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2007 (5) TMI 546 - AT - Central Excise
Issues involved: Clubbing of clearances of three units and denial of SSI notification benefit.
Clubbing of clearances: The adjudicating authority found that the three units were independent entities, registered separately before the SSI benefit was available. Each unit had distinct characteristics such as separate registrations, bank accounts, machinery, and tax numbers. The units were established for legitimate commercial reasons, not to evade duty. The authority concluded that the production of the units could not be clubbed together as they were separate manufacturers under Section 2(f) of the Central Excise Act, 1944. The proviso to Section 11-A(1) was deemed inapplicable due to separate registrations and the time bar issue was also ruled in favor of the units. Time bar issue: The adjudicating authority determined that the department was aware of the units' operations as they were under one Regional Officer and filed separate monthly returns. Consequently, the proviso to Section 11-A(1) was held not applicable, and the larger period of five years could not be invoked. As there was no demand of duty on merits or limitation, penal action against the units was not warranted, except for the confirmed duty on shortages of texturised yarns. Arguments and decision: The Joint CDR argued for clubbing the clearances based on common premises and management, citing relevant case law. In contrast, the respondents' advocate contended that the units operated independently before duty imposition, supported by a CBEC Circular and legal precedents. The appellate tribunal agreed with the adjudicating authority's findings, emphasizing the units' separate functioning and legal status as private limited companies or a partnership firm. The Board's circular supported the conclusion that the units were distinct entities, and there was no evidence of setting up the units to exploit SSI benefits improperly. Consequently, all three appeals by the Revenue were dismissed. *(Dictated and Pronounced in Court)*
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