Customs, Excise and Gold Tribunal - Delhi
Shiplachem vs Commissioner Of Central Excise on 13 September, 2004
Equivalent citations: 2005(187)ELT360(TRI-DEL)
ORDER V.K. Agrawal, Member (T)
1. These are two appeals against the common Order-in-Appeal No. 541-542/03 dated 25-9-2003 passed by the Commissioner (Appeals). One appeal has been filed by M/s. Shiplachem whereas the 2nd appeal has been filed by the Revenue.
2. We heard Shri S.J. Vyas, learned Advocate and Smt. K.A. Mishra, learned S.D.R. Briefly stated, the facts are that M/s. Shiplachem manufacture P or P Ayurvedic Medicines which are sold by them through M/s. Shiplachem Distributors which is owned by Shri T.S. Bhandari. There was one more unit in name and style of M/s. Herbal Formulations manufacturing Ayurvedic Medicaments, A show cause notice was issued for demanding Central Excise duty on the ground of undervaluation of the goods and clubbing the clearance of M/s. Herbal Formulations. The Joint Commissioner, under Order-in-Original No. 18/01, dated 21-8-2001, confirmed the demand of duty and imposed penalty on M/s. Shiplachem besides imposing the penalty on Shri T.S. Bhandari, Manager and Power of Attorney holder. On appeal, filed by them, the Commissioner (Appeals) under the impugned Order, has held that M/s. Shiplachem Distributors, the proprietory concern owned by Mr. Bhandari is related person to M/s. Shiplachem owned by his wife and, therefore, the sale price of the distributor has to taken into consideration for the purpose of computation of value of clearance under Small Scale Exemption Notification. The Commissioner (Appeals), however, did not uphold the clubbing of clearance of Shiplachem and Herbal Formulations as no show cause notice had been issued to M/s. Herbal Formulations. The Commissioner (Appeals) also had given a special finding that the value of clearances of Herbal Formulations cannot clubbed for the purpose of SSI Exemption. The Commissioner (Appeals) had also reduced the penalty on M/s. Shiplachem and set aside the penalty imposed on Shri T.S. Bhandari.
3. The Revenue has filed the appeal on the ground that the clearances of Herbal Formulations have to clubbed with the value of clearances of M/s. Shiplachem as Shri T.S. Bhandari is the proprietor of Herbal Formulations and has the Power of Attorney for Shiplachem; that both Shiplachem and Shiplachem Distributors are the same and the only employee of distributor firm is working as Receptionist for both the units and sitting in the office of Shiplachem only; that technical employees of Shiplachem also work for the distributor firm; that all the work of Shiplachem unit is looked after by Shri T.S. Bhandari, her husband who is the proprietor of Herbal Formulations; that in fact Shiplachem is actually owned and controlled by Shri T.S. Bhandari only; that as such the facts proved the financial flow back as well as common control of both the units.
4. After considering the submissions of both the sides, we do not find any reason to interfere with the decision of the Commissioner (Appeals) in the impugned Order relating to disallowing the clubbing of clearances of both the units, ft is not the case of the Revenue that any show cause notice was issued by the Revenue to M/s. Herbal Formulations directing them to show cause as to why their value of clearances should not be clubbed with the valuation of clearances of M/s. Shiplachem. It has been held by the Tribunal in the case of Ramsay Pharma (P) Ltd, v. C.C.E., Allahabad, 2001 (127) E.L.T. 789 that "when a demand is raised by clubbing of the value of two units, and show cause notice has been issued to only one unit and not to the other, when the separate existence of both the units was projected, the notice is bad in law. In absence of any notice to M/s. Herbal Formulations, therefore, the value of clearances cannot be clubbed with the value of clearances of Shiplachem. Accordingly, the appeal filed by the Revenue is rejected.
5. Shri J.M. Vyas, learned Advocate, has not contested the matter on merit and as such the finding of the Commissioner (Appeals) that M/s. Shiplachem and M/s. Shiplachem Distributors are related persons and the sale price of Shiplachem Distributors is to be taken for computing the value of clearances is upheld. M/s. Shiplachem is only challenging the confirmation of penalty of Rs. 70,000/- on the ground that the amount of penalty can be decided only on the basis of amount of duty confirmed against the assessee. Their contention is that in the impugned Order the amount of duty has not been quantified and, therefore, imposition of penalty of any specified amount is incorrect. We find force in the submissions of the learned Advocate. The quantum of penalty does have nexus to the amount of duty confirmed against the assessee. In the present matters, the Commissioner (Appeals) has held in favour of the assessee as far as clubbing is concerned whereas he has upheld the allegation of related person against M/s. Shiplachem. The demand of duty confirmed by the Joint Commissioner is, therefore, to be re-computed. We, therefore, set aside the imposition of the penalty on M/s. Shiplachem and remand the matters to the jurisdictional Adjudicating Authority with the direction to consider the imposition of penalty after quantifying the duty against M/s. Shiplachem and after affording a reasonable opportunity of hearing to them. The appeals are disposed of in these terms.
(Operative part of order pronounced in open Court on 13-9-2004)