Customs, Excise and Gold Tribunal - Bangalore
Paramount Connector Systems Pvt. Ltd. ... vs The Commissioner Of C. Excise on 6 January, 2006
Equivalent citations: 2006(106)ECC67, 2006ECR67(TRI.-BANGALORE)
ORDER T.K. Jayaraman, Member (T)
1. The Revenue issued show cause notice dated 17.5.1996 proposing clubbing of clearances of two private limited companies and one partnership firm, viz. Paramount Connector Systems (P) Ltd., (hereinafter referred to as 'PCSPL'), Points Electronic (P) Ltd. (hereinafter referred to as 'PEPL') and M/s Electronic Exports (hereinafter referred to as 'EE'). The Commissioner in his order dated 25.11.97 held that PCSPL and PEPL are two different and independent entities. Hence he dropped the proposal to club their clearances for the sake of SSI exemption. However, he demanded duty of Rs. 11,83,810 from both PCSPL and PEPL on the ground that they manufactured the goods and cleared the same under invoices of EE. When the matter went up to the Tribunal, it was held that failure to allocate duty and also give reasons for such allocation by the adjudicating authority is an omission which causes difficulty both to the Tribunal and the appellants to deal with the stay application. Therefore the defect is to be cured. The appeals were allowed by remand with a direction to cure the defect by a process of adjudication.
2. Before issuing the de novo order, the Commissioner issued a letter dated 21.9.99 allocating the duty between PCSPL and PEPL. The basis for demand in this letter is also valuation. The appellant challenged the allocation of duty and demand. The Commissioner passed the de novo order No. 25/99 dated 30.11.99 which is the impugned order in this appeal. In the said order, the entire duty liability is fixed on PCSPL. The amount of duty demanded is Rs. 10,36,983/-. Penalty of Rs. 50,000/- was imposed on each of the appellants, PCSPL and PEPL. Penalty of Rs. 25,000/- was also imposed on the M.D/Director of PCSPL and PEPL. The appellant has strongly challenged the impugned order. Hence they have come before the Tribunal for relief.
3. Shri M.S. Srinivasa, learned Advocate appeared for the appellants and Shri K.S. Bhat, learned SDR appeared for the Revenue.
4. The learned Advocate inviting our attention to various records urged that the Revenue keeps on changing its stand and thereby traversing beyond the scope of show cause notice issued. He said that even though the show cause notice proposed clubbing of clearances of the three entities, it was held in the first order that PCSPL and PEPL are different and independent entities. Before issuing the de novo order, the duty demand was allocated on the basis of valuation and not on the basis of clubbing, However, in the impugned order, the Commissioner has given a finding of clandestine clearances which have occurred at the PCSPL's end. For this, he enumerates seven reasons. All these reasons are mere presumption and not supported by any material. Further, he submitted that there is no allegation or finding regarding financial flow back or common funding which is the sole criteria for clubbing. He relied on the following case laws :
(a) Renu Tandon v. Union of India
(b) Superstar v. CCE 2002 (148) ELT 854 (T)
(c) Cardcure Engineering v. CCE In the letter dated 21.9.99, duty of Rs. 7,54,145/- is demanded from PEPL. No such proposal is there in the original show cause notice. A demand of Rs. 4,09,665/- pertains to goods under four invoices which have already suffered duty at full rate. Therefore, there is no ground for clubbing or clandestine removal and demand duty from PSCPL and PEPL. The learned Advocate further submitted that the Revenue's contention regarding no existence of EE is not correct. EE was functioning from a separate premises at No. 38/01, Industrial Town Rajajinagar. This is clear from the statement of Shri R.K. Singhani, the landlord of the premises. EE had purchased raw materials from various independent suppliers and carried out operations by hiring independent labour contractors. This fact is revealed by the statement of Shri G. Srinivasan, Proprietor of M/s Tripti Enterprises who are the labour contractors. In the Mahazar drawn on 27.5.95, it is clearly mentioned that some tools and materials were found in the premises of EE at 38/01, Industrial Town, Rajajinagar. The officers have seized the records and acknowledged the availability of material and tools in the mahazar drawn. It is not open to the department to allege that EE does not exist.
5. The learned SDR submitted that the Commissioner has given cogent reasons for demand of duty. He also referred to report from the Forensic Laboratory regarding the alleged tampering of the date in the stamped paper. Further he said even in the order dated 25.11.97, the Commissioner has given all reasons for demanding the duty and said that the impugned order should read along with the earlier order to come to a proper conclusion.
6. We have gone through the records of the case carefully. The show cause notice proposed the clubbing of the clearances of EE and PEPL with that of PCSPL. In the first adjudication order, the duty of Rs. 11,80,810/- was demanded on both PCSPL and PEPL without clear allocation of the amount to each unit especially when the finding is that PCSPL and PEPL are independent entities. In the show cause notice, we do not find any allegation of clandestine clearances. However, in the de novo adjudication order, the adjudicating authority makes statement that this is a case of clandestine clearance. Without any basis, the adjudicating authority has made such a statement. The learned Advocate invited our attention to four invoices Nos. (i) 6277/20.1.94 (ii) 6358/09.2.94 (iii) 6536/16.3.94 (iv) 6568/23.3.94, issued by PCSPL and said that duty had already been paid on the goods covered by these invoices. However, the adjudicating authority has taken the values adopted by EE and calculated the duty payable. Thus he has made out a case of undervaluation. There is absolutely no clarity in the de novo order. Further he states that in the absence of evidence of such clandestine clearances, the law requires the department to establish only that degree of probability which leads to belief the existence of facts on such belief. He has come to the conclusion that the entire duty liability rests on PCSPL. After allocating the duty liability to PCSPL and PEPL in page 1 & 2 of the order, the adjudicating authority changes his stands and fastens the entire liability on PCSPL. He has also given reasons for holding such a view. He said that PCSPL had crossed SSI unit limit whereas PEPL was within the SSI limit. The turnover of PEPL during 93-94 was Rs. 74,43,031/- and during 94-95 was Rs. 76,40,288/-. Therefore, PCSPL stood to save more duty/gain more by indulging in clandestine clearances than PEPL who enjoy benefit of small scale exemptions and have to pay lower rate of duty. He further states that there are evidences which indicate PEPL was also involved in clandestine clearances. But in the peculiar circumstances of the case, according to him, the duty on clearances effected by dummy EE is payable by PCSPL. If there are evidences for clandestine clearances by PEPL, the Commissioner has not chosen to discuss the same. In our view, the de novo order has traversed beyond the scope of show cause notice issued.
Hence the same is not sustainable. In these circumstances, we allow the appeals with consequential relief.
(Pronounced in the open court on (sic) JAN 2006)