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Coram: Honble Ms. Archana Wadhwa, Judicial Member Hon'ble Mr. Sahab Singh, Technical Member Appearance:

Mr. M.S.Negi, DR for the Appellants Mr. Saurabh Kapoor, Adv for the Respondent Date of Hearing: 20.11.2012 Date of Decision:

ORDER NO .           _



Per Ms. Archana Wadhwa

Being aggrieved with the order passed by Commissioner (Appeals), Revenue has filed the present appeal.

2. After hearing both the sides, we find that the Commissioner (Appeals) has upheld the clubbing of clearance made by the two units M/s. Nota Industrial Corporation and M/s Nota Tex Mechanical Engg. and has confirmed the duty of Rs. 3,43,230/- and imposed penalty of Rs. 1,00,000/- on M/s. Nota Industrial Corporation. It is seen that the original confirmation of demand by the Additional Commissioner was to the extent of Rs. 10,22,699/- along with imposition of penalty of identical amount on M/s. Nota Industrial Corporation. Commissioner (Appeals) has extended the benefit of trading goods to the appellant and has reduced the duty confirmation. In addition, he has set aside the penalty imposed upon Sh. Surjit Singh, Proprietor of M/s Nota Text Mechanical Engg.

3. Revenue has challenged the above order on two grounds that is, reduction of duty as also penalty on M/s Nota Industrial Corporation and setting aside of penalty on Proprietor of M/s. Nota Tex Mechanical Engg.

4. As regards reduction of duty, we find that Commissioner (Appeals) has relied upon the statement of Sh. Kulwant Rai Jagdev, wherein he has deposed that no machinery was supplied by them after 1994-95. Accordingly, he held as under:-

Further at the time of cross examination Shri Kulwant Rai had stated that in his statement dated 7.9.1999, transaction claimed to have been made to the appellant No.1 and M/s Nota Tex Mechincal Engg. pertain to the year 1994-95 only. He clearly stated that they have not raised any bill without supplying machinery after 1994-95. From the above it is evident that the machines sold by M/s S.R. Jagdev & sons to the appellant No.1 or M/s Nota Tex Mech. Engg were either manufactured by M/s S.R. Jagdev & Sons themselves or were purchased by them and were not manufactured by appellant No.1 or M/s. Nota Tex Mechnical engineers as alleged by the department.

As regards the statement of Shri Rajinder Parsad Yadav, the appellant has claimed he being only a part-time accountant had no knowledge about the business activity undertaken by M/s Virendra Trading Co. Secondly, no opportunity was afforded to the appellant by the Adjudicating Authority for cross examination of shri Rajinder Parsad Yadav. Thirdly there is no evidence available on records to show that the machinery shown to have been purchased by the appellant from M/s. Virendra Trading Co. was manufactured by the appellant No.1 or by M/s Nota Tex Mech. Engg. Therefore in view of the foregoing discussions, statement of Sh. Rajinder Parsad Yadav cannot be relied upon and it cannot be said that machines purchased by appellant No.1 as well as M/s Nota Tex Mechanical Engineer were manufactured by them. From the above, it can be said that department has included sale of traded goods in the value of clearances for home consumption by treating the same as goods manufactured by appellant No. 1 and M/s Nota Mech. Engg on the basis of presumptions without bringing on records any conclusive evidence to this effect. Thus inclusion of value of traded goods in the value of goods manufactured and cleared by the appellant as well as M/s. Nota Mechanical Engg., is not justified.

7. As regards setting aside of penalty on Sh. Surjit Singh Proprietor of M/s. Nota Tex Mechanical Engg., we find that the appellant authority has held as under:-

As regard imposition of penalty upon appellant No.2, it is observed that duty has been demanded after clubbing sale of both the units i.e. M/s Nota Industrial Corpn (appellant No. 1) and M/s Nota Tex Mechnical Works and the later unit of which appellant No.2 is proprietor has been held to be a dummy unit. Thus M/s. Nota Tex Mechnical Engg have no separate identity. Since M/s Nota Tex Mech. Engg. has no separate identity so its proprietor. i.e. appellant No.2 also does not have separate identity. As penalty has been imposed upon the appellant No. 1, so, as discussed above, no separate penalty is imposable upon the appellant No.2. Therefore, penalty imposed upon appellant No.2 is set aside. The Revenues plea for penalty on the proprietor of the second unit cannot be accepted inasmuch as it is the revenue itself who has contended that the second unit is a dummy unit and as such not in existence & penalty cannot be imposed upon the non-existence unit. As such, we do not interfere in the said part of the order of the Commissioner (Appeals) and reject the Revenues appeal against M/s Nota Tex Mech. Engg.