CX - Proceedings under CEA, 1944 and Commercial Tax Act are altogether different and are to be treated separately: CESTAT
By TIOL News Service
NEW DELHI, SEPT 27, 2017: THE Appellants were engaged in the manufacture of power cables and printing/labelling the brand name of others as per the direction of the customers.
On the basis of loose slips found during the search conducted, it is alleged that the goods were removed clandestinely without payment of any CE duty. SSI Exemption was also denied and duty demand of Rs.1,93,67,191/- was confirmed against the assessee along with imposition of penalty, confiscation of goods with an option to redeem the same on payment of redemption fine and personal penalty on the proprietor.
In appeal before the CESTAT, the appellant submitted that a search was conducted by the Commercial Tax Officer (CTO), who, later, had passed an order and dropped the demand vide order dated 09.06.2015; that the Department had failed to identify the owner of the brand name and, therefore, not discharged the burden of proof.
By relying on the case laws in Ample Industries - 2007-TIOL-1500-CESTAT-AHM, Ravi Foods Pvt. Ltd. - 2010-TIOL-1806-CESTAT-BANG, it is emphasised that the Central Excise authorities in their investigation did not find any corroborative evidence of clandestine manufacture of final products and, therefore, the impugned order should be set aside.
The AR for the Revenue submitted that there was a clandestine removal as ‘kachchi parchis' were recovered during the course of search; that the proprietor in his statement admitted that they were manufacturing power cables with the brand name of their customers and they used to receive the orders on phone and no agreement was made for supply of the goods; that as mentioned in kachchi parchis , they used to receive payment from the parties by deducting the value of raw material supplied by them from the total value of the cables manufactured; that details mentioned in the kachchi parchis have not been accounted for by them in the statutory records; that the buyers have also confirmed that the goods were delivered against the ‘kachchi parchis' and the transporter too had admitted the same.
The Bench observed that it was evident that the business premises had, admittedly, been searched by the Commercial Tax Department, but, later the demand under the Commercial Tax Act was dropped for the reasons mentioned in the order.
It is further observed -
"…But the fact remains that, proceedings under the Central Excise Act and the Commercial Tax Act are altogether different and will be treated separately. For the purpose of Central Excise Act, 1944, there is sufficient material available on record by which it is established that there was a clandestine removal of the goods, especially when the Proprietor, Shri Ravinder Kumar Gupta, had admitted that the goods were manufactured and supplied to the buyers without making any entry in the books. From the record, we find that neither vouchers were prepared nor books were maintained. The driver has admitted that he had transported the goods only on the basis of 'kachchi parchies'. Meaning thereby, that no vouchers were given to him. Entries made in the ‘kachchi parchies' stand fully corroborated with the statements of the Proprietor recorded on various dates and the same were not retracted. Not only that, further corroboration comes from the statement of the buyers as also from the driver of the assessee-Appellants' Company who used to transport the goods under the cover of ‘kachchi parchies'. All the evidences are sufficient to arrive at a finding that the assessee-Appellants were, admittedly, indulged in the clandestine removal of the goods…."
Concluding that there is no reason to interfere with the impugned order, the same was sustained and the appeals were dismissed.
(See 2017-TIOL-3501-CESTAT-DEL)
