2010 (1) TMI 1052 - AT - Central Excise

Issues Involved:
1. Waiver of pre-deposit requirement under Section 35F of the Central Excise Act, 1944.
2. Allegation of artificially splitting a single manufacturing unit into four entities to avail duty exemption.
3. Confirmation of duty demands, interest, and penalties under various sections of the Central Excise Act and Rules.
4. Revocation of separate central excise registrations and direction to obtain a single registration.

Detailed Analysis:

1. Waiver of Pre-deposit Requirement:
The appellants sought a waiver from the pre-deposit requirement under Section 35F of the Central Excise Act, 1944, for duty demands, interest, and penalties confirmed against them. The Tribunal considered the submissions from both sides regarding the prima facie case and the financial hardship claimed by the appellants.

2. Allegation of Artificial Splitting:
The central issue was whether the four companies (NPPML, NPML, NPPL, and CKML) were genuinely independent units or were artificially split to avail duty exemption under various notifications. The Department alleged that the units were functioning as one entity controlled by the same family members, with common facilities and interdependencies, thereby making them ineligible for separate duty exemptions.

- Appellant's Argument:
- Each company had a separate identity, factory, and central excise registration.
- The units were independently functioning and manufacturing different products.
- The Department's demand for duty from each unit separately indicated that they were treated as separate entities.

- Department's Argument:
- The units were owned by the same family, with common purchase of raw materials, attendance registers, and boiler for steam supply.
- Instances of one unit making payments on behalf of another and shared manufacturing facilities indicated that they were functioning as a single unit.
- During inspections, some units showed no manufacturing activity but still reported production and clearances.

3. Confirmation of Duty Demands, Interest, and Penalties:
The Tribunal reviewed the facts and evidence, including statements from company officials and seized records, which indicated significant interconnections and shared resources among the units. The Commissioner had confirmed duty demands and imposed penalties under Section 11AC of the Central Excise Act, 1944, and Rule 26 of the Central Excise Rules, 2002.

- Duty Demands:
- Rs. 2,65,23,790/- from NPPML
- Rs. 1,77,08,854/- from NPML
- Rs. 2,61,26,881/- from NPPL
- Rs. 1,26,22,075/- from CKML

- Penalties:
- Equal amounts to the duty demands under Section 11AC.
- Additional penalties of Rs. 1,50,00,000/- each on NPPML and NPPL under Rule 26.

4. Revocation of Separate Central Excise Registrations:
The Commissioner had revoked the separate central excise registrations of the four units, directing them to obtain a single registration, which was contested by the appellants.

Conclusion:
The Tribunal concluded that the four companies were for all practical purposes being run as one factory, artificially split to avail of duty exemptions. The appellants were directed to deposit the entire amount of duty demands within eight weeks, with the requirement of pre-deposit of interest and penalties waived upon compliance. The compliance was to be reported on 5-4-2010. The Tribunal found sufficient prima facie evidence to support the Department's allegations, thus denying the total waiver from the pre-deposit requirement.

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