Customs, Excise and Gold Tribunal - Delhi
Tapsya Steels (P) Ltd. vs Commissioner Of Central Excise on 16 April, 2004
Equivalent citations: 2004(174)ELT108(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. The issue involved in these two appeals filed by M/s. Tapsya Steels (P). Ltd. and M/s. Doaba Rolling Mills Ltd. is whether the value of clearance of M/s. Tapsya Steels Pvt. Ltd. is to be clubbed with the value of clearance of M/s. Doaba Rolling Mills Ltd. and consequently the benefit of small scale exemption is to be denied to the Appellant No. 1.
2. Shri P.C. Jain, learned Advocate submitted that Appellant No. 1 M/s. Tapsya Steels (P) Ltd. manufactures MS ingots with the help of old and used induction furnace purchased from M/s. Doaba Rolling Mills Ltd., Appellant No. 2; that the Appellant No. 1 is a private Ltd. Company holding separate registration, income tax and sales tax and as such are an independent manufacturer; that M/s. Doaba Rolling Mills Ltd. also manufacture MS ingots and runners and risers; that they held a separate registration under Factory Act, Registration under ESI, Income tax and sales tax; that it has been clarified in Meerut Collectorate Trade Notice No. 53/92, dated 11-11-92 that "Limited Companies, whether public or private, are separate entities, distinct from shareholders composing it. Hence each limited company is a manufacturer by itself and will be entitled to a separate exemption limit"; that the said trade notice is based on the circular issued by the Central Board of Excise & Customs; that it is settled law that the Department cannot argue against the Board's Circular, that after referring to the said circular, the Tribunal in the case of L.D. Industries and Ors. v. CCE, Pune, 2003 (157) E.L.T. 459 (T) - 2003 (59) RLT 154 (CESTAT) has held that "By applying the above provisions, the production of M/s. Supreme Washers Pvt. Ltd. has to be considered separately for the purpose of exemption limit......We, therefore, hold that the production of M/s. Supreme Washers Pvt..., cannot be clubbed with the production of LD Industries and LR Industries for the purpose of assessment". Learned Advocate also relied upon the judgment of the Supreme Court in the case of Area Controls Pvt Ltd. v. CCE [2003 (158) E.L.T. 272 (S.C.) = 2003 (59) RLT 606 (SC)] wherein the clearance of seven companies were clubbed together, the Supreme Court remanded the matter to the Tribunal as the Tribunal had not considered Board's Circular dated 1-3-1956 and Circular dated 29-5-1992 to the effect that a limited company should be treated as a separate entity for the purpose of exemption limit. The learned Advocate also contended that it is wrong to say that the premises of both the appellants are not separate by any boundary wall; that had there been no separation by boundary wall, the Central Excise officer would not have approved the site plan; that storing scrap and other materials together or supply of water pipeline from the nearby factory does not prove anything against them; that it is settled law that common office and telephone number does not warrant clubbing of two clearances [Metrosyl v. CCE, Patna - 1995 (77) E.L.T. 130 (T). He also submitted that if both the units are one and the same, the question of demanding the duty from both the units separately does not arise. He relied upon the decision of the Supreme Court in the case of Gajanan Fabrics Distributors v. Central Excise, Pune [1997 (92) E.L.T. 451 (S.C.)] and Tribunal's decision in Nitin Steels v. CCE & Cus., Vadodrara [2003 (151) E.L.T. 422 (Tri)]. Finally, he submitted that Department has not proved any flow back of money which is required for clubbing the clearances of two units as held by the Rajasthan High Court in the case of Renu Tandon v. Union of India, 1993 (66) E.L.T. 375 (Raj.).
3. Countering the arguments Shri H.C. Verma, learned Departmental Representative, reiterated the findings as contained in the impugned order and emphasised that absence of any segregation between these two units and common office and telephone prove that for all practical purposes, these units are one. He relied upon the decision in the case of Unique Resin Industries v. CCE [1993 (68) E.L.T. 230 (Tri.)] wherein the clearances of four units having common infrastructural facilities, sales network and pricing, finance, and run by same family, were clubbed together for the purpose of S.S.I. exemption. He also mentioned that the Appeal filed against the said decision has been dismissed as withdrawn by the Supreme Court as reported in 1996 (87) E.L.T. A136.
4. We have considered the submissions of both the sides. It has been clarified by the Central Board of Excise & Customs by a Circular in 1992 that limited companies, whether public or private, are separate entities, distinct from the shareholders composing it and each limited company is manufacturer by itself and will be entitled to separate exemption limit. The Appellate Tribunal in the case of L.D. Industries (supra) has considered the said Circular and its predecessor Circular dated 1-3-56. The Tribunal by applying the said Circular has held that the clearance of private limited company cannot be clubbed with clearances of other companies. Following the ratio of the said decision the clearances of both the units in the present matters cannot be clubbed together as both of them are private limited companies. Further, the financial flow back has not been brought on record. It has been held by the Rajasthan High Court in Renu Tandon that value of clearances of three units cannot be clubbed together and two units cannot be treated as one unit merely because of proximity of relationship or the situation of two factories or because there are some common employees, unless there is clear and specific finding that there is mutuality of business interest between two units and both have interest in business of each other and they have common funding and financial flow back. We therefore, set aside the impugned order and allow both the appeals.