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Home Case Index All Cases Central Excise Central Excise + AT Central Excise - 2010 (7) TMI AT This

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2010 (7) TMI 854 - AT - Central Excise

Issues:
Waiver of pre-deposit of duty demand, interest, and penalty under Central Excise Act, 1944 for M/s. Servokon Systems Pvt. Ltd. and its Director. Clubbing of clearances of M/s. Servokon and M/s. Powerkon Systems. Imposition of penalty and confiscation of goods.

Analysis:
The case involved applications for waiver of pre-deposit of duty demand, interest, and penalty amounting to Rs. 20,11,317 against M/s. Servokon Systems Pvt. Ltd. and its Director under the Central Excise Act, 1944. The dispute arose from the alleged evasion of Central Excise Duty by splitting manufacturing activities between M/s. Servokon and M/s. Powerkon Systems, both manufacturing Voltage Stabilizers under the brand name 'SERVOKON'. The Central Excise Officers conducted a search where irregularities were found, leading to the issuance of a show cause notice proposing clubbing of clearances, duty demand, penalty imposition, and confiscation of goods.

The Joint Commissioner's order confirmed the duty demand, penalty imposition, and confiscation of goods against M/s. Servokon. On appeal, the Commissioner(Appeals) upheld the decision, leading to the filing of further appeals and stay applications by M/s. Servokon and its Director. The Appellant argued that M/s. Servokon and M/s. Powerkon Systems were separate legal entities, denying the allegations of common operations and staff. They sought waiver of pre-deposit based on a prima facie case.

The Department opposed the waiver, asserting that the units were interdependent, sharing resources and manufacturing similar products under the same brand. The Department contended that the duty evasion was clear, justifying the penalty imposition. The Tribunal examined the submissions and evidence, finding that the units were effectively operating as one entity under the control of the Director. The burden of proving independence was not met by the Appellants, leading to a strong prima facie case for the Department.

In its decision, the Tribunal directed M/s. Servokon to pay Rs. 18,11,317 and the Director to pay Rs. one lakh within eight weeks. Compliance was to be reported by a specified date, with waiver of pre-deposit of interest and the remaining penalty amount contingent on timely payment. The recovery was stayed pending appeal disposal, emphasizing the lack of total waiver due to the Department's strong case.

In conclusion, the judgment addressed the issues of duty evasion, clubbing of clearances, and penalty imposition, highlighting the need for payment by the Appellants while granting partial waiver and stay on recovery. The decision underscored the importance of proving independence in cases involving multiple entities to avoid duty evasion through artificial splitting of operations.

 

 

 

 

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