Custom, Excise & Service Tax Tribunal
M/S.Garg Industries vs Cce, Noida on 9 April, 2015
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE
TRIBUNAL, PRINCIPAL BENCH NEW DELHI.
Date of Hearing/Decision: 09.04.2015
Honble Mr. Rakesh Kumar, Member (Technical)
Honble Mr. S.K. Mohanty, Member (Judicial)
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Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
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Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3
Whether Their Lordships wish to see the fair copy of the Order?
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Whether Order is to be circulated to the Departmental authorities?
Excise Appeals Nos.E/217 & 218/2011
[Arising out of Order-in-Appeal No.311 to 312/CE/Noida/2010 dated 30.09.2010 passed by the Commissioner of Customs & Central Excise (Appeals), Noida ((U.P.)].
M/s.Garg Industries Appellant
Shri B.M. Garg, Proprietor
Vs.
CCE, Noida Respondent
Appearance: Rep. by Shri Rupesh Kumar , Shri Parvesh Behuguna and Shri Hrishikesh, Advocates for the appellants.
Shri R.K. Grover, DR for the respondent.
CORAM : Hon'ble Mr. Rakesh Kumar, Member (Technical) Honble Mr. S.K. Mohanty, Member (Judicial) Final Orders Nos.51455-51456/2015 dated 9.4.2105 Per Rakesh Kumar:
The appellant unit, a proprietorship concern of Shri B.M. Garg, is a small scale unit engaged in the manufacture of Hinges and Hardware articles. The period of dispute in this case is from Jan. 2008 to November, 2008. During this period, the appellant unit was availing of the SSI exemption notification no.8/2003-CE. The Departments allegation is that in order to split up their manufacturing turnover, Shri B.M. Garg set up a number of other manufacturing units viz. M/s. Jai Hardware Pvt. Ltd., in which Shri B.M. Garg and Ms.Rama Garg are Directors, M/s.Door Devices Manufacturing Company, a partnership firm of Shri B.M. Garg and Shri V.P. Garg, M/s. Deepak Hinges Pvt. Ltd. with Shri B.M Garg and Shri V.P. Garg as Directors, M/s.Monika Steels Pvt. Ltd. with Shri B.M. Garg and Shri Satish Mittal as Directors, M/s.D.D. Hardware Pvt. Ltd. with Shri B.M. Garg and Ms. Rama Garg as Directors and M/s. D.P. Garg Exports Ltd. with Shri B.M. Garg and Shri D.Das as Directors. The Department accordingly seeks to club the clearances of the appellant with the clearances of the above mentioned six manufacturing units for determining their eligibility for SSI exemption. It is on this basis that the Addl. Commissioner vide order-in-original dated 26.04.2010 confirmed the duty demand of Rs.17,25,261/- against the appellants unit along with interest and imposed penalty of Rs.17 lakh on the appellant company under Rule 25 of the Central Excise Act, 1944 and penalty of same amount on Shri B.M. Garg under Rule 26 of the Act. As is clear from the order-in-original passed by the Addl. Commissioner and from the show cause notice, while seeking clubbing of the clearances of the appellant unit with the clearances of M/s. Jai Hardware Pvt. Ltd., M/s.Door Devices Manufacturing Co., M/s. Deepak Hinges Pvt. Ltd.,M/s. Monika Steels Ltd., M/s. D.D. Hardware Pvt.Ltd. and M/s.D.P. Garg Exports Ltd., no show cause notice had been issued to these units, whose clearances were sought to be clubbed with the clearances of the appellant unit.
2. On appeal being filed to the Commissioner (Appeals) against this order of the Addl. Commissioner, the same was dismissed vide order-in-appeal dated 30.09.2010. Against this order of the Commissioner (Appeals), this appeal has been filed.
3. Heard both the sides.
4. Shri Rupesh Kumar, Advocate, ld. Counsel for the appellant pleaded that in respect of the clubbing of the clearances of the appellant unit with the clearances of the six other units/firms, no show cause notice has been issued to the group companies/firms whose clearances have been sought to be clubbed with the clearances of the appellant company, that this is fatal mistake in these proceedings and on this ground itself, the impugned order has to be set aside, that in this regard, he relies upon the judgements of the Honble Calcutta High Court in the case of CCE Vs. Diamond Scaffolding Company reported in 2011 (274) ELT 10 , M/s. Copier Force India Ltd. Vs. CCE, Chennai reported in 2008 (231) ELT 224 , K.R. Balachandra Vs. CCE, Coimbatore reported in 2003 (151) ELT 68 and Poly Resins Vs. CCE, Chennai reported in 2003 (161) ELT 1136 and that in view of this, the impugned order is not sustainable.
5. Shri R.K. Grover, ld. Departmental Representative defended the impugned order by reiterating the findings of the Commissioner in the impugned order and pleaded that non- issue of show cause notice to the above mentioned six manufacturing units/firms, whose clearances are sought to be clubbed with the clearances of the appellant company is not fatal to the proceedings.
6. We have considered the submissions from both the sides and perused the records.
7. The appellant company, a proprietorship concern of Shri B.B. Garg, is manufacturers building hardware articles. There are six group units viz. M/s. Jai Hardware Pvt. Ltd., in which Shri B.M. Garg and Ms.Rama Garg as Directors, M/s.Door Devices Manufacturing Company, a partnership firm of Shri B.M. Garg and Shri V.P. Garg, M/s. Deepak Hinges Pvt. Ltd. with Shri B.M Garg and Shri V.P. Garg as Directors, M/s.Monika Steels Pvt. Ltd. with Shri B.M. Garg and Shri Satish Mittal as Directors, M/s.D.D. Hardware Pvt. Ltd. with Shri B.M. Garg and Ms. Rama Garg as Directors and M/s. D.P. Garg Exports Ltd. as Shri B.M. Garg and Shri D.Das as Directors, who are also engaged in the manufacture of similar goods in their factories located at different locations. The Departments case is that all these six units are actually owned and controlled by Shri B.M. Garg and on this basis the clearances of the appellant unit are sought to be clubbed with the clearances of the above six units for determining the eligibility for SSI exemption. However, there is no dispute that no show cause notices have been issued to M/s. Jai Hardware Pvt. Ltd., M/s.Door Devices Manufacturing Company, M/s. Deepak Hinges Pvt. Ltd., M/s.Monika Steels Pvt. Ltd. M/s.D.D. Hardware Pvt. Ltd. and M/s. D.P. Garg Exports Ltd. Shri R.K. Grover, ld. DR pleads that the issue of show cause notice to these six group units/firms was not fatal, as Shri B.M. Garg was holding the majority shares or was a partner in these private limited companies/firms and hence, non-issue of show cause notice has not vitiated proceedings and in this regard, he relies upon the judgement of the Tribunal in the case of Diwan Saheb Fashions Pvt. Ltd. reported in 2013 (288) ELT 529 (Tribunal-Delhi), wherein it was held that proceedings were not vitiated even though no show cause notice was issued to the units whose clearance was to be clubbed, as their proprietors / partners were fully aware of the proposal to club clearances. In our view, the judgement of the Tribunal in the case of Diwan Saheb Fashions Pvt. Ltd. (supra) is not applicable to the facts of this case, as as discussed in para-4 of the judgement, in the case of Diwan Saheb Fashions Pvt. Ltd. (supra), the units whose clearances were sought to be clubbed were dummy units and did not have separate existence. In the present case, the units of M/s. Jai Hardware Pvt. Ltd., M/s.Door Devices Manufacturing Company, M/s. Deepak Hinges Pvt. Ltd., M/s.Monika Steels Pvt. Ltd. M/s.D.D. Hardware Pvt. Ltd. and M/s. D.P. Garg Exports Ltd. are the existing firms/companies having factories at different locations. Therefore, if the clearances of these units are sought to be clubbed with the clearances of the appellant unit, it was necessary to issue the show cause notices to these firms so as to enable them to put up their defene and without hearing the units, whose clearances are sought to be clubbed with the clearances of the appellant company, a unilateral decision cannot be taken that all the units are owned and controlled by one person only. For clubbing the different units for the purpose of SSI exemption, the only requirement is that the units should be owned by one person and for this purpose, it is absolutely necessary that if the clearances of a unit A are sought be clubbed with the clearances of the units, B, C and D and these units are owned by different persons, show cause notices must be issued to B, C and D, whose clearances are sought to be clubbed with the clearances of Unit A. We are supported in this view by the judgement of Calcutta High Court in the case of Diamond Scaffolding Company reported in 2011 (274) ELT 10 and the judgements of the Tribunal in the cases of Copier Force India Ltd. reported in 2008 (231) ELT 224, K. R. Balachandra reported in 2003 (151) ELT 68, Poly Resins reported in 2003 (161) ELT 1136; CCE, Bombay Vs. Supreme Electrical Appliances reported in 2001 (131) ELT 271 and SKN Gas Appliances reported in 2000 (120) ELT 732. In view of this, the impugned order is not sustainable. The same is set aside. The appeals are allowed. The misc. applications.
( Rakesh Kumar ) Member (Technical) ( S.K. Mohanty ) Member (Judicial) Ckp.
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