Hightension Electrical Equipments Pvt. Ltd. Vs Commissioner of Central Excise (CESTAT Kolkata)
The appeals arise from an order confirming central excise duty demand of Rs. 3,19,84,038 (including cess), along with interest and penalties, against the appellant-company for the period April 2009 to March 2013, along with a penalty on its Director. The appellant-company was engaged in manufacturing and trading electrical overhead materials and hardware fittings used in transmission lines. It availed Small Scale Industry (SSI) exemption and maintained that it manufactured some goods while procuring others from the market and supplying them directly to customers under separate invoice series marked “M” (manufactured goods) and “T” (traded goods).
The Department conducted an investigation, recorded statements of company personnel, and alleged that goods shown under “T” series invoices as trading were actually manufactured by the appellant. Based on this, the Department combined both manufacturing and trading turnover, denied SSI exemption, and alleged clandestine manufacture and removal of goods without payment of duty. A show cause notice was issued demanding duty, interest, and penalties, including penalty on the Director for alleged involvement. The adjudicating authority confirmed the demand, appropriated an amount deposited during investigation, and imposed penalties.
The appellant contested the findings, stating that it lacked capacity and infrastructure to manufacture the entire quantity of goods and that a portion of supplies was procured from third-party suppliers and delivered directly to customers. It was argued that no investigation was conducted at the suppliers’ end or with transporters to verify the Department’s allegations. The appellant also contended that statements relied upon were inconsistent, recorded after delays, and not compliant with statutory requirements. It further argued that audited balance sheets clearly distinguished between manufacturing sales and trading sales, but the adjudicating authority failed to consider them properly.
