Decided on July 22,2015

Radhika Hydraulics And Ors. Appellant
Commissioner of Central Excise And S.T. Respondents


H.K.THAKUR - (1.)THESE appeals have been filed by the appellants against Orders -in -Appeal No. 55 to 67/2010/Commr(A)/Raj dated 19.02.2010 passed by Commissioner (Appeals) Rajkot under which demand of Rs. 34,89,818/ -, alongwith interest and equivalent penalty imposed by Adjudicating authority have been upheld against the main appellant M/s. Radhika Hydraulics, Rajkot. Penalties imposed by the Adjudicating authority, against the other appellants for aiding and abetting the main appellant, have been modified by the first appellate authority.
(2.)Shri Hardik Modh, (Advocate) appearing on behalf of all the appellants argued that the main appellant is engaged in the manufacture of parts of Hydraulic Jacks for Trailers falling under CETH 87169090 and are also trading in Hydraulic Jacks of Trailer and its accessories, manufactured by others/got manufactured from job workers. That appellant is not having machinery to manufacture complete Hydraulic Jacks for Trailer and different processes are being got done from job workers or from three other small factories owned by the family members of the main appellant. That Shri Nitin G. Vekaria is the proprietor of M/s. Radhika Hydraulics. That value of clearances of the main appellant is less than the exemption limit.
2.1 That on 26.4.2006, officers of Central Excise (AE), Rajkot conducted the search of main appellant's premises and found a certain diaries/chits. That certain excess stock of raw materials and finished goods were also placed under seizure. That statements of two raw material suppliers of the main appellant were also recorded. That statements of four buyers and two transporters were also recorded to the effect that goods cleared by the main appellant were sent from the premises of the main appellant. That an amount of Rs. 24.32 lakh has been paid by the main appellant during the course of these proceedings.

2.2 It is the case of the Advocate that the main appellant had no capacity to manufacture the complete Hydraulic Jack; that only parts of Hydraulic Jacks are manufactured and other processes are got done from the job workers. That after all the processes of assembly are complete finished goods are brought to the factory premises/godown of the main appellant and sold by affixing the brand name Radhika of the main appellant. That main appellant also furnished a copy of Chartered Engineer certificate to the lower authorities to establish that main appellant does not have the capability to manufacture the entire Hydraulic Jack and also to the effect as to what processes are undertaken by the main appellant. That during the course of proceedings before the lower authorities main appellant gave details of machineries available with sister concerns of the main appellant alongwith details of processes undertaken in each of the sister concerns. Photocopies of bills raised by job workers were also furnished. That request was made before the lower authorities to the effect the processing capabilities on the machines/equipments available on the date of Panchnama may be got verified as the same are still operational with the main appellant. However the same was not entertained by the lower authorities. It was also argued that cross -examination of the crucial witnesses were not allowed who maintained the diary from which duty is calculated. That when the manufacture of goods is not established then there can be no cause for demanding duty. That details of finished goods manufactured and shown in the diary were not segregated as to how much of the goods entered therein were presumed to have been manufactured and cleared clandestinely by main appellant. That how much raw materials procured was used for making finished goods by the main appellant is also not coming forward from the statements of the proprietor of the main appellant. Learned Advocate made the Bench go through the statements of Shri Nitin G. Vekaria (Proprietor of the main appellant) recorded on 26.04.2006 and 09.05.2006. It was his case that buyer of the goods can only confirm the source of receipt of Hydraulic Jack but can not say as to from where the supplied goods were manufactured i.e. whether the same were manufactured by the main appellant or got manufactured from the job worker and thereafter embossed/marked with the brand Radhika name of the main appellant. That the concept of manufacture is different in Central Excise and the Income Tax laws. That the seized goods on the date of visit were the Hydraulic Jacks manufactured by job workers/sister concerns which were brought to the godown of main appellant for embossing brand name before they could be sold. That appellant would also be eligible for cum duty benefit and 25% reduced penalty, which the lower authorities have not extended, in case their submissions on merit are not considered. Learned Advocate also made the Bench go through paras 23 and 24 of the show cause notice dated 17.10.2006 to argue that all the three sister concerns were held to be independent and within SSI exemption limit of Rs. One Crore and that clearances of all these units with the main appellant were not proposed to be clubbed for denying exemption. That similarly M/s. Patel Plastics, M/s. Maruti Agro Industries and M/s. Sardar Agro were held to be within SSI exemption limit as manufacturers.

(3.)SHRI T.K. Sikdar (AR) appearing on behalf of the Revenue argued that as per 3 CD report dated 05.12.2006 filed by the main appellant with the Income Tax department (for the Assessment Year 2006 -2007), the main appellant has claimed himself to be the manufacturer of Hydraulic Jacks. That the balance sheet of the main appellant indicate that no trading activity is undertaken. That proprietor of the main appellant in his first statement has admitted to have undertaken the manufacture of Hydraulic Jacks and subsequent rejection of the statement is only an after thought on legal advice. It was also argued by the learned AR that no job charges were paid by the main appellant to M/s. Maruti Agro Industries, M/s. Patel Plastics Products and M/s. Sardar Agro Industries and the contention of the main appellant is that with the sister no job charges were paid due to undertaking mutual job work free for each other. That raw materials for all four units within Gujarat were purchased by Shri Nitin G. Vekaria. That all the raw materials for the four units were procured from outside Gujarat by Shri Rameshbhai Partner of M/s. Patel Plastics Products, as per his statement. That Shri Suresh G. Vekaria, Proprietor of M/s. Maruti Agro Industries, the elder brother of Shri Nitin G. Vekaria of M/s. Radhika Hydraulic, in his statement dated 26.4.2006 confessed that he was keeping record about the clandestine clearance of all the four units. Learned AR, therefore, strongly defended the order passed by the first appellate authority. For this purpose, Shri T.K. Sikdar (AR) made the Bench go through paras 12.3 to 12.7 of the Order -in -Appeal dated 19.02.2010.

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