Custom, Excise & Service Tax Tribunal
M/S Mica Mold vs Cce, Jamshedpur on 22 August, 2017
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL KOLKATA Excise Appeal Nos. 648-654 of 2011 (Arising out of Order-in-Original No. 06-09/Commissioner/2011 dated 13.04.2011 passed by the Commissioner of Central Excise & Service Tax, Jamshedpur) DATE OF HEARING : 22.08.2017 DATE OF DECISION : 22.08.2017 M/s Mica Mold . Appellants Arun Agarwal (Rep by Sh. S.K. Poddar & M/s Mica Mold (P) Ltd. Sh. P.K. Chaudhary, Adv Harsh Agarwal VERSUS CCE, Jamshedpur . Respondent
(Rep. by Sh. S. Mukhopadhyay, DR) CORAM : HONBLE MR. JUSTICE (DR.) SATISH CHANDRA, PRESIDENT HONBLE MR. V. PADMANABHAN, MEMBER (TECHNICAL) FINAL ORDER NO. FO/76672-76678/2017 PER JUSTICE Dr. SATISH CHANDRA :
All these appeals are filed by the assessee-Appellants against the Order-in-Original No. 06-09/Commissioner/2011 dated 13.04.2011 passed by the Commissioner of Central Excise & Service Tax, Jamshedpur. The period in dispute is 2003 to 31.12.2009.
2. The brief facts of the case are that, during the period under consideration, Shri Arun Agarwal is the Proprietor of M/s Mica Mold, which was engaged in the manufacture of electrical motor parts, generator fittings, such as, Brush Holder, BHRR Assembly, Hitachi Rocker Ring, Lead Wires etc. and insulating fitting for electrical appliances, such as, insulators, earth box assembly etc. for Indian Railways. Shri Arun Agarwal is having two sons, namely, Shri Rajiv Agarwal and Shri Harsh Agarwal, who after attaining the age of majority, have started independent firm, namely, M/s Mica Mold Pvt. Ltd., which was also engaged in the manufacture of same items, but at different business premises which is located about 2 kms. away from M/s Mica Mold.
3. On 2nd and 3rd November, 2007, a search was conducted at the business and residential premises of the Proprietor, Shri Arun Agarwal as well as another employee of the assessee-Appellants. On the basis of the seized material, SSI Exemption granted under Notification No. 08/2003 dated 01.03.2003 was denied. In other words, the turnover of the two business entities was clubbed. At the same time, the penalties on the Proprietor as well as Directors were imposed by the adjudicating authority. Being aggrieved, the assessee-Appellants have filed the present appeals.
3. With this background, we have heard Shri S.K. Poddar, learned counsel for the assessee-Appellants and Shri S. Mukhopadhyay, learned DR for the Revenue.
4. The learned counsel for the assessee-Appellants submits that both the factory premises are located at a distance of about 2-3 kms., but the office is being run from the different premises but in the same building having independent phone numbers and employees. It is the submission of the learned counsel that for Income Tax and other purposes, both the business entities are different, having distinct and separate entity and has nothing to do with each other except that the Directors are the sons of the Proprietor. These facts were admitted by the Department in the subsequent assessment of the penalty.
4. On the other hand, Shri S. Mukhopadhyay, learned DR for the Revenue, justifies the impugned order.
5. After hearing both sides and on perusal of the material available on record, we find that an identical issue has come up before the Tribunal in the case of DM Gears (P) Ltd. Vs CCE&ST, Delhi, [2007] 79 taxmann.com 307 (New Delhi CESTAT), wherein it was observed that :
7. First, we examine the question whether sales made by DMGP to DDIL are entitled to the SSI benefit. It is not in dispute that both these entities have separate registered manufacturing premises. It is nobodys case that there are no equipments in either of the premises and it is also not the view taken by the Revenue that the entire manufacturing happened at one of the two premises and the other is a dummy one. Inasmuch as both the units have separate manufacturing premises with equipments and the fact that they are E/3028-3030/2010 -DB 6 manufacturing different automobile parts, leads us to conclude that both are separate manufacturing units. The constitution of the two firms are different. DMGP is a Private Limited Company whereas DDIL is a Limited Company and hence they have separate legal existence and separate registrations not only for Central Excise but also for Sales Tax and other government departments. Under the circumstances, we are of the view that DMGP as well as DDIL are to be considered as separate manufacturing premises and each one will be eligible for the benefit of SSI exemption under Notification No. 8/2003-CE dated 01.3.2003.
12. To sum up the discussions, it is decided as follows:- (i) DMGP, DDIL and DDSC are considered as interconnected undertakings within the meaning as outlined under section 4 of the Central Excise Act read with Monopolies and Restrictive Trade Practices Act, 1969. Accordingly, the value of goods manufactured and cleared by DMGP as well as DDIL and sold exclusively through DDSC, are to be redetermined in terms of price adopted by DDSC when sold to independent dealers. Since various abatements /discounts claimed by the appellant have not been extended, we consider it appropriate to remand the matter E/3028-3030/2010 -DB 8 to Original Adjudicating Authority to re-determine the value for the purpose of charging excise duty, after extending the eligible abatements/ discounts as per law and the decisions of the Apex Court......
6. Further, it may be mentioned that similar views were expressed by the Tribunal in the case of Deep Cabletronics vs CCE, Delhi [Excise Appeal No. 52010 of 2015], wherein it was observed that :
6. We have considered the submissions made by both sides. From the ratio laid down by the Honble Supreme Court in the case of Commissioner vs Anil Pumps (P) Ltd. (supra) as well as by the Honble High Court in the case of CCE vs Minimax Industries, 2011 (269) ELT 166 (Del), it is evident that the brand name can be utilized by the family members. Similar views were expressed by the Tribunal in the case of CCE&C, Aurangabad vs Jain Spices & Agro Products, 2011 (273) ELT 135 (Tri.-Mumbai)..........
7. In the instant case, both the business entities are different having distinct and separate entity being the Proprietary concern and Private Limited Company. The assessment of turnover for Income Tax purposes was being made separately and their factory premises are also differently located. Only that the Directors of the Private Limited Company are the sons of the Proprietor of the firm, does not mean that they are the same business entities, especially when in the subsequent assessment year the Department has accepted these facts. When it is so, then we find no reason to sustain the impugned order in this regard and the same is hereby set aside pertaining to the SSI Exemption.
8. The next grievance of the assessee-Appellants is pertaining to replacement of parts for repair and reconditioning work of the Indian Railways.
9. During the course of arguments, the learned counsel for the assessee-Appellants submits that they have purchased various items from the open market where the excise duty was paid, but the Department has considered that the assessee-Appellants had manufactured these items in their own factory. Lastly, he prays that the duty is not leviable on these items which were purchased from the open market.
10. After hearing both sides and considering the totality of the facts and circumstances of the case, it appears that in the impugned order, there is neither a proper discussion nor any quantification pertaining to this issue, had been made. Hence, we modify the impugned order and remand the matter to the adjudicating authority to decide this issue de novo but by providing reasonable opportunity to the assessee-Appellants to present their case with liberty to file additional documents, if any, as per law.
11. Another grievance of the assessee-Appellants is regarding the inclusion of inspection charges paid by the Indian Railways to RITES Ltd. for inspecting the goods supplied by M/s Mica Mold and M/s Mica Mold Pvt. Ltd.
12. The learned counsel for the assessee-Appellants submits that since the charges were paid by the Indian Railways, the same cannot be included in the sale price of the items as no bills were ever raised by them to this effect.
13. After considering the rival submissions, it may be mentioned that the assessee-Appellants have neither raised separate bills nor any item was mentioned therein pertaining to the inspection charges. The inspection was done by the RITES Ltd. for the Indian Railways and thereafter the payment was made by the Indian Railways to RITES Ltd. The assessee-Appellants have nothing to do with the said charges. When it is so, then by following the ratio laid down in the case of Annapurna Malleables (P) Ltd. Vs CCE, Raipur [2016] 66 taxmann.com 135 (New Delhi CESTAT) and CCE, Calcutta-II vs Beekay Steel Indus. [2000] 2000 taxmann.com 113 (CEGATKolkata), we find no justification in including the inspection charges into the price charged by the assessee-Appellants. Hence, the impugned order is set aside in this regard.
14. The last grievance of the assessee-Appellants is that, during the search at the premises of M/s Mica Mold, a total sum of Rs. 4.31 crore was seized and out of which Rs. 1.31 crore was transferred to the Income Tax Department. From the balance amount of Rs. 3 crores, the Department by bifurcating, transferred Rs. 1,77,43,034/- towards Service Tax and retained the remaining amount of Rs. 1,22,56,966/- under Section 110 of the Customs Act (applicable to the Central Excise) read with Section 12 of the Central Excise Act, 1944.
15. The learned counsel for the assessee-Appellants submits that when the turnover of both the business entities cannot be clubbed, there is no justification for retaining the amount of Rs. 1,22,56,966/-.
16. On the other hand, the learned DR justifies the impugned order.
17. After considering the totality of the facts and circumstances of the case, it is evident that when the turnover of both the business entities cannot be clubbed, as stated above, then we direct the adjudicating authority to decide the issue afresh but by providing a reasonable opportunity to the assessee-Appellants.
18. Regarding the penalties on the Proprietor, Directors and Firm, we are of the view that, in the light of the above discussion, there is no justification for imposition of the penalties and the same are hereby dropped.
19. In the result, the appeals are partly allowed in the above terms.
(Dictated & pronounced in the open court) (V. PADMANABHAN) MEMBER (TECHNICAL) (JUSTICE (Dr.) SATISH CHANDRA) PRESIDENT Golay 7 A.No. E/648/11 & ORS.