director and other Director Sh. Vijay Kumar Gupta is also not actively involved in business affairs; business of company is run and managed by Sh. Gaurav Gupta, who is having a manufacturing unit of C.I. Casting in the same area by name of Mech-Well Foundry; all details of purchase, production and sale extra can be given by Sh. Gaurav Gupta.
5. Further statement of following suppliers/buyers have been recorded, which establish that all units were managed and controlled by Sh. Gaurav Gupta and C.I. Castings were cleared from Mech-Well Foundry, but invoices raised in the name of other units.
i) During search of Mech-Well on 3.8.2010 a driver Sh.
Dharmender, vehicle Registration No.HR38E9981 with invoice No.600 dated 3.8.2010 issued by Hans Industry in favour of S.G.Ferro (P) Ltd. came in premises of Mech-Well to unload drums of silicate. In his hand-written statement 3.8.2010 he admitted that he came to unload the goods at premises of Mech-Well against said invoice and is supplying here silicate for the last year on the direction of owner of Hans Industry.
ii) Sh. Vidya Sagar Hans of Hans Industry in his statement 29.9.2010 has inter alia stated that other units also belong to same group, which are headed by Sh. Gaurav Gupta; they used to receive orders from Sh. Gaurav Gupta; material delivered either at Mech-Well Foundry, Industrial Castings or 32 S.G.Ferro Engineering Pvt. Ltd. irrespective of name and address mentioned on bills payments were received from firm to which said goods were billed; he has seen statement 3.8.2010 of driver and agree to facts mentioned in the statement; said goods were delivered at Mech-Well as per directions of Sh. Gaurav Gupta or his family members; bill No.595 dated 2.8.2010 of their firm Hans Industries billed to S.G.Ferro Pvt. Ltd. was off-loaded at factory premises of Mech-Well.
iii) Sh. Anil Hans of Hans Industry, Prop. of Hans Udyog in his statement 29.9.2010 has inter alia stated that they are dealing with Mech-Well, Industrial Castings, S.G. Ferros, Premier Castings, Castech Industries and Dynocast Industries; as per his knowledge these units were controlled by Sh. Gaurav Gupta and his family members; delivery of silicate is done at the address directed by Sh. Gaurav Gupta or his staff irrespective of firm/address mentioned in their bills.
iv) During search of Gautam Industry on 3.8.2010 one buyer Sh.S.S.Sharma of M/s Prestine India (P) Ltd. appeared and in his hand-written statement 3.8.2010 he inter alia stated that he has come to inspect goods manufactured by Mech-Well at Plot No.15; as & when their required parts/Castings are ready they inform their company and after that they used to come at address of manufacturer at Plot No.15, Sarurpur More; factory reflected with signboard as Gautam Industry; that invoices issued for these dispatches are the invoices of M/s Mech-Well Foundry;
v) Sh. R.C. Grover of Pressline India Pvt. Ltd. in his statement 6.10.2010 has inter alia stated that before taking delivery Sh. S.S.Sharma goes to factory of Mech-Well to check C.I. Castings and he is in full conformity with facts stated by Sh. Sharma in his statement 3.8.2010.
vi) Further as per statements of suppliers of goods have by and large stated that they supplied goods on the directions of Sh. Gaurav Gupta; they have seen only Mech-Well; payments 33 were made by Sh. Gaurav Gupta by cash and cheques; as per knowledge Sh. Gaurav Gupta is owner of all these firms.
vii) Further statements 22.3.2011, 23.3.2011, 24.3.2011, 25.3.2011, 28.3.2011 and 11.4.2011 of buyers of goods from the firms of Mech-Well Group by and large stated that Sh. Gaurav Gupta & their family members are owners of these firms; Sh. Gaurav Gupta supplied them C.I. Castings on invoices of any of these firms; they used to make payments as per name of units mentioned in invoices; they were purchasing machine parts from Mech-Well but bills placed in the name of other units; never seen manufacturing activities in above three units; Sh. Gaurav Gupta used to deliver C.I.Castings and he used to raise invoices of any of their firms.
6. Findings of Adjudicating Authority under Order-in- Original No.9/2013 dated 21.11.2013 with regard to Record of cross-examination is that Most of persons not retracted their statements and S/Sh. Saurabh Gupta, Sunil Goel, MoolChand, Vijay Gupta only submitted photo copy of postal receipt in respect of retracted statements and not produced any documentary evidence regarding receipt of retraction communication. The statements rendered before Central Excise officers have evidentiary value and relied upon decision of the Hon‟ble Apex Court in the case of Commissioner of Central Excise vs. Kalvert Foods Ltd.
Further, discussed Notification No.8/2003 and relied upon certain decisions of Hon‟ble Apex Court/Tribunals supporting clubbing of value in such cases.
For common Management: Facts, documents and statements establish that all units were controlled by Sh. Gaurav Gupta.
34There is common source of procurement:
Fabricated documents like bills were raised on different entities and documents/statement proves common source of procurement and all activities were controlled by Sh. Gaurav Gupta;
There is common use of machinery by Group firms: Both Industrial Castings &Gautam Industry found to be using plant & machinery of Mech-Well and these units found without any demarcation. Industrial Casting showing purchase of capital goods of Rs.37,000/- from Premier Castings, which was found dummy.
Said purchase bills were fabricated. No rent was charged by Mech-Well from Industrial Castings. Dummy units were floated to cover clearance of Mech-Well Foundry;
They are having common Marketing Arrangement: Statements of buyers of
C.I.Castings admitted that owner of goods was Sh. Gaurav Gupta and his family members;
Having common Financial Flow-Back: as per Annexure ‟A‟ to „H‟ and „I‟ showing financial flow-back among all these companies and huge cash withdrawal and financial flow has been admitted by Sh. Gaurav Gupta.
In respect of Rent Free Space/Fictitious Rent Agreement: Table at Page 66 showing ownership of premises and no rent was paid to owners of properties being units of a family members.
For common Employees, electricity meter & promissory seed money: All affairs were done under common management of Sh.
GauravGupta, his father Sh. Vijay Gupta and his younger son Sh. Saurabh Gupta.35
Thereafter it is concluded that Gautam Industry, Industrial Castings and S.G.Ferro Alloys are dummy units of Mech-Well Foundry and Industrial Thermopac owned by Sh.
Gaurav Gupta and Sh. Vijay Gupta respectively and created to avail inadmissible SSI exemption. Dummy firms were created by Sh. Gaurav Gupta on papers and all units were controlled by one person Sh. Gaurav Gupta as noticees failed to discharge the onus of proof of fulfilment of conditions of Notification No.8/2003 and thus raising demand beyond normal period of limitation was correct.
7. Documentary evidence establishing mutual interest as well as free flow of financial transactions between these firms and cash withdrawals of Rs.6.86 Crores.
(A)
i) The sale invoices have been issued among all these units including dummy establishing mutual as well as financial interest.
ii) Documents tabulated showing different locations/addresses in different documents in respect of Industrial Castings and electricity bills are in the name of one Sh. Chander Prakash. Electricity bills in respect of Gautam Industries is in the name of one Sh. Sunder Dass;
iii) Electricity connections are in the name of one Sh. Chander Prakash;
iv) Electricity connections is the name of one Sh. Sunder Dass and Letter 6.4.2011 from SDO, OP S/Div, DHBVN, Pali having details of Electricity connections.
v) Letter 7.10.2008 from Premier Castings requesting to send Sales Tax Form-D-I at residential address of Sh.Gaurav Gupta.
vi) Latest sale invoice book Sr.No.401 to 450 of Mech-Well resumed from premises of Industrial Castings;
36vii) Purchase invoices of Mech-Well resumed from premises of Industrial Castings;
viii) Latter 22.7.2008 signed by Sh. Gaurav Gupta to Manager, AIRTEL on behalf of Gautam Industry;
Proprietors of dummy firms admitted that these firms were floated on papers and there was no plant & machinery and manufacturing facility and this fact has been affirmed by Sh.Gaurav Gupta and Sh. Vijay Gupta during statements. During investigation they could not produce any invoice relating to purchase as well as sale of plant & machinery of dummy firms. Admitted that they were showing sale of goods against bills of dummy firms for the purpose of accounting requirement and in-fact goods were manufactured and cleared from Mech-Well. Sh. Gaurav Gupta admitted that affairs of these firms are managed and controlled by him and taken responsibility to pay duty and voluntarily deposited part payment of Rs.80 lakhs on behalf of Mech-Well, Industrial Casting and Gautam Industry. Purchase bills of seven firms including dummy firms were passed by Sh.Vijay Gupta and he identified his signature on these invoices during statement. It has been admitted that most of invoices of dummy firms were signed by Accountant, Sh. Sunil Goel and Sh. Gaurav Gupta. To complete formalities and record rent payments by cash have been shown as well as expenses towards rent, electricity wages and salary etc. in books of accounts of dummy firms. The buyers of C.I. Castings also admitted that Sh. Gaurav Gupta was handling affairs of all firms and invoices of other units were issued when C.I. Castings was transported from Mech-Well. (B) Annexure marked ‟A‟ to „H‟ prepared from bank statements and reflected year-wise details of financial transactions by way of cash/cheque receipts & payments between all units of joint family members of Mech-Well Group including dummy firms reflected cash withdrawals of Rs.6,85,94,251/- by Mech-Well Group including dummy firms.
Under statement 15.4.2011 Sh. Gaurav Gupta gone through these Annexure and appended his dated signatures and stated that these units were their family owned concerns and as per the 37 requirements of funds the same were transferred from the account of one unit to the account of another. As regards dummy firms, he stated that since they were showing sale of goods against bills of such firms as per accounting requirement funds were transferred to and from their other units to the accounts of such dummy concern. Further Proprietors of dummy firms have admitted that they were paid salary in cash and used to sign blank cheque books in advance on the directions of Sh. Gaurav Gupta. Sh. Gaurav Gupta in his statement 24.8.2010 has affirmed these facts and admitted that said cheques were given to suppliers or cash was withdrawn from banks through these cheques. Further cash was withdrawn to make cash payments to supplier of raw-material as well as to pay salary to employees.
Thus in view of above facts and documentary evidence on record claim of the Appellants that all 8 units are independent and their clearances could not be clubbed is wrong and not justifiable. The Adjudicating Authority after consideration of facts and documentary evidence produced by the Appellants held common management, common source of procurement, common use of machinery, common marketing arrangement, common financial control and flow-back, rent free space/fictitious rent agreement, common employees.
8. Claim of Appellants that confessional statements which were retracted cannot be treated confessional:-
To know the intent of legislature statutory provisions of law under which these statements have been recorded are reproduced as under:-
Section 14(2) of the Central Excise Act, 1944: All persons so summoned shall be bound to attend, either in person or by an authorised agent, as such officer may direct, and all persons so summoned shall be bound to state the truth upon any subject respecting which they are examined or make statements and to produce such documents and other things as may be required.
(3) Every such inquiry as aforesaid shall be deemed to be a "judicial proceedings" within the meaning of Section 193 and Section 228 of the IPC, 1860.38
The statutory provisions bound the person to state the truth while making statements. Further it is very much integral part of statements that before recording statements due caution has been given to authors of statements which has duly been recorded stating that statements are being tendered under Section 14 of the Central Excise Act, 1944 and provisions have been explained to them and they shall state the truth. Further the authors have been specifically cautioned that these statements can be used against them or any other persons in any proceedings. On conclusion the authors have recorded that statements have been tendered voluntarily without any duress, threat and coercion and then signed the statements. Thus it can be safely concluded that such statements could be made only with their personal knowledge and could not have been obtained through coercion or duress or through dictation.
The learned Adjudicating Authority in his findings has concluded that most of the persons have not retracted their statements and some failed to produce any documentary evidence towards receipt of retraction in his office. Importantly such retractions are only afterthought when no evidence or even allegation of mala fide or demand of any undue favour or illegal gratification has been brought on record against any of the officer. When no mala fide intent or explanation has been placed on record to prove recording of statements under threat, duress and coercion then it can be concluded that an attempt has been made to malign the officers, who are performing their statutory duties to save the valuable economy of the country. Most relevant question is that mostly statements are hand-written with smooth accuracy and writing flow and how statements of these persons can be under threat or duress when recorded after a considerable and long gap of time period i.e. Sh. Gaurav Gupta tendered statements on 3.8.2010, 24.8.2010, 12.1.2011, 15.4.2011, Sh. Vijay Gupta on 3.8.2010, 12.1.2011 and 15.4.2011, Sh. Saurabh Gupta on 3.8.2010, 12.1.2011, 15.4.2011, Sh. Pratimesh Kumar Sharma on 3.8.2010 and 18.8.2010, Sh. Sunil Kumar on 3.8.2010, 13.8.2010 and 8.4.2011. Another aspect arises is that why all these persons based 39 only in Faridabad choose to send their retraction letters continuously to the Commissioner, Central Excise, Faridabad by post and not lodged complaint by paying visits to his office and got official receipt against these retraction letters. But when the learned Commissioner denied receipt of original copies of these retraction letters then the claim of the Appellants is not free from doubt. It is settled law by the Hon‟ble Apex Court that the Central Excise Officer is not a Police officer and statement made under Section 14 of Central Excise Act, 1944 is admissible piece of evidence and mere retraction of confession not sufficient to make confessional statement irrelevant. In support certain decisions are being relied upon.
9. Alleged natural justice has not been denied to anyone as due opportunities by way of show cause notice and adjudicating proceedings have been extended. In support certain decisions of the Hon‟ble Court are being relied upon.
10.Claim that alleged dummy units - Premier Castings, Castech Industries and Dynocast Industries were closed for over a year when search was conducted on 3.8.2010 and brought on record certain documents to prove their existence.
This ground is completely false and afterthought as it is on record in the show cause notice 6.5.2011 that during investigation at no stage this ground has been raised by Appellants. Further documentary evidence of following sale invoices placed on record by the Appellants before the Hon‟ble Tribunal proved this ground false and fabricated:-
Search was conducted on 3.8.2010 but the sale invoice produced and raised by Industrial Thermopac to dummy firm - Castech Industries as placed on record have been issued during March, 2010, February, 2010, January, 2010 and December, 2009. Sale invoices raised by Industrial Thermopac to dummy firm - Castech Industries placed on record have been issued during March, 2010, February, 2010, January, 2010 and December, 2009.
Further during investigations and tendering statements Proprietors of these dummy firms as well as Sh. Gaurav Gupta and Sh. Vijay 40 Gupta confessed that these firms were floated on papers and there was no plant, machinery, electricity connection and premises and they were showing sale of goods against the bills of dummy firms for the purpose of accounting requirement and in-fact goods were manufactured and cleared from Mech-Well. At the time of investigation Appellants neither produced invoices evidencing purchase of plant & machinery for these dummy units nor sale invoices showing disposal on closure of dummy firms. All documents including fake rent agreements have been prepared only to show existence of dummy firms in papers. Thus, in view of facts, documentary evidence and admission the record produced to support existence of dummy units should not be taken into consideration being fabricated, manipulated and certain clearances got from the concerned authorities by filing false declaration/information. These facts have duly been admitted during investigation.
11.It has been pointed out during argument by the learned Counsel that dummy firms have not been made parties to show cause notice. It is on record that Proprietors of these dummy firms have been made parties to show cause notice and on that basis the learned Adjudicating Authority has imposed penalties against them under Rule 26 of Central Excise Rules, 2002. These dummy firms have not been issued show cause notice proposing demand of Central Excise duty since they have not manufactured any goods, but duty has been demanded from the firms who manufactured and cleared the goods on the sale invoices of these dummy firms.
12.The Adjudicating Authority denied SSI exemption and confirmed demand with interest and equal penalty against following units:-
i) Confirmed Central Excise duty of Rs.1,03,37,761/- against Mech-Well Foundry clubbing clearance made on the invoices of three dummy firms during 2006-07 to 2009-10 and appropriated part payment of Rs.50 lakhs;
ii) Confirmed Central Excise duty of Rs.2,59,881/- against Industrial Thermopac on removing Thermo packing material against the invoices of dummy firm - Castech Industries during 2008-09 to 2010-11;41
iii) Confirmed Central Excise duty of Rs.76,38,905/- against Industrial Castings on clearance of C.I. Castings/machine parts during 12.4.2006 to 30.7.2010 and appropriated part payment of Rs.15 lakhs;
iv) Confirmed Central Excise duty of Rs.66,61,336/- against Gautam Industries on clearance of Planomiller Machines during 7.4.2006 to 12.7.2010 and appropriated part payment of Rs.15 lakhs;
v) Confirmed Central Excise duty of Rs.12,96,591/- against S.G.Ferro Engg. Pvt. Ltd. on clearance of C.I. Castings/machine parts during 31.10.2009 to 16.10.2010.
Further imposed penalty under Rule 26 of Central Excise Rules, 2002 against the following:-
i) Rs.75 lakhs against Sh. Gaurav Gupta, Prop. of Mech-Well Foundry;
ii) Rs.50 lakhs against Sh. Vijay Gupta, Director of S.G.Ferro Engg. Pvt. Ltd.;
iii) Rs.50 lakhs against Sh. Saurab Gupta, Prop. of Gautam Industry;
iv) Rs.7 lakhs against Sh. Nirmal Kumar Gupta, Director of S.G.FerroEngg. Pvt. Ltd.;
v) Rs.15 lakhs against Sh. Mool Chand, employee of Industrial Thermopac and Prop. of Premier Castings;
vi) Rs.1 lakh against Sh. Pritimesh Kumar Sharma, Factory In-charge of Mech-Well Foundry and Prop. of Dynocast Industries;
vii) Rs.50,000/- against Sh. Vidya Sagar Hans of Hans Industry;
viii) Rs.10,000/- against Sh. Dharmender, Driver of Hans Industry;
ix) Rs.50,000/- against Sh. Anil Hans of Hans Udyog.
27. Heard the parties in details and examined the records placed before us and directed both sides to file written submissions which have been filed by both sides and taken on record.
4228. The issues arising from the facts of the case, is to be decided by us:-
(1) whether M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) are non existing and are dummy units of M/s. MWF and (2) Whether M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI) and M/s. S.G. Ferro Engineering Pvt. Ltd. (M/s.
SGFEPL) can be held dummy unit of M/s. MWF and consequently the benefit of exemption Notification No.08/03-CE dt.1.3.2003 can be denied and duty be demanded from them.
Issue No.1 Whether M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) are non existing and are dummy units of M/s. MWF.
29. On going through the facts of the case and relied upon documents, we find that the following documents were found during the course of investigation, with regard to M/s. Premier Castings 43
30. With regard to M/s. Castech Industries (M/s.CTI), the following documents have been relied upon during the course of investigation:-
31. Further, in the case of M/s.Dynocast Industries (M/s.DCI), the following documents have been relied upon during the course of investigation:-
32. All these above documents were found during the course of investigation itself in the case of M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI), 44 the same has not been denied by the Revenue. Further, various documents have been examined during the course of hearing by the Bench itself which shows that these units indulged in not only domestic sale but also involved inter state sale which shows that the units are independent units having statutory registration with various department identifying them the separate units. The whole case of the Revenue is based on the various inculpatory statements recorded during the course of investigation. The claim of the appellants is that the Revenue has relied upon the inculpatory statements which were retracted. The claim of the revenue is that retraction have not reached to the office of Commissioner, therefore the retraction cannot be acceptable. But we find that some of the witnesses were called for cross examination, during the course of investigation and while drawing panchnama at the time of visit, these firms were found non existing as they were closed earlier and no sale were effected in the name of firms which itself shows that the firms were already closed by their respective proprietors/owners. Moreover, the documents placed before us show that these units having their independent existence and registered with various government departments that these units were separate units.
33. Another allegation is that there was free flow of funds between units and the same were controlled by Shri Gaurav Gupta but the same cannot be reason to club the clearances of these firms and cannot be alleged that these were dummy units as the issue has been examined by this Tribunal in the case of Nova Industries Pvt.Ltd.-2015 (327) ELT 103 (Tri.- (supra) wherein this Tribunal observed as under:-
"15. First, we will deal with the issue whether the clearance of M/s. DSA can be clubbed with the clearance of M/s. NOVA. In the impugned order, the allegation against the appellant is that both the companies were promoted by Shri D.V. Khanna himself as Managing Director of both the companies and Director in both the companies are same. It is also found that by the Adjudicating Authority, the salesman/dealers to be decided mutually and marketing of both the companies were commonly and salary of employee of M/s. Nova was paid from M/s. DSA and commission of employees of M/s. NOVA was paid from M/s. DSA‟s account. The annual incentives were given to the dealers on the basis of combined sales of both the units. Moreover, the shareholding in both the units by the Directors is almost common. Sometimes, money was given to each other but nothing was shown in the balance sheet. Therefore, clearance of both 45 the units are to be clubbed as the same are managed by Shri D.V. Khanna, Managing Director in the clearance of NOVA.
16. We also find that in this case, both the units are private limited and registered with the Registrar of Companies and both the units are having their units separately located with a distance in some industrial area but there is no common gate for both the companies. Further, both the companies are registered with Income-tax Department, Sales-tax Department, Central Excise Department, Director of Industries, etc. as separate units. The registration of Central Excise was granted to both the units although the documents were signed by Shri D.V. Khanna for filing returns or correspondence with the department but they were never objected to. We also find that in this case although both the companies are having different brand names of their product such as NOVA/DSA. The units are having their own separate machinery having manufacturing the goods and same have been cleared on payment of duty by availing SSI exemption of both the units separately. The only allegation is that sometimes, salary of one of the employees was paid by the other firm or they are managed by one person. Moreover, the dealers get the commission on the combined sales of both the companies. These things cannot constitute that there was a mutuality of interest and therefore, clearances of one unit cannot be clubbed with the clearance of other unit.
17. We find that this issues has come before the Tribunal in various cases whereas in the case of Bullows India Pvt. Ltd. v. CCE, reported in 2012 (284) E.L.T. 584 (T) (supra) wherein this Tribunal has observed as under:
We find that in the present case the issue is whether the appellants are entitled for the benefit of Notification 175/86-C.E. and subsequently Notification 1/93-C.E., therefore, the ratio of the above decision of the Hon‟ble Gujarat High Court is fully applicable on the facts of the present case. The Hon‟ble High Court held that the Revenue has to establish that there was mutuality of interest or financial flowback of the funds and in such cases the clearances of the holding and subsidiary private limited companies can be clubbed. In the present case we find that even in the show cause notice there were no such allegations. In the show cause notice the only allegation is that the holding company has share capital in the subsidiary company. There is no evidence regarding financial flowback on record. In these circumstances and respectfully following the decision of the Hon‟ble Gujarat High Court, the impugned order is set aside and the appeals are allowed. The cross objections filed by the Revenue are disposed off accordingly.
18. Further, we find that, in the case of CCE v. Sharad Industries reported in 2013 (294) E.L.T. 561 (T) this Tribunal again observed as under:
We, after appreciating the submissions of both the sides find that there is not much dispute on factual position. It is not the Revenue‟s case that two units owned by Smt. Kamlesh Gupta and her husband Shri Avdesh Kumar Gupta not complete units having all the necessary machines and infrastructure for manufacture of their final product. Both the units have separate Sales Tax Registration, Industries Registration, Income Tax Registration, Electricity Connection, Telephone Connection & ESI Registration etc. Merely because there is 46 a door between the two units and power of attorney stand given to her husband to look after the job of her unit, by itself cannot be held to be a ground for holding both the units as one. Admittedly, husband and wife are entitled to their own business and if the husband is looking after the business of the wife that will not make the unit owned by the wife as a dummy unit. The prime requirement, for clubbing the clearance of two units is not having complete independent machinery and infrastructure to manufacture the goods. If both the units are complete by itself, capable of manufacturing the goods without any help from the other unit, it has to be held that both the units are independent units. The various decisions of the Tribunal referred to and relied upon by Commissioner (Appeals) in his impugned order are applicable to the facts of the present case. It stands held in precedent decision that financial flow back and financial intertwining between the two units is the main reasons for reflecting upon the fact of their being independent or not. One such reference can be made to in decision of the Hon‟ble High Court in the case of M/s. Renu Tandon v. Union of India - 1993 (66) E.L.T. 375 (Raj.). Similarly, in the case of M/s. Electro Mechanical Engg. Corporation v. CCE, Jaipur - 2003 (152) E.L.T. 194 (Tri.), Girish Electricals Industries v. CCE, Mumbai - 2004 (167) E.L.T. 299 (Tri.) it was held evidence of common office premises, common staff and common maintenance of records, etc. cannot be held to be sufficient to club the clearances of the units, who have different registration in all the departments and in the absence of any financial flow back.
19. We further, analyse the decision of Ennar Cements Pvt. Ltd v.
CCE reported in 2013 (292) E.L.T. 245 (T) (supra) wherein this Tribunal has observed as under :
"We have gone through the records of the case carefully. The appellants are two Private Limited Companies. They have separate existence. The investigation reveals that the clearances of one unit were done with the other and vice versa in order to remain with the exempted limit and thereby evading payment of Central Excise duty. If that is the case, the investigation ought to have decided the real clearances of each unit and demanded the duty accordingly in respect of each unit. However, in the present case, the duty has been demanded collectively from both the units. If the Department feels that out of the two units, one unit is dummy, then the dummy unit should have been identified. In that case, the value of the clearance of dummy unit could have been clubbed with the clearance of the real unit and duty demanded. This has not been done.
The learned Commissioner in the impugned order has given the following findings : -
"70 (ii) Whether each unit is entitled to a separate limit (under the SSI exemption notification) as per the Board's Circular No. 6/1992, dated 29-5-1992.
I have perused the Circular No. 6/1992, dated 29-5-1992 [issued from F. No. 213/15/92-CX-6] issued by the Central Board of Excise and Customs, New Delhi in the context of SSI exemption Notification No. 175/86-C.E., dated 1-3-1986. In the said Circular, the board had, inter alia, clarified that the limited companies, whether public or private, are separate entities distinct from the shareholders composing it and hence, each limited company is a manufacturer by itself and would be entitled to a separate exemption limit. It is not in 47 dispute that M/s. Ennar Cements and M/s. Seshashaila Cements are private limited companies registered separately under the Companies Act and each of them have separate factories. Taking various facts into account I have already held in my findings on (i) above that the management [of both the units] is one and the same and both the units are not independent to each other, thereby they are to be treated as a single manufacturer having more than one factory. Hence, the clarifications given by the Board in the said Circular dated 29-5-1992 are not applicable to the facts of the present case."
On perusal of the above findings of the learned Commissioner, it is clearly stated that each appellant‟s company is separate. In respect of the Board‟s Circular, the clearances of the limited companies cannot be clubbed. The Commissioner has clubbed it and demanded duty collectively. This is not legal and correct and it is contrary to the Board‟s Circular."
20. We further find that in the case of Alpha Toyo Ltd. v. CCE, New Delhi reported in 1994 (71) E.L.T. 689 (Tribunal) this Tribunal has observed as under :
SSI exemption - Clubbing of clearances common Managerial Control, a few common directors and advancing of interest free loans by main unit to other units not sufficient to make other units as dummies when they are having independent control or money flow back to the main unit - Clearances not clubbable - Situation not to be confused with that of related person concept under Section 4(4)(c) of Central Excises & Salt Act, 1944 - Notification No. 175/86-C.E., dated 1-3- 1986 - Section 5A ibid.
21. In the case of Renu Tandon v. Union of India reported in 1993 (66) E.L.T. 375 (Raj.) Exemption - SSI Exemption - Clubbing of clearances - Two units situated at same premises, manufacturing similar product, having some common management, office and labour and common electric connection - One unit owned by father-in-law and the other by daughter-in-law and work of both units looked after by her husband - In absence of evidence of common finding and financial flow back, two units not treatable as one and their clearances not clubbable - Notification No. 175/86-C.E. dated 1-3-1986.
22. In the case of Vivomed Labs. (P) Ltd. v. Collector of C. Ex. reported in 1991 (53) E.L.T. 152 (Tribunal) Exemption to SSI Units - Clubbing of clearances - Units registered separately under Income-tax Act, Sales Tax having separate Central Excise Licenses and also financed through separate application for loan from financial institutions - Shareholders in all the firms not the same group of persons - Tie up with Medly Pharmaceuticals for marketing purposes explained inasmuch as the services rendered being paid for in terms of agreement between them - Clubbing of clearances of units not justified in absence of conclusive evidence of financial flow back among them - Notification No. 83/83, dated 1-3- 1983, No. 85/85, dated 17-3-1985 and No. 175/86, dated 1-3-1986.
23. We also find that the activity of the appellants were in the knowledge of the department as they were registered with the Central Excise Department and units are located in the same range, 48 therefore, extended period of limitation is also not invokable for clubbing the clearance of DSA with NOVA.
24. From the analysis of the above decisions and the facts of the case before us, we find that both the units are separately located having separate registrations and dealing separately. We also find that there is no financial flow back, therefore, there is no mutuality of interest between the units. Accordingly, clearances of both the units cannot be clubbed together.
25. In these circumstances, the charge of clubbing of the clearance of M/s. DSA with M/s. NOVA is not sustainable and the same is set aside."
34. We also take note of the fact that there is no denial by the revenue in respect of the documentary evidences found during the course of investigation and placed on record.
35. in that circumstance, we hold that the documentary evidence will prevail over the oral statements recorded during the course of investigation as held by this Tribunal in the case of Philip Fernandes vs. CC, Airport, Mumbai-2002 (146) ELT 180 (Tri.-Mum), wherein this Tribunal as held as under:-
"12.The Revenue urges us to discard the bank statement produced by Shri Philip Fernandes as proof of substantial withdrawals and the certificate of the money changer on the ground that the same were not forwarded with the covering letter confirming the contents thereof and further for the reason that the same were not received in response to the department‟s letter. These two reasons are no ground for us to doubt the veracity and authenticity of the moneychanger‟s certificate, all the more when the adjudicating authority caused enquiries to be made and has accepted the certificates only after satisfying himself on verification. We also note that Philip Fernandes had retracted his statement on 16-3-1998 itself i.e., immediately after his statement was recorded under Section 108 of the Customs Act, 1962 on 15-3-1998 and that he had written a letter to the department on 24-4-1998 explaining that he was a man of means being an engineer with the National Drilling Company, Abu Dhabi since 1980 and drawing a salary of more than Rs. 1.50 lakh per month; that he had lend 8 lakhs UAE Dirhams to one Mr. Jimmy Johnson for purchase of water well drilling rig from USA; that Mr. Johnson returned 8,30,000/- Dirhams (capital with interest); that he used a sum of 7,17,202/- Dirhams to buy assorted foreign currency from Thomas Cook and that he brought foreign currencies to India on 11-2-1998 in order to make payment of Rs. 74,65,000/- to purchase ground floor and basement of a commercial complex at Mumbai as his wife had entered into an agreement on 6-2-1998 with Laxmi Builders and Developers for purchase of the said premises; that the builder subsequently cancelled the agreement and therefore he was to take the money back to Dubai and he was in fact taking it back on 15-3-1998 when it was seized. Shri Philip Fernandes has produced before the Commissioner a certificate dated 30-6-1995 from National 49 Drilling Company, Abu Dhabi showing his employment with the Company for over 15 years, copies of bank‟s statements showing substantial withdrawals, the foreign exchange receipt and certificates issued by the moneychanger; copy of agreement for purchase of the commercial premises and correspondence between the builder and Mrs. Fernandes showing cancellation of the agreement as enclosures to the letter dated 29-4-1998. Although the Revenue disputes receipt of this letter on 27-4-1998 which Shri Fernandes claims was the date of its receipt we find from the original shown to us shows the date of receipt as 27-4-1998. Further copy of this letter was sent to the department again in July, 1998 and on 21-8-1998 prior to the issue of the show cause notice in September, 1998. No arguments are put forth by the learned DR to dislodge the findings of the Commissioner on the basis of the above documentary evidence. The plea of the learned DR is based upon the detailed statement of Shri Philip Fernandes and statements of Shri Nilesh Popat and Shri Praveenbhai Kheni. We find that in addition to the retraction of Shri Philip Fernandes on 16-3-1998, there is one more reason to doubt the inculpatory statement of Shri Fernandes and that the statement of Shri Nilesh Popat which was recorded on 16-3-1998 is stated to have been shown to Shri Philip Fernandes at the time of recording his initial statement on 15-3-1998, which is an impossibility. It is in the statement of Shri Nilesh Popat that Shri Pravinbhai Kheni comes into picture. Shri Popat has retracted his statement on 3-5-1998 where he has specifically mentioned about Shri Fernandes‟s claim of licit acquisition of the foreign currencies seized from him on 15-3-1998. In the present case documentary evidence in the form of certificate of Thomas Cook Al Rostamani, Dubai certifying purchase of foreign currencies in Dubai by Shri Fernandes runs contrary to the oral evidence in the form of statements of Shri Fernandes, Shri Nilesh Popat and Shri Praveenbhai Kheni. It is well settled that when the statements recorded under the provisions of Section 108 of the Customs Act, 1962, (which are retracted), are inconsistent with the documentary evidence, the documentary evidence is to be preferred. This is the view expressed by the Tribunal in the case of R.P. Industries v. Collector of Customs - 1996 (82) E.L.T. 129. Although in that case the documentary evidence was seized during the search that would not alter the position in this case since the documentary evidence in the form of moneychanger‟s certificate submitted to the department before the issue of the show cause notice has been verified and found to be genuine and correct. The same view has been taken in final Order Nos. CI/2874 & 2875/WZB/2001, dated 19- 9-2001 [2002 (140) E.L.T. 225 (T)] in the case of Kishin Shewaram Loungani & Another v. CC, Mumbai."
36. Therefore, we hold that the clearances of the firms, namely, M/s. Premier Castings (M/s.PC), M/s. Castech Industries (M/s.CTI) and M/s.Dynocast Industries (M/s.DCI) cannot be clubbed with clearances of M/s. MWF. Consequently, no penalty can be imposed on the said allegation.
37. We also take note of the fact that Shri Sunil Goel, proprietor of M/s. Castech Industries has passed away, therefore, no proceedings survive against M/s. Castech Industries.
Issue No.2 Whether M/s. Industrial Casting (M/s. IC), M/s. Gautam Industries (M/s. GI) and M/s. S.G. Ferro Engineering 50 Pvt. Ltd. (M/s. SGFEPL) can be held dummy unit of M/s. MWF and consequently the benefit of exemption Notification No.08/03-CE dt.1.3.2003 can be denied and duty be demanded from them.
38. We take note of the fact that during the course of investigation itself following documents as well as machinery were found from the premises which are as under:-
Industrial Casting:-
Gautam Industries:-51
M/s S. G. Ferro Engineering Pvt. Limited:-52
39. We have gone through the panchnama also. As per panchnama, all these units were found working during the course of investigation itself and machinery were installed. Moreover, the documents which have been found during the course of investigation, show that these units were separate manufacturing units and their clearance were the below the threshold limit in terms of Notification No.08/03-CE dt.1.3.2003 as amended. Moreover, the Revenue is confused, as one side, it has been alleged that these are dummy units of M/s. MWF and on the other hand, they are demanding duty separately from them. If, the Revenue alleged that these are dummy units of M/s.MWF then the duty is required to be demanded from M/s.MWF whereas the duty has been demanded from these unit which itself show that these units are independent units. Therefore, the department is confused and has concluded that these units are independent units from M/s.MWF and demanded duty from them by denying the benefit of Notification No.08/03-CE dt.1.3.2003.
40. Now the issue arises that whether these units are entitled to SSI exemption or not?
41. We find that the clearances of these three units are below the threshold limit of SSI exemption Notification No.08/03-CE dt.1.3.2003 and the same has not been disputed by the Revenue while quantifying the duty and there is no allegation of suppression of clearance by these units. In that circumstance, we hold that these units are separate and independent units and are entitled for the benefit of SSI exemption under Notification No.08/03-CE dt.1.3.2003 as amended during the impugned period. Therefore, no duty demand is sustainable against these three units.
42. In view of above discussion, we hold that the sole allegation of the Revenue is based on the understanding that these units are of M/s. Mech-well Group and the same are controlled and managed by Shri Gaurav Gupta in the name of dummy units. Such allegation is not sustainable as discussed hereinabove in detail. The Revenue‟s case is based on the oral evidence by discarding the documentary evidence available on records during investigation. Oral statements have no evidentiary value against the documentary evidence available on record.
5343. In that circumstance, we hold that the allegations made by the Revenue in the show cause notice are not sustainable. Accordingly, we do not find any merit in the impugned order and the same is set aside. Therefore, no demand is sustainable against the appellants. Consequently, no penalty is imposable on the appellants.
44. In the result, the impugned order is set aside and the appeals are allowed with consequential relief, if any.
(Order pronounced in the Court on 13.11.2019) (Ashok Jindal) Member (Judicial) (C. L. Mahar) Member (Technical) mk