CHANDRAWATI POLYMERS (P) LTD. Vs. COMMISSIONER OF C. EX., GHAZIABAD
LAWS(CE)-2015-4-15
CUSTOMS EXCISE AND GOLD(CONTROL) APPELLATE TRIBUNAL
Decided on April 09,2015

Chandrawati Polymers (P) Ltd. Appellant
VERSUS
Commissioner of C. Ex., Ghaziabad Respondents

JUDGEMENT

RAKESH KUMAR - (1.)THE facts leading to filing of these appeals are, in brief, as under: -
(2.)1.1 The main appellant, M/s. Chandravati Polymers Pvt. Ltd., Ghaziabad, (hereinafter referred to as "CPPL") manufacture Industrial and Decorative Laminates chargeable to central excise duty under Heading No. 3920.37 of the Central Excise Tariff. Shri Manoj Ratnakar Jain is Director of the appellant company. M/s. Aar Em Plywood and Sunmica is a trading firm whose proprietor is Shri Manoj Ratnakar Jain. M/s. Ratnakar Enterprises is a partnership firm owned by Shri Manoj Ratnakar Jain and his brother -in -law. M/s. Shakti Sales and P.A. Sales are the dealers through whom M/s. CPPL were selling the laminates to Indian Railways. The bulk of the industrial and decorative laminates manufactured by CPPL were being supplied either directly or through M/s. Shakti Sales and M/s. P.A. Sales to Indian Railways in terms of their contract with them. The period of dispute in this case is from 14 -1 -1991 to 30 -11 -1995. The officers of the Directorate General of Central Excise Intelligence (DGCEI) visited the factory of CPPL on 21 -11 -1995 and recovered documents and records and made enquiries. In course of inquiry, it was found that while bulk of the laminates being manufactured by the appellants were being supplied by them to Indian Railways either directly or through their two dealers M/s. Shakti Sales and M/s. P.A. Sales in terms of the contract terms, laminates supplied were to be of 3 mm. thickness and the same were to be inspected prior to delivery by the RITES or DGS & D in the factory of the CPPL. It was found that quantity of laminates being supplied by CPPL either directly or through M/s. P.A. Sales or M/s. Shakti Sales during the above mentioned period of dispute was far in excess of the quantity, which had been manufactured by CPPL as per their records. It was also found that CPPL were claiming to have supplied certain quantity of laminates to Railways by purchasing the same from M/s. Ratnakar Enterprises and M/s. Aar EM Plywood and Sunmica, who in turn, claimed to have purchased the laminates from a number of other dealers. The goods supplied by CPPL to Railways directly or through M/s. Shakti Sales or M/s. P.A. Sales as trading activity had been supplied under delivery challans or trading invoices, while the goods manufactured by them had been cleared under gate passes. Inquiry was made with the dealers from whom M/s. Ratnakar Enterprises and M/s. Aar Em Plywood and Sunmica claimed to have purchased the laminates and all the dealers while confirming that they had supplied the laminates, stated that the laminates supplied by them were of 0.6 mm to 1.5 mm. thickness. Since the laminates supplied to Railways by CPPL either directly or through M/s. Shakti Sales and M/s. P.A. Sales were of 3 mm. thickness and as per the conditions of supply, there was pre -delivery inspection by DGS & D or RITES, it appeared that the entire quantity of laminates supplied to Railways shown as trading activity had actually been manufactured by CPPL as the goods purchased by them from traders were of thickness varying 6 mm. to 1.5 m. and the same could not have been supplied by them to Railways as there was pre -delivery inspection by RITES/DGS & D. It is on this basis that Investigating Officers were of the view that the difference between quantity of laminates supplied to Indian Railways during the above mentioned period of dispute and the quantity which was manufactured by CPPL as per their records, had been clandestinely removed by them without any accountal and the same had been cleared without payment of duty by showing the same as trading activity. It is on this basis that the Commissioner vide order -in -original dated 30 -4 -2004 confirmed the duty demand of Rs. 2,10,56,785/ - against CPPL under proviso to Section 11A(1) of the Central Excise Act, 1955 and besides this, imposed penalty of equal amount on them under Section 173Q of the Central Excise Act, 1944. The land, building, plant & machinery of the Appellant Company was ordered to be confiscated under Rule 173Q(2) of the Central Excise Rules, 1944 with option to be redeemed on payment of redemption fine in lieu of confiscation of Rs. 10 lakhs. He also imposed penalty on other appellants under Rule 209A of the Central Excise Rules, 1944 as under:
1.2 Against the above order of the Commissioner, these appeals have been filed by CPPL, Shri Manoj Ratnakar Jain, M/s. Ratnakar Enterprises and M/s. Aar Em Plywood and Sunmica. The misc. applications have been filed by the department for vacation of stay.

None representing the appellants appeared for hearing though a notice for hearing of this matter on 20 -3 -2015 had been sent well in time. It is seen that on earlier occasions also, this matter had been listed for hearing on 28 -1 -2015, 24 -12 -2014, 31 -7 -2014 and in respect of which, the notice have been issued to the appellants well in time but none representing the Appellant had appeared. In view of this, in accordance with the provisions of Rule 21 of the CESTAT (Procedure) Rules, the matter is being decided ex parte after hearing ld. Departmental Representative.

Heard Shri Ranjan Khanna, ld. Departmental Representative, who pleaded that more than 95% of the sales of the industrial and decorative laminates manufactured by CPPL were to Indian Railways either directly or through their dealers, M/s. P.A. Sales and M/s. Shakti Sales, that sales of laminates either directly by CPPL or through their dealers, M/s. P.A. Sales and M/s. Shakti Sales were in terms of the contract of the Indian Railways with them in terms of which the laminates of only 3 mm were to be supplied and were to be subjected to pre delivery inspection by the RITES or DGS & D in the factory of the CPPL, that in view of this, there is no possibility of the laminates of below 3 mm. thickness being supplied to Railways, that the duty has been demanded on the difference between the quantity of laminates supplied during the period of dispute to Railways and the quantity whose production has been recorded by the appellant in their RG -1 register, that according to the appellant, this difference represents the quantity which had been procured by them as trading activity through M/s. Aar Em Plywood and Sunmica and Ratnakar Enterprises from some dealers, that all the dealers from whom the laminates are claimed to have been procured have stated that they have supplied the laminates of thickness of 6.6 mm. to 1.5 mm. thickness, that since sales to Railways were of the laminates of 3 mm. thickness only, the claim of CPPL that substantial quantity of laminates of 3 mm thickness supplied to Railways had been purchased from the dealers is false, that it is clear that the laminates supplied to Railways either directly or through M/s. P.A. Sales and M/s. Shakti Sales which had been cleared under delivery challans/trading invoices, had been manufactured by CPPL and had been cleared without payment of duty and that in view of this, duty demand has been correctly confirmed against CPPL and penalty has been correctly imposed on them and other co -noticees and as such, there is no infirmity in the impugned order.

(3.)WE have considered the submissions of the ld. DR and have gone through the records of this case. The appellant manufacture industrial and decorative laminates and there is no dispute that more than 90% of the production is supplied to Indian Railways either directly or through dealers and through M/s. Shakti Sales and M/s. P.A. Sales. There is no dispute that supply to Railways of the laminates are against the contract of the Indian Railways with CPPL and with M/s. P.A. Sales and M/s. Shakti Sales in terms of which the laminates of only 3 mm. thickness are to be supplied and were to be subjected pre -delivery inspection by RITES/DGS & D in the factory premises of CPPL. Therefore, there is no possibility that the laminates of below 3 mm. could have been supplied by CPPL to Railways in violation of the contract terms. However, there is huge difference between the quantity of the laminates supplied by CPPL to Indian Railways either directly or through M/s. P.A. Sales and M/s. Shakti Sales and the quantity manufactured by them as per the RG -1 Register. According to the appellant, the balance quantity had been procured by them from several dealers through M/s. Aar Em Plywood and Sunmica and M/s. Ratnakar Enterprises. However, all the dealers from whom the laminates are claimed to have been purchased, have on inquiry stated that they had supplied the laminates of 0.6 mm. to 1.5 mm. thickness only and, therefore, the appellant's claim that the quantity of laminates supplied to Railways in excess of the quantity whose production is recorded by them during the period of dispute, had been procured by them from various dealers, is false. Absolutely no explanation in this regard had been given by the appellant. Not only this, three opportunities of hearing were given to them but they have not appeared for the same. In view of this, it has to be presumed that the quantity of the laminates of 3 mm. thickness, which had been supplied by the CPPL either directly or through M/s. P.A. Sales and M/s. Shakti Sales to Indian Railways during the period of dispute, which is in excess of the quantity whose production was recorded by them during that period in the RG -I Register, had actually been manufactured by them without accountal and had been cleared without payment of duty under the guise of trading activity. In view of this, we do not find any infirmity in the impugned order. The appeals filed by the appellants are dismissed. Since the appeals are disposed of, the misc. applications for vacation of stay stand dismissed as infructuous.
(Order pronounced on 9 -4 -2015)

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