2004 (8) TMI 584 - AT - Central Excise

SSI Exemption - Value of clearances - Clubbing of clearance made by a partner in his individual capacity from the proprietary unit with the clearance of a partnership firm to which he is a partner under Notification No. 175/86 u/s Company s Law/Partnership Act - HELD THAT - In order to club the turnover of two concerns it has to be proved by adducing evidences that one firm is dummy or camouflaging the others. In the present case there is no such allegation in the show cause notice and there is no iota of evidence in this regard. The same view was expressed in the case of Prabhat Dyes Chemical v. Collector of Central Excise 1992 (7) TMI 186 - CEGAT NEW DELHI . The same view has been expressed by the Hon ble Supreme Court in the case of Assistant Collector of Central Excise Customs Surat Others v. Shri J.C. Shah M/s. Jayantilal Babubhai Others 1962 (9) TMI 1 - SUPREME COURT . The decisions submitted by the ld. JDR are not applicable in the present circumstances. In the case of Supreme Engineering Works v. Collector of Central Excise 1993 (5) TMI 178 - CEGAT NEW DELHI the Tribunal held that the Collector s conclusion based on ample evidence regarding common control of production and sales among the units having special financial relations shown to be not on a principal to principal basis. In the case of Collector of Central Excise Chandigarh v. Densons Pultroteknik 1993 (12) TMI 133 - CEGAT NEW DELHI the Tribunal held that one or more factories were controlled by the same manufacturer and it was held that the value of clearances of the two units clubbed together. The facts of the present cases are distinguishable and the ratio of the aforesaid cases are not applicable in the present case. In view of the above discussions appeal deserves to be allowed. Cross Objection (CO) also gets disposed of. Consequently after setting aside the impugned order we allow the appeal with consequential relief to the appellants.

Summary

Issues Involved: Clubbing of clearances made by two firms under Notification No. 175/86 u/s Company's Law/Partnership Act.

Summary:
1. The appellant argued that the Commissioner's order to club the clearances of two firms, one being a proprietary firm and the other a partnership firm, was incorrect. Citing legal precedents, the appellant emphasized the distinct identity of the two firms and that the clearances should not be clubbed together.

2. The respondent contended that both firms were set up to enjoy duty exemption and manufactured similar goods. Relying on legal cases, the respondent argued that the control of both firms was with Mr. Jindal, justifying the clubbing of clearances for duty exemption purposes.

3. The Tribunal noted that as per the Company's Law/Partnership Act, there is a clear distinction between a proprietary firm and a partnership firm. The Tribunal agreed with the appellant that the clearances of the two firms should not be clubbed together as they have separate identities and operate independently.

4. It was emphasized that to club the turnover of two concerns, evidence must be provided to show that one firm is a dummy or camouflaging the other. In this case, no such evidence was presented, and legal precedents were cited to support the appellant's argument that the clearances should not be clubbed together.

5. Ultimately, the Tribunal set aside the Commissioner's order and allowed the appeal in favor of the appellants, granting them consequential relief. The Tribunal found that the facts of the case did not warrant the clubbing of clearances made by the two separate firms under Notification No. 175/86.