2003 (9) TMI 679 - AT - Central Excise

Summary

Issues Involved:
1. Clubbing of Clearances
2. Classification of Wet Grinders
3. Invocation of Longer Period of Limitation
4. Cum-Duty Price Treatment
5. Eligibility for Modvat Credit

Issue-wise Detailed Analysis:

1. Clubbing of Clearances:
The primary issue was whether the clearances of multiple units should be clubbed for the purpose of demanding duty. The Commissioner concluded that all units were dummy units created by the main unit's proprietor, Shri P. Natarajan, to evade central excise duty. Evidence included shared management, financial interdependencies, and common control of production and sales. Natarajan admitted to managing all units, using funds interchangeably, and selling products under different brand names. The Tribunal upheld the Commissioner's decision, rejecting the appellants' arguments about their independent operations and separate registrations under various tax statutes. The Tribunal emphasized that overwhelming evidence supported the finding of dummy units, and the plea of separate registration was insufficient to prove independence.

2. Classification of Wet Grinders:
The appellants argued that wet grinders should be classified under Heading 8479 instead of 8509. The Tribunal referred to the Harmonized System of Nomenclature (HSN) and concluded that wet grinders with self-contained electric motors are correctly classifiable under Heading 8509, as they are electro-mechanical domestic appliances. The Tribunal distinguished this case from previous judgments where grinders without built-in motors were involved.

3. Invocation of Longer Period of Limitation:
The Tribunal agreed with the Commissioner's decision to invoke the longer period of limitation. The Tribunal found that Natarajan had suppressed crucial information, including the managerial control over all units, the placement of purchase orders, and the clearance of goods without documentation. These actions justified the extended limitation period for demanding duty.

4. Cum-Duty Price Treatment:
The appellants contended that the duty should be abated from the cum-duty price. The Tribunal found merit in this argument, citing the Larger Bench decision in Srichakra Tyres Ltd. v. CCE, which mandated that duty demanded after the sale of goods should be abated from the cum-duty price. The Tribunal remanded this aspect for de novo consideration to rework the assessable value accordingly.

5. Eligibility for Modvat Credit:
The Commissioner had denied Modvat Credit due to improper declarations. The Tribunal noted that the substantive benefit of Modvat Credit should not be denied merely for procedural lapses in declarations. The Tribunal remanded this issue for verification of the duty-paying documents, allowing the appellants to claim Modvat Credit if otherwise eligible.

Conclusion:
The Tribunal partially allowed the appeal by M/s. Jothiprabha Industries, remanding the issues of cum-duty price and Modvat Credit for further verification. The appeals by the other units were dismissed, affirming the Commissioner's findings that they were dummy units created to evade duty. The Tribunal upheld the clubbing of clearances, classification under Heading 8509, and the invocation of the longer period of limitation.