2003 (8) TMI 273 - AT - Central Excise

Issues Involved:
1. Clubbing of clearances of multiple units.
2. Lack of evidence to support the allegations.
3. Determination of duty liability and penalties.
4. Independent existence of units and their assessment under tax laws.
5. Allegations of dummy units created to evade duty.
6. Requirement of indispensable machines for manufacturing.
7. Financial flow back and management of affairs by a single individual.

Detailed Analysis:

1. Clubbing of Clearances of Multiple Units:
The appellants are engaged in the manufacture of RTS grills, clamps, distribution boxes, etc., and the department alleged that the units were essentially one entity to avoid central excise duty. The original authority concluded that clubbing of clearances was justified, demanding duty of Rs. 27,80,571.67 under Section 11A of the CE Act, 1944, and imposed penalties. However, the adjudicating authority did not specify the duty liability among the units, while imposing penalties on all.

2. Lack of Evidence to Support the Allegations:
The appellants argued that the department failed to present any evidence to support the allegations in the show cause notices. The original authority's findings were not backed by any evidence, and the Commissioner (Appeals) upheld the order without detailed examination. The show cause notice was criticized for its poor wording and lack of specific evidence or records.

3. Determination of Duty Liability and Penalties:
The original authority imposed penalties on all units but did not specify who should discharge the duty liability. The Tribunal noted that if the units were merely on paper, imposing penalties on them was contradictory. The Tribunal cited previous judgments where similar matters were remanded for reconsideration due to vague orders and lack of clarity on duty liability.

4. Independent Existence of Units and Their Assessment Under Tax Laws:
The appellants contended that all units were separate and independent entities, assessed separately under Sales Tax and Income-tax laws. They argued that the units were not dummy entities created by R.D. Pandian. The Tribunal observed that the lower authorities did not provide evidence to disprove the independent existence of the units.

5. Allegations of Dummy Units Created to Evade Duty:
The department alleged that the units were dummy entities created by R.D. Pandian to evade duty. However, the Tribunal found no evidence to support this claim. The appellants supplied goods to Tamil Nadu Electricity Board based on tenders, not contractual obligations, and the department did not disprove this.

6. Requirement of Indispensable Machines for Manufacturing:
The lower authorities claimed that the units lacked indispensable machines for manufacturing. The appellants countered that no sophisticated machinery was required for their products and that the department did not visit the premises with any expert to verify this claim. The Tribunal noted the lack of evidence to support the department's conclusion.

7. Financial Flow Back and Management of Affairs by a Single Individual:
The original authority alleged that R.D. Pandian managed all units' affairs to evade duty. However, the Tribunal found no evidence of financial flow back or concrete evidence to support this claim. The Tribunal emphasized that mere findings without evidence were insufficient to prove financial flow back or mutual interest among units.

Conclusion:
The Tribunal set aside the impugned order and remanded the matter for de novo consideration, instructing the original authority to provide effective hearing opportunities to the appellants and consider the cited case laws. The Tribunal did not express any opinion on the merits of the case and allowed the appellants to present evidence during the de novo proceedings. The appeals were allowed by remand.

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