2004 (3) TMI 461 - AT - Central Excise

Summary

Issues Involved: The issue involved in this case is whether the clearances of two units, GEI and GEC, can be clubbed together for the purpose of exemption under Notification 175/86.

Summary:
1. The officers of Central Excise visited the premises of GEI and GEC and observed various interconnected activities between the two units. A show cause notice was issued alleging that GEC and another unit, EGO Therm (India), were created to camouflage GEI's production to wrongly avail exemption under Notification 175/86. The Commissioner adjudicated the notice, holding that the clearances of GEI and GEC can be clubbed for exemption purposes. A demand and penalty were imposed on GEI, leading to this appeal.

2. Upon hearing both sides, it was found that the clearances of GEI and GEC were clubbed based on common proprietary interest as Shri S.J. Lilani was associated with both units. However, it was noted that mere common ownership is not sufficient, citing a precedent where clearances of units owned individually and under HUF were not clubbed. Factors like common brand name and office premises were deemed insufficient to establish common proprietary interest. The crucial aspect of financial flowback and mutual interest between the units was absent in this case.

3. Following the precedent set in a previous Tribunal order, it was held that the clearances of GEI and GEC cannot be clubbed for denying exemption under Notification 175/86. The impugned order was set aside, and the appeal was allowed.