Final Order Nos. 237-241/2008-EX(PB), arising from Appeal Nos. E/5651-5655/2004. Case: Diwan Saheb Fashions Pvt. Ltd. Vs Commissioner of C. Ex., Delhi-I. CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal)
| Case Number | Final Order Nos. 237-241/2008-EX(PB), arising from Appeal Nos. E/5651-5655/2004 |
| Counsel | For Appellant: Shri V.L. Kumaran and Ravi Kumar, Advocates, and For Respondent: Shri Virender Choudhary, DR. |
| Judges | Shri S.S. Kang, Vice-President and Rakesh Kumar, Member (T) |
| Issue | Central Excise Act, 1944 - Section 11A |
| Citation | 2008 (229) ELT 240 (Tri - Del) |
| Judgement Date | May 02, 2008 |
| Court | CEGAT (Customs, Excise & Gold (Control) Appellate Tribunal) & CESTAT (Customs, Excise and Service Tax Appellate Tribunal) |
Order:
Rakesh Kumar, Member (T), (Principal Bench At New Delhi)
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These five appeals have been filed by M/s. Diwan Sons (India) Pvt. Ltd., 23/5, East Patel Nagar, Delhi (hereinafter referred to as Diwan Sons); Shri Surinder Diwan, Director - Diwan Sons; Shri Sudhir Diwan, Director - Diwan Sons; Shri M.L. Diwan, Proprietor - East West Attire, B-2, Basement, Sunder Kiran Building, 6/41, W.E.A. Karol Bagh, New Delhi, and Mrs. Usha Diwan, Proprietor - M/s. Ethnocity, B-l, Basement, Sunder Kiran Building, 6/41, WEA Karol Bagh, New Delhi against order-in-Original No. 27-29/2004 dated 31-8-2004 passed by Commissioner of Customs, Delhi-I in respect of three Show Cause Notices - SCN No. CE-20/Misc - Inv/Diwan Sons/R-28-4-2001 dated 7-5-2002 for demand of duty amounting to Rs. 39,68,880/- for period from April 2001 to September 2001; SCN No. CE-20/Misc-Inv/Diwan Sons/R-28/4/2001 dated 27-9-2002 for demand of duty amounting to Rs. 61,50,000/- for the period from October 2001 to March 2002 and SCN No. IV/(hdqr. - Prev.) 12/01/03 dated 12-8-2003 for demand of duty amounting to Rs. 1,05,27,577/- for the period from April 2001 to March 2003. The Commissioner by this order -
(a) confirmed the demand of duty amounting to Rs. 2,06,46,457/- (37,68,880 + 61,50,000 + 1,05,27,577) against Diwan Sons under provision to Section 11A(1) of the Act, along with interest on this duty at the applicable rate under Section 11AB of the Act;
(b) imposed penalty of Rs. 2,05,46,457/- on Diwan Sons under Section 11AC of the Acts and penalty of Rs. 25 lakhs each on Shri Surinder Diwan and Sudhir Diwan under Rule 26 of the Central Excise Rules, 2001/2002; and
(c) imposed penalty of Rs. 5 lakh each on Shri M.L. Diwan and Mrs. Usha Diwan under Rule 26 of the Central Excise Rules, 2001/2002.
1.1 Diwan Sons is a private limited company with Shri Surinder Diwan and Shri Sudhir Diwan, who are real brothers as its Directors. M/s. East West Attire is a proprietorship firm with Shri M.L. Diwan as its proprietor. Shri M.L. Diwan is the father of Shri Surinder Diwan and Sudhir Diwan. Ethnocity is also a proprietorship firm owned by Mrs. Usha Diwan, wife of Shri Surinder Diwan. Both East West Attire and Ethnocity were started in the year 2001 and closed down in 2003. During the period of dispute, all the three firms were engaged in manufacture (as merchant-manufacturer) of ''Articles of Apparel, not knitted or crocheted'' falling under Heading 62.01 of the tariff and these apparels were being sold from various sales outlets of Diwan Sons under the brandnames - "Diwan Saheb", "Ethnic Fusion": "Ethno", "Cupra Club" etc. During the period of dispute, only Diwan Sons had taken Central Excise Registration under Rule 174 of Central Excise Rules, 1944/Rule 7 of Central Excise Rules, 2001/2002, were availing SSI exemption and were paying duty on the clearances in a financial year, in excess of the threshold limit for full duty exemption. M/s. Ethnocity and M/s. East West Attire had not taken any Central Excise registration, and were not paying any duty, as they were claiming full duty exemption. Entire production of garments of East West Attire and Ethnocity was being cleared to Diwan Sons who were marketing the same under the brand names mentioned above.
1.2 From the sale outlets of Diwan Sons, in addition to the garments merchant manufactured by them, East West Attire and Ethnocity, fabrics of Raymonds, Digjam etc. are also sold and the customers purchasing the fabrics have option to get the garment stitched through Diwan Sons for which they are separately charged. About 85% of the customers buying fabrics from Diwan Sons, also get the garments stitched through them. The persons who have purchased the fabrics elsewhere can also come to Diwan Sons for getting the garments stitched. The tailoring activity has been outsourced by Diwan Sons to M/s. Heritage Tailoring Co. However, lining, branded buttons, labels etc. are provided by Diwan Sons.
1.3 In January 2003 the Officers of Central Excise Commissionerate, Delhi-I searched the premises of Diwan Sons, East West Attire, Ethnocity and of their associate concern and conducted detailed inquiry with the Directors/Proprietors of Diwan Sons, East West Attire, Ethnocity etc. and also with their employees and on completion of enquiry, three Show Cause Notices, mentioned above, were issued. The allegations in the Show Cause Notices are that:-
(a) the garments made on account of tailoring activity of Diwan Sons i.e. the garments stitched through Diwan Sons for the...
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