2003 (9) TMI 610 - AT - Central Excise

Summary

Issues:
- Clubbing of clearances for calculating exemption limit under Notification No. 175/86-CE dated 1-3-1986.

Analysis:
The case involved a dispute regarding the clubbing of clearances of a manufacturer and a job worker for the purpose of calculating the exemption limit under Notification No. 175/86-CE dated 1-3-1986. The respondents, engaged in manufacturing textile hose pipes, outsourced part of their production to another entity, M/s. Fibrotex, for rubber lining on a job work basis. M/s. Fibrotex then sold the processed goods directly to customers of the respondents under the respondents' direction and at their sale price. The department issued show cause notices proposing recovery of differential duty, alleging that the clearances of both entities should be clubbed together for exemption limit calculation. The Assistant Commissioner initially dismissed the show cause notices, finding no evidence to prove control or lack of arm's length transactions between the entities. The Commissioner (Appeals) upheld this decision, leading to the Revenue's appeal.

Upon hearing both parties, the Tribunal found no evidence supporting the Revenue's claim that the respondents exercised full control over the job worker, justifying the clubbing of clearances. The Revenue failed to establish mutuality of interest or financial flow back between the respondents and the job worker. As a result, the Tribunal upheld the Commissioner (Appeals)'s order, rejecting the Revenue's appeal. The absence of proof regarding control or mutual interest between the entities led to the decision in favor of the respondents, emphasizing the importance of substantiating such claims with concrete evidence in disputes involving clubbing of clearances for exemption limit calculations.