Custom, Excise & Service Tax Tribunal
Shri Hansraj Bhasani vs Cce, Delhi Ii on 8 November, 2016
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL West Block No. 2, R.K. Puram, New Delhi 110 066. Principal Bench, New Delhi COURT NO. I DATE OF HEARING : 19/10/2016. DATE OF DECISION : 08/11/2016. Excise Appeals No. 1028-1030 and 1334 of 2009 [Arising out of the Order-in-Original No. 4/2009 dated 09/01/2009 passed by The Commissioner, Central Excise, Delhi II.] M/s Shivalik Printers ] Shri Hansraj Bhasani ] Appellants Smt. Kamlesh Sushil, Partner ] Shri Satish Kumar Sushil, Partner ] Versus CCE, Delhi II Respondent
Appearance S/Shri Bipin Garg, Advocate and Vijayan Khongal, C.S. for the appellants.
Shri R.K. Manjhi, Authorized Representative (DR) for the Respondent.
CORAM : Honble Shri Justice Dr. Satish Chandra, President Honble Shri B. Ravichandran, Member (Technical) Final Order No. 54850-54853/2016 Dated : 08/11/2016 Per. B. Ravichandran :-
These are four appeals against common impugned order dated 09/01/2009 of Commissioner of Central Excise, Delhi I. The main appeal is by M/s Shivalik Printers and the other three appellants are its partners. The main appellants are engaged in printing of sheet, labels, wrappers etc. in their premises at Patparganj, Delhi. They had another premises at Rohtas Nagar, Delhi where they were manufacturing printed duplex cartons and lamination of sheets etc. The case against the main appellant is that they have evaded Central Excise duty by creating/utilizing dummy units in different names to show split up turnover in order to avail SSI exemption for excisable goods. The show cause notice alleged that four concerns viz. : M/s Neha International, M/s Sandeep Trading Company, M/s Kaveri Udyog and M/s K.S. Graphics alongwith other two units M/s Vrinda Fine Arts, M/s Shiva Graphics were so connected with main appellant that the turnover all the six units can be clubbed to determine the excise duty liability in terms of Notification No. 8/2003 dated 01/03/2003. The impugned order held that out of the above six units, M/s Shiva Graphics and M/s Vrinda Fine Arts were held to be not connected with appellants. Other four units were held to be dummy units. Accordingly, value of clearances were clubbed and excise liability confirmed.
2. We have heard the learned Counsel for the appellants and the learned AR for the Revenue. We have also perused the appeal records, written submission and case laws referred to during the arguments. We note that the main appellant is a partnership firm with three partners namely S/Shri Hansraj Bhasani, Satish Kumar Sushil and Smt. Kamlesh Sushil. M/s Neha International is a proprietary concern of Smt. Neha Bhasani w/o Shri Hansraj Bhasani. M/s Kaveri Udyog is a proprietary concern of Smt. Tanuja Sushil, daughter-in-law of Shri Satish Kumar Sushil. M/s Sandeep Trading Company is owned by Shri Sandeep Kumar Chandra, sister-in-law of Shri Satish Kumar Sushil. M/s K.S. Graphics is owned by Shri Kuldeep Singh. The operations of these 4 units were held to be dummy and are to be considered for clubbing with clearances of the main appellant. The reasoning followed by the impugned order is that M/s Neha International got the printing work done from the main appellant; the proprietor of M/s Kaveri Udyog admitted having goods manufactured from main appellant on job work basis; the proprietor of M/s Sandeep Trading Work is a full time Manager with the main appellant and the Management of both these units is common; M/s K.S. Graphics were manufacturing cartons and boxes and since word packaging was indicating in their operation the same should be included in the overall manufacturing and clearance of main appellant.
3. We note that the impugned order used the words dummy units and extended armed units without categorical examination of scope of these terms. The interconnection by way of relationship of the proprietors or by other means among these units and also with the main appellant appears to be the main basis for the conclusion arrived at by the Original Authority. We find much more categorical evidence is required to establish bogus existences of the 4 units so that all operations can be considered as if carried out by the main appellant for the purpose of Central Excise levy. Admittedly, these 4 units have separate registration for sales tax and are assessed separately for sales tax and income tax. Transactions were through banks. The records gathered during investigation revealed documents in the name of these units which included purchase files for various years, sales bills, bank receipts, job work challans, income tax returns etc. In these circumstances, we find that if the proposal is made to discount their legal existence for the purpose Central Excise levy and to take the main appellant as the legal entity behind all excisable operations, then it is necessary to issue notice, with allegations/evidences, to these purported dummy units also. These units are having legal existence with reference to other statutory authorities. It is all the more reason to put them in notice as their existence as an independent units is being questioned.
4. We note none of these units were issued with show cause notice before deciding the case. It is a well settled principle that their legal status can be settled only upon issuing notice to them. It would appear that at the notice stage itself, it is presumptively concluded that these units have no existence and apparently do not require any notice. Such pre-judicial presumptions is against the principles of natural justice. In this connection, reference can be made to the decision of the Honble Madras High Court in CCE, Chennai vs. Urbane Industries reported in 2015 (325) E.L.T. 726 (Mad.) and decision of the Tribunal in Ramsay Pharma (P) Ltd. vs. CCE, Allahabad reported in 2001 (127) E.L.T. 789 (Tri. Del.).
5. We find that on this issue, in view of the clear violation of principles of natural justice, the impugned order cannot be legally sustained. Accordingly, the same is set aside. However, the Original Authority is free to re-decide the issue after following the principles of natural justice and affording opportunity to all the units and persons impugned in the original proceedings. The appeals are allowed with the above observations.
(Order pronounced in open court on 08/11/2016.) (Justice Dr. Satish Chandra) President (B. Ravichandran) Member (Technical) PK ??
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5EX/1028-1030, 1334 of 2009