ANNAPURNA INDUSTRIES LTD. Vs. CCE, HYDERABAD-I

JUDGEMENT

(1.) BOTH these appeals arise from a common Order -in -Appeal No. 57/99 (H -ii) CE Dated 31.8.99 by which Commissioner (appeals) has disposed of Order -in -Original No.3/97 dated 5.11.97 passed by Commissioner of Central Excise, Hyderabad confirming duty demand of Rs. 10,95,740/ - under 9(2) of Ce Rules read with proviso to Sub section 1 of the Section 11A of CE Act. There is a penalty of Rs. 50,000/ - on Shri T. Vinayaka Ravin Reddy under Rule 209 A of the C E rules, 1944 besides penalty of Rs. 2,00,000/ - on the appellant company.

(2.) LD . consultant Shri Sarbheswara Rao took us through the Order -in -Original and pointed out that the Additional Commissioner in the Order -in -Original has based his findings on the bills recovered from Vinayaka Agencies and M/s. DCM who are the agents and the wholesale dealers to confirm higher quantity of aerated water and cool drinks said to have been received by DCM and which was reflected in their accounts. It is his contention that this cannot be the ground at all to confirm clandestine manufacture and removal of goods as alleged in the show cause notice. The appellants' of the Production Manager as well as Production chart have been obtained by the investigating authorities. His personal diary which noted even the productions both entered in RG -I as well in the private registers were also taken and found that there was no discrepancy therein. When that was the position, the question of the Additional Commissioner basing his findings on the supposed receipt by the retail dealers cannot be a ground for confirmation of such huge damages. Ld. Consultant points out that the goods which they had removed to the dealer M/s. DCM had been fully accounted for and the accounts fully tallied. Both the adjudicating officers have correctly come to the conclusion that in so far as the removal of the manufacturer to their wholesaler DCM to the agents were found to be the reason for confirming the clandestine removal. He submits that the salesman who sold these goods to the respective dealers have not been examined to substantiate the charge that the invoices were made out by the DCM in excess of the receipt of the goods from the appellants's factory. He further submits that in order to manufacture the extent of final goods as alleged in the show cause notice, appellants ought to have received the "Essence" from the from M/s. Parely Co. to whom the appellants were the franchisee manufacturers. Without the receipt of the "essence", and also the purchase of the raw materials like sugar, Co2, crown corks, there would not have been production and removals. He points out that the department ought to have established the case by showing that the appellants had received the quantum of "essence" from the supplier namely M/s. Parely Ltd. besides having purchased Co2 and crown corks. He points out day these are the factors which have been taken into consideration in large number of judgements and in all those cases on which the cases were booked were on the same lines were set aside by the Tribunal on the ground that the department had failed to establish the manufacture and clandestine removal of the final goods as in the following cases.

(3.) LD . D.R. Shri S. Arumugam took us through records and pointed out that there were clear admissions on behalf of dealers with regard to the receipt of the final goods from M/s. DCM who was the wholesaler of the appellants.Therefore, M/s. DCM would not have supplied to the dealers unless he had received that much of quantity from the manufactures. The Additional Commissioner in the impugned order has clearly recorded his findings as to how the case is based with these circumstantial evidence and that is sufficient for purpose of confirmation of demand. He also pointed out that Bill number have also been cited in the Order -in -Original establishing the case. He submits that there is no infirmity in both the orders and seeks for confirmation on the same.