Custom, Excise & Service Tax Tribunal
Commissioner Of Central Excise And ... vs Aschem Agrotech (P) Ltd on 18 March, 2014
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Final Order No. 20378 / 2014 Appeal(s) Involved: E/207/2007-DB [Arising out of Order-in-Appeal No. 171/2006 dated 29/12/2006 passed by the Commissioner of Central Excise, Bangalore-II] Commissioner of Central Excise and Customs - Bangalore-II PB 5400 CR Building, Queens Road, Bangalore - 560 001, Karnataka Appellant(s) Versus Aschem Agrotech (P) Ltd. B-80, 81, KSSIDC Indl. Estate, Doddaballapur - 561 203 Respondent(s)
Appearance:
Mr. Ganesh Haavanur, AR For the Appellant Mr. Harish R., Advocate World Trade Center, No. 404-406, 4th Floor, South Wing, Brigade Gateway Campus, No. 26/1 Dr. Rajkumar Road, Malleswaram West, Bangalore - 560 055 For the Respondent CORAM:
HON'BLE SHRI B.S.V. MURTHY, TECHNICAL MEMBER HON'BLE SHRI S.K. MOHANTY, JUDICIAL MEMBER Date of Hearing: 18/03/2014 Date of Decision: 18/03/2014 Order Per: B.S.V. MURTHY The respondent holds 100% shares of M/s. Healthline Pvt. Ltd. (HLPL). Therefore HLPL is a subsidiary for the respondent and therefore the respondent has full management control over HLPL. There is no dispute on this fact. Entertaining a view that the clearances of HLPL have to be taken into account for deciding eligibility of benefit of SSI exemption notification in respect of the respondent, proceedings were initiated. Both the lower authorities have taken the view that the value of clearances of subsidiary namely HLPL cannot be clubbed with the respondent herein and hence Revenue is in appeal.
2. We find that the issue as to whether a subsidiary company and holding company should be treated as different for the purpose of SSI benefit or not was considered by this Tribunal in the case of CCE, Cochin Vs. Modern Food Industries Ltd. reported in [2006 (198) E.L.T. 95 (Tri.-Bang.)]. At this juncture learned AR would submit that this case can be distinguished by the fact that there was evidence of flow of funds from the holding company to the subsidiary company. In our opinion this fact alone cannot make a difference. For all purposes the holding company would be having more than 50% of the shares of the subsidiary company and in this case admittedly 100% of the shares are held by the holding company. When 100% of the shares are held, interest is paid on the loan or not does not really make a difference for the transaction between the two. Because in any case the holding company would have to bear the entire amount or profit or loss, whatever be the result of the activity of the subsidiary.
3. We also take note of the fact that the original adjudicating authority while dropping the show-cause notice has made the following observations:
a) The two companies are located at different places and are independent legal entities,
b) M/s. HLPL did not sell any of the goods manufactured by them to the assessee company.
c) The products manufactured by M/s. HLPL and the assessee were different.
d) There were no commercial transactions between the two companies.
e) The profit or loss was assessed separately and there was no interference between two companies in administrative control, exercised by either company.
f) The ratio of Supreme Court judgment in the case of CCE, Bangalore Vs. M/s. Gammon Far Chems limited [reported in 2003 (152) ELT 28 (SC)] is not applicable to the case of M/s. HLPL as the department had not established that they (M/s. HLPL) had produced goods on behalf of the holding company i.e., the assessee.
g) The clarification given by the Board in Circular No. 06/1992 dated 29.05.1992 supports the case of M/s. HLPL.
h) As per the rulings of the Honble Tribunal in the case of M/s. Precision Gears Private Limited Vs. CCE, Bombay/Indore reported in 1998 (100) ELT 535 (Tri-Del.) the mere fact of holding shares would not make other company an unit of the other when both of them existed as independent entities.
These observations show very that the decision of the original adjudicating authority is logical and correct and has been rightly upheld. In view of the above discussion, the appeal is rejected.
(Order dictated and pronounced in open court) (S.K. MOHANTY) JUDICIAL MEMBER (B.S.V. MURTHY) TECHNICAL MEMBER iss