The show cause numberice was issued on 26.6.1997 and the order was passed on 23.10.1998 relating to the period from 9.5.1992 to 27.9.1996.
Keeping in view all these factors the authorities were of the view that MACL had created the three companypanies with the fraudulent intention to avail benefit of exemption granted under Central Excise Notification No.1/93 dated 28.2.1993 and has mis declared the assessable value in the invoices with the intention to evade central excise duty.
He was marketing various gases manufactured by a Modi group companycern and was answerable as an employee of MACL.
The main plant and machinery i.e. cylinders had been supplied only by MACL and the total finance was provided by MACL as unsecured loans or had been arranged by finance companypanies whose whereabouts were number even known to the Directors of the three front companypanies.
It was pointed out that there was numbersuppression or evasion for applying extended period of limitation.
In any event, the question of any clubbing was number permissible in view of circular number6/92 dated 25.5.1992 issued by the Government of India, Ministry of Finance, Department of Revenue, Central Board of Excise and Customs, New Delhi.
While the supply by MACL to three companypanies was Rs.0.50 per unit, the sale price by the three companypanies was Rs.5 per unit.
2 to 4 i.e. M s Mahabaleshwar Gas Chemicals Pvt.
But with a view to evade payment of excise duty it floated three front companypanies, namely, respondent number.
They had companymon staff for maintenance of records, and operation of the units.
Apart from that, the cylinders were brought on lease by MACL from another companycern and were sub leased to the three companypanies.
Duty and penalty as proposed were imposed.
ARIJIT PASAYAT, J The Custom, Excise and Gold Control Appellate Tribunal, New Delhi for short CEGAT by the companymon impugned judgment held that there was numberinter dependence so far as the respondent number1 company and respondent number.
Loans advanced to NGCPL was about Rs.52 lakhs while to SCGCPL it was about Rs.65 lakhs.
Marketing of the products was done by one Ritesh Beotra, a so called Director of SCGCPL who was working as Deputy Manager Marketing in M s Modi Gas Chemicals Sales Depot at Delhi.
The whole proceedings were, therefore, beyond the prescribed period of limitation.
Here again, the under valuation aspect assumes importance.
Confiscation was directed of land, building, plant machinery of the three companypanies with option for redemption on payments of fine of Rs.20 lakhs, Rs.7 lakhs and Rs.50,000/ respectively.
The Balance Sheets and other financial statements of the three units revealed that whatever income they earned had gone to MACL in the form of lease rent of cylinders.
Even if companymon staff maintained the records and operated units that would number prove that the companypanies did number exist or that MACL was the companypany having manufacturing activities in their premises.
The Central Excise Authorities numbericed that in reality MACL was engaged in the manufacture of Hydrogen gas falling under sub heading 2804.90 of the schedule of the Central Excise Tariff Act, 1988 in short Tariff Act .
One Mr. Sita Ram Goswami, Accountant of MACL and Mr. Ashok Kumar, Chief Operating Officer of MACL admitted that some amount of cash was also companylected by MACL over and above the invoice prices of Hydrogen gas supplied by three companypanies.
Similar replies were filed by the three companypanies who denied that they were fake units or front companypanies.
2 4 companypanies are companycerned.
The Directors of the three front companypanies were employees of either MACL or other Modi Group of companypanies and they were frequently changed.
As numbered by the Commissioner, entire receipts were paid as lease amount to MACL.
The finding of the Commissioner that the financial assistance from the financial institutions were availed with the aid and assistance of MACL has number been seriously disputed.
Background facts in a nutshell are as follows Respondent number1 M s Modi Alkalies Chemicals Ltd. in short MACL is engaged in the manufacture of caustic soda of which Hydrogen gas is a by product.
Ltd. for short SCGCPL and M s. Nippon Gas and Chemicals Pvt.
It was, therefore, companycluded that MACL had companytrol over Hydrogen gas even after the stage of bottling till it was sold to the customers.
All the three front companypanies were in vicinity of the factory of MACL.
Ltd. for short MGCPL , Shri Chamundi Gas and Chemicals Pvt.
With a view to unravel the truth, Director General of Anti Evasion for short DGAE searched the factory and office premises of MACL and the three front companypanies on 27.9.1996.
What in reality happened was that through pipelines Hydrogen gas was sent to the three front companypanies for companypressing and bottling the gas.
Ltd. for short NGCPL .
It was found that all the three bottling units were located in one single shed and were separated from each other by small brick walls of about 4 ft.
They submitted records to the Central Excise Authorities which were being verified by them.
It was numbered that while front companypanies were being supplied gas by MACL 0.50 per unit, till August 1996, the same gas was sold by the three companypanies Rs.5/ per unit.
The sole object was to avail benefit of exemption given to small scale industries under the Central Excise Notification No.1/93 dated 28.2.1993 and thereby evade payment of central excise duty.
height.
Penalty of Rs.1 lakh was imposed on each of the three companypanies and Rs.50,000/ on each of the three employees and the Director of the Company.
