Custom, Excise & Service Tax Tribunal
M/S. Polybelt Technologies India vs Commissioner Of Central Excise, ... on 20 January, 2016
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL WEST ZONAL BENCH AT MUMBAI COURT NO. Appeal No. E/3573/2004 (Arising out of Order-in-Appeal No. AT/M-III/54/2004 dt.30.8.2004 passed by the Commissioner (Appeals) Central Excise, Mumbai-III ) M/s. Polybelt Technologies India : Appellant VS Commissioner of Central Excise, Mumbai-III : Respondent Appeal No. E/3616/2004 (Arising out of Order-in-Appeal No. AT/M-III/54/2004 dt.30.8.2004 passed by the Commissioner (Appeals) Central Excise, Mumbai-III ) Commissioner of Central Excise, Mumbai-III : Appellant VS M/s. Polybelt Technologies India : Respondent Appeal No. E/767/2006 (Arising out of Order-in-Original No. 14/KKS/2005-2006 dt.30.11.2005 passed by the Commissioner of Central Excise, Mumbai-III ) M/s. Polybelt Technologies India : Appellant VS Commissioner of Central Excise, Mumbai-III : Respondent Appeal No. E/396/2007 (Arising out of Order-in-Appeal No. AT/757/M.III/2006 dt.05.12.2006 passed by the Commissioner (Appeals)Central Excise, Mumbai-III ) M/s. Polybelt Technologies India : Appellant VS Commissioner of Central Excise, Mumbai-III : Respondent Appeal No. E/680 & 679/2009 (Arising out of Order-in-Appeal No. AH/104-105/M.III/2009 dt.12.03.2009 passed by the Commissioner (Appeals)Central Excise, Mumbai-III ) M/s. Polybelt Technologies India : Appellant VS Commissioner of Central Excise, Mumbai-III : Respondent For approval and signature: Honble Shri Ramesh Nair, Member (Judicial) Honble Shri Raju, Member (Technical) ============================================================
1. Whether Press Reporters may be allowed to see : No
the Order for publication as per Rule 27 of the
CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the : No
CESTAT (Procedure) Rules, 1982 for publication
in any authoritative report or not?
3. Whether Their Lordships wish to see the fair copy : Seen
of the Order?
4. Whether Order is to be circulated to the Departmental : Yes
`authorities?
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Appearance
Shri Balbir Singh, Sr. Advocate with
Shri H.G. Dharmadhikari Advocate and
Ms. Lalita Phadke, Advocate for Appellant
Shri V.K. Singh Spl. Counsel for respondent
CORAM:
Honble Shri Ramesh Nair, Member (Judicial)
Honble Shri Raju, Member (Technical)
Date of hearing : 20/01/2016
Date of pronouncement : 28/04/2016
ORDER NO.
Per : Ramesh Nair
The appeals involved herein are Appeal No. E/767/06 filed against Order-in-Original No. 14/KKS/2005 2006 dt. 30.11.2005 passed by the Commissioner of Central Excise, Mumbai - III and Appeal Nos. E/3573/04, E/3616/04, E/396/2007, E/680/09, E/679/09 filed against Order-in-Appeal Nos. AT/M-III/54/3004 dt. 30.08.2004, AH/757/MII/06 dt. 5.12.2006, AH/104 & 105/M-III/09 dt. 12.03.2009 respectively passed by the Commissioner (Appeals), Central Excise, Mumbai-III. Out of the above 6 Appeals, one Appeals No. E/3616/04 has been filed by the revenue and remaining appeals have been filed by Appellant M/s Polybelt Technologies which is a partnership concern. The period involved in all the appeals is 17.08.96 to March 2007.
2.?The facts of the case are that Appellant M/s. Polybelt Technologies India a partnership concern is engaged in the manufacture of Nylon sandwich Power Transmission Belt. They have been classifying their product under chapter heading 3926.90 of the Central Excise Tariff Act and were making clearance under Nil rate of duty by claiming SSI Exemption in terms of Notification No. 175/86 CE dt. 01.03.86 as amended and subsequent analogus notifications. Initially they were issued show cause notice dt. 03.05.1997 wherein it was proposed to club their clearances and of one more unit M/s Transcon International (which was taken over in July 96) with M/s NTB International Pvt. Ltd. on the ground of control of M/s NTB over M/s Polybelt, mutual flow of funds, clearance of goods manufactured by M/s NTB in the name of M/s Polybelt and that the goods, market and sales of M/s Polybelt and M/s NTB are common. The statements of employees and related persons of M/s Polybelt and M/s NTB were recorded. The show cause notice alleged that the units are single entity and the value of clearances are required to be clubbed for the purpose of charging excise duty under Notification No. 175/86 CE dt 01.03.86 as amended from time to time. It was also proposed to classify the Transmission belt under chapter sub heading No. 4010.90, 4210.90 and 5901.00 of the Central Excise Tariff Act as per the composition of said product and to levy appropriate duty.
2.1 The show cause notice was adjudicated vide Order-in-Original No. 16/99 Commr.VI dt. 10.06.99 wherein the demands were confirmed and penalties were imposed. M/s. Polybelt Technologies, M/s. NTB International and M/s. Transcon filed appeal before the CEGAT, Mumbai. The Tribunal vide Order dt. 30.06.2000, remanded the matter to the Commissioner for de novo adjudication. In de novo proceedings the Commissioner vide Order-in-Original No. 38/2001 Commr. M-VI dt. 31.12.2001 confirmed the demand and imposed penalties. Against the said order dt. 31.12.2001 the parties filed appeal No. E/1325-30/02 before CESTAT. These appeals were heard alongwith two more appeals i.e E/1331/02 and E/3374/03 which were filed by M/s Polybelt for the subsequent period. The CESTAT vide Order No. A/764-771/WZB/2004 C-II dt. 01.09.2004 dismissed the appeal No. E/1325-30/02 on the issue of classification as well as clubbing. However in case of Appeal Nos. E/1331/02 and E/3374/03 filed by M/s Polybelt Technologies, the CESTAT remanded the matter to the jurisdictional Commissioner for fresh decision by giving following findings:
These appeals have been filed by M/s Polybelt Technology. After hearing both sides and perusal of case records, we find that these two appeals involve same issue but for different periods. No. E/1331/02 relates to period from 17.08.1996 to 30.09.2000 involving duty demand of Rs. 28,46,522.46 made under 6 show cause notices. The appeal is against the order-in-original passed by the adjudicating Commissioner. Appeal No. E//3374/03 relates to period 01/10/2000 to 30/09/2001 involving a duty demand of Rs. 9,95,420 and is a second appeal against the order-in-appeal passed by the Commissioner (Appeals) who has upheld the duty demand confirmed by the Assistant Commissioner. We are of the view that these two appeals need to be remanded for fresh decision by the jurisdictional Commissioner in the light of our above decision on the issue of classification in appeal Nos. E/1325-1330/02 and concessions made by the Ld. Advocate in regard to clubbing etc. for the earlier period. In addition the following points urged by the appellants need to be considered at the time of fresh adjudication :-
(i) No show cause notice has been issued for the impugned periods to M/s NTB International though small scale exemption is sought to be denied to M/s Polybelt Technology by clubbing clearances.
(ii) Clubbing cannot be done for subsequent period on the basis for such clubbing for an earlier period.
At the time of fresh adjudication the Appellants shall be at liberty to produce all relevant documents and case laws and the department shall also be at liberty to determine whether the financial and other arrangements existing between the concerned units have undergone any change in the subsequent period. The impugned orders are set aside and both the matters are remanded back to the jurisdictional Commissioner specifically for fresh adjudication to avoid multiplicity of proceedings before him and his Assistant Commissioner. The Appellant shall be allowed a reasonable opportunity of being heard before passing a fresh order.
2.2 The Commissioner vide Order-in-Original No. 14/KKS/2005-2006 dt. 30.11.2005 in fresh proceedings denovo adjudicated the show cause notices alongwith two more show cause notices dt. 24.11.2003 and dt. 06.01.2005 involving duty of Rs. 10,28,065/- and Rs. 6,20,115/- respectively. The Commissioner relied upon the previous investigation conducted against M/s Polybelt and M/s NTB. He relied upon the order dt. 01.09.2004 in Appeal No. E/1325-1330/02 of CESTAT and held that the assessee in those appeals themselves have accepted and/or conceded on the point of clubbing. He further held that the objection of party regarding non issue of show cause notice to M/s NTB International is purely technical as the show cause notice discuss the issue of clubbing with NTB International and refers to previous show cause notice wherein the decision has now reached finality before CESTAT themselves. That he finds that the circumstances under which their clubbing together has been admitted before CESTAT still exists and the assessee have not come up with any fresh ground and/ or reason to prove that there is any change in the constitution of any of the companies or change in their relations. He concluded M/s Polybelt Technologies India and M/s NTB International are one entity and accordingly the demands made for this purpose are liable to be confirmed in respect of M/s Polybelt Technologies India . M/s Polybelt Technologies India has filed appeal against this order dt. 30.11.2005 under appeal No. E/767/06. On the issue of classification he held that the issue has reached finality before CESTAT in its order dt. 01.0-9.2004, nothing is left to be decided.
2.3 For the subsequent period the demands against M/s Polybelt Technologies India were also confirmed by the adjudicating authority and upheld by the Commissioner (Appeals) on the similar grounds. Against all such orders M/s Polybelt Technologies India have filed Appeal Nos. E/3573/04, E/396/07, E/680/09 and E/679/09. The revenue is also in appeal in Appeal No. E/3616/04 urging for imposition of penalty which was set aside by the Commissioner (Appeals). The revenue has also filed cross objection in appeals filed by M/s Polybelt Technologies India.
3. Shri Balbir Singh, Ld. Sr.Counsel, alongwith Shri H.G. Dharmadhikari, Ld. Advocate & Ms. Lalita Phadke, Advocate appearing for M/s Polybelt Technologies India submits that the impugned orders are bad in law. On the issue of denial of SSI Exemption to M/s Polybelt Technologies India he submits that in the matter of previous show cause notices which were decided by the adjudicating authority vide Order-in-original No. 38/2001 Commr. M-VI dt. 31.12.2001 and upheld by the CESTAT in appeal No. E/1325-1331/02, the demands were made against M/s NTB International by clubbing the clearances of Appellant holding, that the Appellant is fragment of M/s NTB international. That whereas in instant appeals no show cause notice was issued to M/s NTB International and the demand has been made from Appellant which essentially means that the independent existence of Appellant M/s Polybelt Technologies is recognized by the revenue. That if the Appellant has no existence, in that case no demand should have been made and confirmed against them. He relies upon the judgment of M/S Gajanan Fabrics Distributors Vs. CCE, Pune 1997 (92) E.L.T. 451 (S.C.) to support his contention.
3.1 He further submits that in the present appeals without specifying the quantum of turnover of M/s NTB International the demand has been made and thus the show cause notices are vague. That in subsequent period there was no transfer of funds, but still considering the earlier transfer of funds as basis to show mutuality of interest, demand was confirmed against Appellant. That the Tribunal in its order dt. 01.09.2004 considered the two legal and factual issue i.e (i) No show cause notice has been issued in the impugned periods to M/s NTB International Pvt. Ltd though small scale exemption is sought to be denied to M/s Polybelt Technologies India by clubbing their clearances (ii) clubbing cannot be done for a subsequent period on the basis of relevant factors existing for such clubbing for an earlier period. On this points Tribunal had remanded the matter to the Commissioner by setting aside order no. 38/2001.
3.2 That in remanded matters as well as in appeals of subsequent period, the adjudicating authority has committed error by holding M/s Polybelt Technologies India a partnership concern as subsidiary of M/s NTB International which is a private Ltd. company. The partnership firm which is independent and NTB international Pvt. Ltd does not hold any share in partnership. Therefore the findings of the Commissioner are erroneous and imaginary, hence the order deserves to be set aside. He relies upon the order of Tribunal as reported in Super Star Vs. CCE, Calicut 2002 (148) E.L.T. 854 (Tri. - Bang.). He submits that the non issue of show cause notice to M/s NTB International as adjudged by the adjudicating authority to be purely technical tentamounts to non obeying the order of the Tribunal whereas the Honble Tribunal in its remand order has categorically stated the said point to be considered. That the non issue of SCN to units whose turnover is proposed to be clubbed vitiates the entire proceedings. He submits that the clubbing of clearances can be held only if there is financial flowback during the period covered by the show cause notice and not by relying on earlier investigation for issue of earlier show cause notice as ordered by the Tribunal in its remand order. That in subsequent show cause notice there is no allegation of any transfer of money from M/s NTB International to Appellant firm or vice versa. That it is settled proposition of law that for clubbing of clearances ground of related person is not sufficient because the ground of related person is contemplated with the transaction between two related persons under section 4 of the Central Excise Act.. He submits that the department has confirmed the demand for period prior to show cause notice involved in the present appeals on M/s NTB International as actual manufacturer and the Appellant M/s Polybelt Technologies as dummy unit as can be seen from the remand order dt. 01.09.2004. That in the present proceedings which is for the subsequent period, the duty demand has been made from Appellant only by treating NTB as its subsidiary. Thus the department has by its own action has admitted that both the companies are in existence and factually it is correct that the Appellant has own factory at Plot No. A-404, Wagle Industrial Estate, Thane with complete set of machines and independent financial arrangement. M/s NTB International is an independent manufacturing factory at plot No. A 302, Road No. 32, Wagle Industrial Estate, Thane. Thus when the two separate central excise registration have been granted to two independent manufacturers and it is not the case that the Appellant is selling goods to NTB or that NTB is selling its goods to Appellant, then both have independent existence. That under such factual matrix the demand of duty from Appellant is illegal. He relies upon the judgment of Bentex Ind. Vs. CCE, New Delhi 2003 (151) E.L.T. 695 (Tri. - Del.), Plasto Containers (India) P. Ltd. Vs. CCE, Nagpur 2011 (268) E.L.T. 509 (Tri. - Mumbai), CCE, Ludhiana Vs. Jagatjit Agro Industries 2014 (309) E.L.T. 301 (Tri. - Del.), Jifcon Tools Pvt. Ltd. Vs. CCE, Aurangabad 2007 (208) E.L.T. 345 (Tri. - Mumbai), Highland Dye Works Pvt. Ld. Vs. CCE, Surat 2000 (121) E.L.T. 502 (Tribunal).
3.3 On the issue of classification he submits that though the classification list of their predecessor company M/s Transcon International has been approved by the department in terms of Rule 173B of Central Excise Rules, 1944,therefore classification resorted by them is correct. That even the Tribunal accepted their contention in case of M/s Transcon and set aside the demands for the extended period in its order No. M/422//WZB/MUM/C-II/EB dt. 20.12.2005.
4.?On the other hand, Shri V.K. Singh, Ld. Special Counsel appearing on behalf of the Revenue reiterates the findings of the impugned order and files written submission. He submits that on classification issue the classification as done by the department has been upheld by the Honble Supreme Court as reported in NTB International Pvt. Ltd. Vs. Commissioner 2015 (319) ELT 45 (SC) the demand confirmed by the adjudicating authority is sustainable. He also relies upon the earlier investigation conducted for holding Appellant unit as dummy of M/s NTB International.
5.?We have carefully considered the submissions made by both sides.
6.?We find that as far as classification issue is concerned the same has been finally decided and thus stands settled in favour of revenue. However so far as eligibility to claim SSI Exemption benefit by Appellant M/s Polybelt Technologies India is concerned, we find that the show cause notices involved in the present appeals were issued by relying upon earlier investigations conducted against the Appellant and M/s NTB international wherein it was held that the Appellant M/s Polybelt Technologies India is dummy concern of M/s NTB International and demands were upheld by the Tribunal vide its order dt. 01.09.2004. However in the same order the Tribunal in appeals for the subsequent periods remanded back the matter. The Appellate Tribunal directed the adjudicating authority to decide the case after considering the fact that no show cause notice has been issued for the impugned periods to M/s NTB International though small scale exemption is sought to be denied to M/s Polybelt Technologies India by clubbing clearances and that whether Clubbing canbe done for subsequent period on the basis for such clubbing for an earlier period. The adjudicating authority while deciding the issues in remand proceedings and also while adjudicating other show cause notices has given findings that the non issue of show cause notice to M/s NTB international is purely technical and also relied upon the earlier investigation and thereby confirmed the demands against the Appellant. In the appeals before us for the subsequent periods, the lower authorities adopted same analogy and confirmed the demand which was upheld by the Commissioner (Appeals). We find that the appellant were issued show cause notice even though their clearance was sought to be clubbed with M/s NTB International. Thus once the Appellant concern is alleged to be dummy concern/ fragment of M/s NTB International in that case the demand should not have been proposed against M/s. Polybelt as in the eyes of the revenue the Appellant has got no independent existence. We thus find that the impugned orders suffers from serious infirmity on this count. Once the independent existence of a concern is denied and is held to be dummy concern, in that case the duty could not have been demanded from Appellant M/s Polybelt Technologies India which is illegal. In the case of M/s Gajanan Distributors Vs. CCE Pune 1992 (57) ELT 451 (SC), the Honble Supreme Court has held that when the demand is confirmed against each of the unit whose clearance is sought to be clubbed, the revenue explicitly recognizes the independent entities of such unit. In the instant appeals, in the remand proceedings the demand has again been confirmed against the Appellant M/s Polybelt whose independent existence has been denied by the revenue. This confirmation of demand against the Appellant itself recognizes their independent existence and thus the demand made by holding the same to be part of M/s NTB international is illegal and not sustainable. We agree with the judgments relied upon by the Appellant in case of M/s Highland Dye Works Pvt. Ltd. Vs. CCE, Surat 2000 (121) E.L.T. 502 (Tribunal) wherein while setting aside the demand the Tribunal held as under :
13. In 1997 (92)? E.L.T. 451 (S.C.) in the case of Gajanan Fabric Distributors v. CCE, Pune it is held in paragraphs 2, 3 and 4 that the Collector recording the finding and same upheld by the Tribunal that all seven units except Gajanan Weaving Mills were only a corporate facade although registered with various authorities with a view to camouflage their actual identity and thereby avail of the exemption which otherwise would be inadmissible to them and yet confirming the duty demand upon all seven units and their partners or directors - demand ought to have been confirmed only against Gajanan Weaving Mills which was the assessee and liable - By confirming the demand upon all the seven units, the Collector treated them all as assessees and implicitly recognised their independent existence - matter to go back to Commissioner of Central Excise, Pune with unlimited remand for de novo adjudication without reference to either orders of the Collector and Tribunal - Sections 2(f), 3, 5A(1) and 11A of Central Excise Act, 1944 - Rule 7 of Central Excise Rules, 1944.
14. In addition to that, 2000 (115) ELT 704 in the case of Universal Industries v. CCE, Pune the above judgment is relied upon along with the precedent order dated 2-9-1999, Order Nos. 2318-2335/99/WZB/C-II [1999 (114) ELT 405 (Tri.)], wherein it is held in paragraphs 4 and 5 that for the purpose of demand clubbing of clearance of units unjustified while duty confirmed against each constituent unit. Demand may be confirmed against a single unit. In both these cases, the matter was remanded to the Commissioner, Pune to hear and send the show cause notice afresh in the light of the law settled by the judgment of the High Court and the Supreme Court up to date with parties to file additional documents if they so chose and the remand was unlimited. The matter is required to be decided independently. In the precedent Bench order indication is given that the Commissioner shall give adequate opportunity to the party to state the case and the appellant shall cooperate with the Commissioner. As against this, the ld. JDR has not submitted anything. So under these circumstances the contention of the appellant gains weight and it has to be and is accepted. The impugned order cannot sustain and it requires to be set aside only on this count. Regarding the reversal of the notional higher credit by the appellant as per the impugned order in clause (2) it depends upon the finding of the Collector/Commissioner (Appeals) that the duty liability falls on Highland Bombay which is the parent unit of the appellants, as per the case of the department.
In view of our above observations and findings we are of the view that the demand made against the Appellant M/s Polybelt is not sustainable.
7. We further find that while remanding the earlier show cause notice the Tribunal had directed the adjudicating authority to examine the basis of clubbing for an earlier period. However the adjudicating authority without examining the basis of clearances again confirmed the demand which shows that no fresh enquiries were made to determine as to how the Appellant is connected with M/s NTB and whether the facts show the mutuality of interest between the two. Since the demand was confirmed without examining the actual facts which can lead to clubbing of Appellant with M/s NTB international, we hold that on account of this count also, the demand is not sustainable. In case of M/s Jifcon Tools Pvt. Ltd. Vs. Commissioner of C. Ex., Aurangabad 2007 (208) E.L.T. 345 (Tri. - Mumbai) the coordinate bench of Tribunal on the issue of clubbing of clearances has held as under :
8.?Reliance has been placed by both sides on catena of judgments pronounced by the Tribunal to show that commonness of Directors and partners, occasional transfer of raw materials, same company staff, transfer of purchase order by one unit to another will not make them one unit for the purpose of clubbing, as long as each unit is having complete set of machine required to manufacture the goods in question. We note that all the incidence referred to by the Commissioner are in the nature of common business relations between the two units and cannot be made the basis for holding M/s. JEE as dummy of M/s. JTPL. We also note that M/s. JTPL is a limited company whereas M/s. JEE is a partnership concern. We may here refer to Boards Circular No. 6/92 dated 29-5-92 clarifying that limited companies are separate entities distant from the share holders composing it and hence each limited company is a manufacturer by itself and will be entitled to a separate exemption limit. The same cannot be clubbed with a partnership firm especially when a partnership firm is created independently and is a complete unit in itself. As such, we hold that M/s. JEE is an independent unit entitled to SSI benefit in its own right and its clearances cannot be clubbed with the clearances of JTPL.
8. We find that the Appellant from the very beginning has been contending that they have separate factory with machinery and set up. They have also been contending that there is no mutuality of interest between them and M/s NTB International and the facts relied upon for confirmation of demands in previous period no more exists. Further that the Appellant is partnership firm and M/s NTB international is a Private Ltd. Company and therefore they cannot be clubbed. The adjudicating authority has not considered any of these aspects and confirmed the demand against the Appellant firm by clubbing it with M/s NTB International which is illegal. We are therefore of the view that on this ground also the demand against the Appellant is not sustainable. Our views are also supported by the judgment of this Tribunal in the case of M/s Bentex Industries Vs. CCE, New Delhi 2003 (151) E.L.T. 695 (Tri. - Del.) wherein it was held that:
5.?The bare perusal of the impugned order shows that the learned Commissioner has clubbed the clearances of both the companies named above, broadly on the grounds; that both were working in the same building, had a shared staff and machinery, the Managing Director of one company was proprietor of another, the brand names being used by both the companies were also similar with little variation, the advance income-tax of the Director of the Company, appellants no. 1, was paid by the Director of the other company, they had common telephone facilites, even the raw material was also purchased by them under same documents, payment in respect of one unit was being received by another, inward register was common, there was transfer of labour from one unit to another, as well as on some other grounds detailed in the order itself. But, in our view, all these facts, circumstances and grounds were inconclusive and insufficient in the eyes of law for clubbing the clearance of both the companies. The duty has been demanded in the show cause notice from both the companies and same had been even confirmed by the Commissioner through the impugned order against both of them. This fact itself is enough to prove that the Department itself had accepted both the companies, as independent units, otherwise the duty was to be demanded/confirmed only from one unit which was the main and not from the another which was dummy. In this context, the observations of the Apex Court in the case of Gajanan Fabrics and Distributors v. CCE, 1997 (92) E.L.T. 451 (S.C.), can be read with advantage.
6.?It is also evident from the record that appellants no. 2 was not even availing the benefit of SSI after 1-4-1995 for having crossed the limit of Rs. 2 crores and for this reason also, there could not be clubbing of the clearances of this company with that of company, appellants no. 1. Moreover, the appellants no. 1 is a Private Limited company, whereas appellants no. 2 is only a Proprietorship concern. Both have got distinct legal identities. The mere fact that in the company, appellants no. 1, the major shares were held by Shri R.L. Chopra and his family members, while company, appellants no. 2, was the sole concern of Shri R.L. Chopra could not be taken to be enough to infer legally that one of these two companies, was a dummy one. Even the Commissioner in the impugned Order has not recorded any specific findings regarding the dummy character of any of these two companies. He has confirmed duty demand against both of them by treating them as independent units.
7.?There is no tangible evidence on the record to prove the financial flow back from one company to another. Mere sharing of company telephone, office, labour, on certain occasions receipt of raw material, etc., as detailed in the impugned order were not sufficient in the eyes of law to club the clearance of both the units. In the case of Indian Metal Industries v. CCE, Bhubaneshwar, 1999 (108) E.L.T. 593 (Tribunal), it has been observed that financial flow back between the two units is essential for clubbing their clearances. Similarly, in the case of CCE, Rajkot v. Amar Plast Industries, 2000 (115) E.L.T. 482 (Tribunal), it has been ruled that use of common premises, telephone, common electric generator and cutting/mixing machines are not enough for clubbing the clearances of both the units.
8.?Regarding use of the brand name by the two units, it has been observed by the Tribunal in the case of Arvind Nanda v. CCE, Meerut, 2001 (136) E.L.T. 416 (Tribunal), that the same cannot result in clubbing of the clearances of both the units. Similarly, in the case of Karnataka Gears (P) Ltd., Concord Steel Works Ltd. v. CCE, Bangalore, 1999 (110) E.L.T. 529 (Tribunal) = 1998 (29) RLT 543 (T), it has been held by the Tribunal that just because two limited companies were interested in the business of each other, their clearances could not be clubbed, holding one to be dummy of another.
9.?Similarly, in the case of Applied Research & Engg. (P) Ltd, v. CCE, Pune, 1997 (89) E.L.T. 494 (Tribunal), it has been observed that clubbing of a limited company with a partnership firm, although having some common factors, is not permissible. The use of same premises/shed, common management, common office, some common labour, common goods, had been also held to be insufficient for clubbing the clearances of two units, by the Rajasthan High Court in the case of Renu Tandon v. U.O.I., 1993 (66) E.L.T. 375 (Raj).
10.?From the record, we find that both the companies stand duly registered with the State and Central Excise Authorities as well as Sales Tax Department independently. They have got their separate registration numbers for the purposes of labour, industrial law, provident fund, income-tax, etc. It is also evident from the record that earlier also the Central Excise Department issued show cause notice to both these companies for denying the benefit of SSI on the ground that they were using the brand name of another person who was not entitled to the benefit of said exemption. The Commissioner even had already in that show cause notice confirmed the duty demand against both of them. This also goes long way to prove that the Excise Department had accepted both these companies as independent/separate identities and units. This circumstance, in fact, debars the Department from now taking somersault and to plead that only one company is the main unit while the other is a dummy one.
9. In view of our above observations, we therefore hold that the demands against the Appellant M/s Polybelt Technology are not sustainable and we therefore set aside the demand and penalties against them. Since the demand itself is not sustainable, we hold that the revenues appeal towards imposition of penalty against M/s Polybelt is also not sustainable. We therefore allow the appeals filed by M/s Polybelt Technolgies India with consequential reliefs and dismiss the appeal filed by the revenue.
(Pronounced in court on 28/04/2016)
(Raju)
Member (Technical)
(Ramesh Nair)
Member (Judicial)
SM.
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Appeal No. E/3573/2004 & Ors.