Customs, Excise and Gold Tribunal - Calcutta
Jindal Steel Fabricators vs Commissioner Of Central Excise on 17 August, 2004
Equivalent citations: 2005(180)ELT238(TRI-KOLKATA)
ORDER M.P. Bohra, Member (J)
1. Heard Shri U.P. Moitra, ld. Consultant for the appellants and Shri J.R. Madhiam, ld. JDR for the respondents.
2. Shri Moitra submits that in the present case, one Sri Mahesh Kr. Jindal, proprietor of M/s. Jindal Steel Fabricator is the partner of the partnership firm namely. M/s. Jindal Steel Products also. The other partners of the said partnership firm are closed relations of Shri Mahesh Kr. Jindal. Under these circumstances, the Commissioner of Central Excise, Kolkata, held that "the value of clearance made by the two firms being under the actual control of Shri Mahesh Kr. Jindal, proprietor of M/s. Jindal Steel Fabricators should be clubbed together, were not at all entitled to, for the purposes of benefit under Notification No. 175/86, dated 1-3-86 during the financial years in consideration." Ld. Consultant submits that in the present case, the Commissioner of Central Excise, Kolkata-II, has passed the order mechanically without proper application of mind and in complete ignorance of the Hon'ble Supreme Court's judgments followed by CEGAT in identical issue. The demand was based on clubbing of clearance value of two different factories treating both the factories belonging to the same manufacturer. In this case, the proprietor of the appellants' unit is one of the partners of another unit. Hence two factories are distinctly two separate Units. There is a distinct identity of a proprietary firm and a partnership firm. The clearance made by a partner in his individual capacity from the proprietary unit cannot be clubbed with clearance of a firm to which he is a partner. He relies on the following decisions:
(1) Assistant Collector of Central Excise & Customs at Surat and Ors. v. Shri J.C. Shah, M/s. Mani Shankar Magatram and Ors. reported in 1978 (2) E.L.T. (J 317). (2) Diamond Engineering & Trading Corpn. v. Collector of Central Excise reported in 1989 (44) E.L.T. 92 (Tribunal). (3) Pimpri Gases v. Collector of Central Excise reported in 1990 (49) E.L.T. 474 (Tribunal). (4) Dipen Enterprises v. Collector of Central Excise reported in 1990 (49) E.L.T. 481 (Tribunal). (5) Jindal Electricals v. Commr. of Central Excise, Chandigarh reported in 2003 (156) E.L.T. 429 (Tri. - Del.).
He, therefore, submits that the order may kindly be set aside and the appeal may kindly be allowed.
3. In reply, Shri Madhiam submits that Mr. Mahesh Kr. Jindal, proprietor of M/s. Jindal Steel Fabricator is also partner of the partnership firm namely, M/s. Jindal Steel Products and the other partners are his closed relations. The entire control of the partnership firm was of Mr. Jindal. He also submits that both the firms were manufacturing identical excisable goods and enjoying S.S.I. exemption benefit under Notification No. 175/86 dated 1-3-86 separately clearly show that the two units were made with the sole purpose of enjoying the duty exemption. He relies on the decisions rendered in the cases of Collector of Central Excise, Chandigarh v. Densons Pultroteknik reported in 1994 (70) E.L.T. 628 (Tribunal) and Supreme Engineering Works v. Collector of Central Excise, Pune reported in 1996 (82) E.L.T. 102 (Tribunal). He, therefore, submits that the appeal may kindly be rejected.
4. In the present case, Mr. Mahesh Kr. Jindal is a proprietor of M/s. Jindal Steel Fabricator and also a partner of the partnership firm, namely, M/s. Jindal Steel Products. As per the Company's Law/Partnership Act, there is a distinct identity of a proprietary firm and a partnership firm. The clearance made by a partner in his individual capacity from the proprietary unit cannot be clubbed with the clearance of a firm to which he is a partner. In the present case, Mr. Mahesh Kr. Jindal is a proprietor of M/s. Jindal Steel Fabricator and also a partner in another firm, namely, M/s. Jindal Steel Products. Both the firms, namely, M/s. Jindal Steel Fabricators proprietary concern and M/s. Jindal Steel Products, Partnership concern, having separate identity are two separate manufacturers. The two firms have income-tax Files, Sales Tax Registration, separate Bank Accounts etc. Accordingly, they cannot be treated to be one manufacturer and consequently, the value of the clearances of the two firms cannot be clubbed together.
5. In order to club the turnover of two concerns, it has to be proved by adducing evidences that one firm is dummy or camouflaging the others. In the present case, there is no such allegation in the show cause notice and there is no iota of evidence in this regard. The same view was expressed in the case of Prabhat Dyes & Chemical v. Collector of Central Excise reported in 1992 (62) E.L.T. 469. The same view has been expressed by the Hon'ble Supreme Court in the case of Assistant Collector of Central Excise & Customs, Surat and Ors. v. Shri J.C. Shah, M/s. jayantilal Babubhai and Ors. reported in 1978 (2) E.L.T. J317 (S.C). The decisions submitted by the ld. JDR are not applicable in the present circumstances. In the case of Supreme Engineering Works v. Collector of Central Excise, Pune, the Tribunal held that the Collector's conclusion, based on ample evidence regarding common control of production and sales among the units, having special financial relations shown to be not on a principal to principal basis. In the case of Collector of Central Excise, Chandigarh v. Densons Pultroteknik, the Tribunal held that one or more factories were controlled by the same manufacturer and it was held that the value of clearances of the two units clubbed together. The facts of the present cases are distinguishable and the ratio of the aforesaid cases are not applicable in the present case. In view of the above discussions, appeal deserves to be allowed. Cross Objection (CO) also gets disposed of.
6. Consequently, after setting aside the impugned order, we allow the appeal with consequential relief to the appellants.