The Principal Commissioner of Central GST & C. Ex., Daman Commissionerate v. Filatex India Ltd.

9. Ms. Maya Majumdar, learned Standing Counsel of Appellant-Revenue submits that the Tribunal has completely erred in ignoring the outcome of the investigation that no grey fabrics were manufactured from the yarn cleared without payment of duty by Respondent-Company, that the yarns had been diverted and sold elsewhere and records and payment transactions have been manipulated for such fictitious sale of fabrics, that the polyester yarn had been diverted without payment of duty under the garb of its clearance and under Rule 12B of the Central Excise Rules, 2002. Learned Standing Counsel draws the attention of this Court to Paragraphs 7.3, 7.4, 8.1, 8.2, 13, 14 and 15 of the Order-in-Original in support of her contentions. She submits that no fabrics were received by the job workers nor any payments were made to them. She submits that in some cases they had shown vehicle numbers in the challans through which material was sent to job workers for conversion but no details of transportation through which the grey fabrics were transported back from job workers has been shown. Some of the so called job workers did not even have weaving machines. She would submit that the investigation reveals that the job workers did not know M/s. Rama Filaments Pvt. Ltd., that they had never received yarn nor done any job work for M/s. Rama Filaments Pvt. Ltd. She would submit that the statement of Shri Madhav Bhageria, Joint Managing Director of the Respondent- Company was recorded and he had agreed with the authority’s findings. The summons issued to certain buyers also were returned undelivered and the statements were recorded denying purchase of any grey fabrics from the Respondent-Company or having made any transactions with them.

10. Learned Standing Counsel submits that therefore the findings of the Tribunal in Paragraphs 12 to 15 are contrary to the record and deserve to be set aside.

11. Learned Standing Counsel has sought to rely upon the judgment in the case of Collector of Customs, Madras & Others Vs.

Paragraphs 30 and 31 thereof in support of her contentions:-

12. Appellant-Revenue has in the circumstances, prayed that the question framed is a substantial question of law and as such the Appeal be admitted.

13. Mr. Jas Sanghavi, learned Counsel for Respondent- Company vehemently opposes the submissions made on behalf of the Appellant-Revenue and refers to Paragraph 12 of the order of the Tribunal. He points out that the Tribunal has clearly found that Respondent-Company before sending the goods for job work filed intimation with the Department as required under the Central Excise Rules, 2002, that copies of the said intimations have been furnished and that it is undisputed that the Department was in knowledge of the job work activities. He submits that while sending the goods, the challans were prepared and the yarn was acknowledged by the job workers of having been received; that job work charges were paid to job workers and TDS was also deducted on such payments as evidenced from the Form-16A issued to the six job workers. He submits that during the investigation, the statements of the employees and Director of the Respondent- Company were recorded and all had stated that the goods have been sent to the job work, that none of the statements from the job workers recorded by the investigation deny the fact that they had undertaken job work activity on behalf of Respondent-Company. Learned Counsel would submit that these are findings of facts by the Tribunal and cannot be faulted. He submits that the question framed is a question of fact and not of law and therefore the Appeal deserves to be dismissed.

14. We have heard Ms. Maya Majumdar, learned Standing Counsel for the Appellant-Revenue and Mr. Jas Sanghavi, learned Counsel for the Respondent.

15. Before proceeding further, it would be useful to refer to Section 35G of the Central Excise Act, 1944 which is quoted as under:- “35G. Appeal to High Court. - (1) An appeal shall lie to the High Court from every order passed in appeal by the Appellate Tribunal on or after the 1st day of July, 2003 (not being an order relating, among other things, to the determination of any question having a relation to the rate of duty of excise or to the value of goods for purposes of assessment), if the High Court is satisfied that the case involves a substantial question of law. (2) The Commissioner of Central Excise or the other party aggrieved by any order passed by the Appellate Tribunal may file an appeal to the High Court and such appeal under this sub-Section shall be - (a) filed within one hundred and eighty days from the date on which the order appealed against is received by the Commissioner of Central Excise or the other party; (b) accompanied by a fee of two hundred rupees where such appeal is filed by the other party;

(c) in the form of a memorandum of appeal precisely stating therein the substantial question of law involved. (2A) The High Court may admit an appeal after the expiry of the period of one hundred and eighty days referred to in clause (a) of sub-section (2), if it is satisfied that there was sufficient cause for not filing the same within that period. (3) Where the High Court is satisfied that a substantial question of law is involved in any case, it shall formulate that question. (4) The appeal shall be heard only on the question so formulated, and the respondents shall, at the hearing of the appeal, be allowed to argue that the case does not involve such question: Provided that nothing in this sub-section shall be deemed to take away or abridge the power of the Court to hear, for reasons to be recorded, the appeal on any other substantial question of law not formulated by it, if it is satisfied that the case involves such question. (5) The High Court shall decide the question of law so formulated and deliver such judgment thereon containing the grounds on which such decision is founded and may award such cost as it deems fit. (6) The High Court may determine any issue which- (a) has not been determined by the Appellate Tribunal; or (b) has been wrongly determined by the Appellate Tribunal, by reason of a decision on such question of law as is referred to in sub-Section (1). (7) When an appeal has been filed before the High Court, it shall be heard by a bench of not less than two Judges of the High Court, and shall be decided in accordance with the opinion of such Judges or of the majority, if any, of such Judges. (8) Where there is no such majority, the Judges shall state the point of law upon which they differ and the case shall, then, be heard upon that point only by one or more of the other Judges of the High Court and such point shall be decided according to the opinion of the majority of the Judges who have heard the case including those who first heard it. (9) Save as otherwise provided in this Act, the provisions of the Code of Civil Procedure, 1908 (5 of 1908), relating to appeals to the High Court shall, as far as may be, apply in the case of appeals under this Section.” (Emphasis supplied)

16. It is clear from the above Section that an appeal shall lie against the order of the Appellate Tribunal if the High Court is satisfied that the case involves a substantial question of law.

17. The Revenue appears to be agitating factual aspects in the matter. A perusal of the Tribunal order indicates that the Tribunal after having heard both sides and after having perused the case records has given a fact finding on the issues raised on behalf of the Appellant-Revenue. It has found that in the present case the fabric was shown to have been manufactured from six job workers, viz., M/s. Rama Filament Pvt. Ltd., M/s. Geena Synthetics Pvt. Ltd., M/s. A. P. Textiles Ltd., M/s. Mansa Synthetics Pvt. Ltd., M/s. Micro Polyester Pvt. Ltd. and M/s. Good Luck Synthetics Ltd.

18. Further, it has been found by the Tribunal that Respondent-Company before sending the goods for job work filed intimation with the Department as required under the Central Excise Rules, 2002 and that the copies of the said intimation had been annexed to the Appeal before the Tribunal. The Tribunal has given a finding that it is undisputed that the Department was in knowledge of the job work activities, that while sending goods, the challans were prepared and the yarn was acknowledged by the job workers of having been received. Respondent-Company has paid job work charges to the said job workers and also deducted TDS on such payments as found by the Tribunal from Form-16A issued to all six job workers. It is also recorded by the Tribunal that during investigation, the statements of the Joint Managing Director, Director and employees of Respondent-Company were recorded and all of them has stated that the goods were sent for job work. The Tribunal also records that in respect of M/s Geena Synthetics, M/s. Rama Filaments, M/s. Mansa Synthetics, M/s. Micro Polyester and M/s. Good Luck Synthetics were existing at the time of investigation. It is further recorded that none of the statements from the job workers recorded by the investigation deny the fact that they had undertaken job work activity on behalf of Respondent-Company.

19. The Tribunal has in Paragraph 13 of its order given a finding that M/s. A. A. Textiles was a registered unit and that the Respondent-Company has shown the acknowledgment receipt of goods by the said M/s. A. A. Textiles and job work payment. The Tribunal has found that the remaining five job workers in their statements have clearly stated that they had undertaken job work of manufacturing of fabrics on account of the Respondent-Company. We agree with the Tribunal that only on the ground that some job workers could not be found or that some of them refused to have done job work, it cannot be concluded that no activity of job work manufacturing of fabrics was undertaken. The statement of few transporters that they did not transport the fabric cannot be a ground to hold that no fabric was manufactured as the main job workers have accepted the manufacture of fabric on job work. Even the clearance/sale of fabric and duty payment thereupon is not under dispute. There are no evidences that job work charges paid by the Appellant to the job workers flowed back to them. True it is that even if some of the buyers of the fabrics could not be found, it cannot lead to the conclusion that the Appellant did not sell the fabrics to such parties. The Tribunal has found that majority of job workers, i.e. 5 job workers out of 6 investigated, have accepted the job work manufacturing of the fabrics from the Yarn supplied by the Appellant and that no evidence has been adduced to the effect that the Respondent-Company had clandestinely removed the yarn from their factory for sale by evading central excise duty. On these factual findings, the Tribunal has dismissed the Appeal.

20. In our view, all the factual aspects raised on behalf of the Revenue, appear to have been answered by the Tribunal. Before us, the Revenue has not been able to controvert any of these findings nor is there any material shown to us that demonstrates anything to the contrary.

21. The decision in the case of Collector of Customs, Madras & Others (supra) relied upon by the learned Counsel for the Revenue, in our view, would therefore not assist the case of the Appellant-Revenue.

22. These are all findings of fact by the final fact finding Authority viz. the CESTAT which cannot be faulted with. Besides, even the question as framed does not propose a question of law but is a question of fact which cannot be gone into by this Court. There is also no perversity demonstrated. In the circumstances, neither the Appeal nor the question as framed raises any substantial question of law.

23. There is therefore no merit in this Appeal. The Appeal stands dismissed. No costs. (ABHAY AHUJA, J.) (DHIRAJ SINGH THAKUR, J.)