2009 (4) TMI 767 - AT - Central Excise

Stay/Dispensation of pre-deposit - SSI Exemption - Clubbing of clearances - Formerly employee given some help by applicant by renting out the adjacent premises and some old machinery for his use for manufacturing processes

Summary

Issues:
1. Whether M/s. Seating Systems is a dummy unit set up to split clearances from M/s. Pandey Furniture Pvt. Ltd.
2. Whether the clearances made by M/s. Seating Systems can be treated as clearances of M/s. Pandey Furniture Pvt. Ltd.
3. Whether there is sufficient evidence to establish mutuality of interest and financial flow back between the two firms.

Analysis:
1. The case involved a situation where Shri Raj Kishore, a former employee of M/s. Pandey Furniture Pvt. Ltd., set up a separate entity named M/s. Seating Systems to manufacture chairs. The authorities alleged that this was a tactic to split clearances from the Pvt. Ltd. Co. and evade duties. The Commissioner (Appeals) initially held the firms as independent but relied on certain commonalities to link them.

2. The Advocate for the applicant argued against this connection, stating that Shri Raj Kishore was merely given some assistance by M/s. Pandey Furniture Pvt. Ltd., such as renting premises and machinery. The Commissioner (Appeals) and the Departmental Representative reiterated their findings on the unusual link between the two entities, but the Tribunal found insufficient evidence to prove the mutual interest and financial flow back between them.

3. The Tribunal noted that the statement of Shri Raj Kishore was retracted, and there was no admission statement from Shri K.N. Pandey or others involved. They highlighted that many submissions were not thoroughly investigated to ascertain the truth. Due to the lack of conclusive evidence, the Tribunal ruled in favor of the applicants, waiving the pre-deposit of dues and staying the recovery until the appeals were disposed of.

This judgment underscores the importance of substantial evidence in establishing connections between entities for duty-related matters and the necessity for thorough investigations to determine the veracity of claims made during legal proceedings.