2014 (10) TMI 875 - HC - Central Excise

SSI Exemption - Clubbing of the value of clearances - Whether value of clearances made by M/s. Parag Industries was required to be clubbed with the clearances made by the appellant - Extended period of limitation - Tribunal in 2013 (11) TMI 689 - CESTAT NEW DELHI has confirmed the demand - Held that - Revenue clearly proves its case establishing total concern control nexus and inseparable link between the assessee and its other proprietary concern viz. Parag Industries The question is fully covered by the decision of the Apex court in the case of Modi Alkalies & Chemicals Ltd. 2004 (8) TMI 108 - SUPREME COURT OF INDIA . In the subsequent decision of the Apex Court in Parle Bislery Pvt. Ltd. 2010 (12) TMI 26 - Supreme Court of India the view taken in earlier decision has been upheld and thus the above two decisions of the Apex Court are binding on us. - Appeal dismissed - Decided against the assessee.

Summary

Issues Involved:

1. Eligibility for Small Scale Industry (SSI) Exemption under Notification No.7/97-CE.
2. Clubbing of clearances of two units for the purpose of SSI exemption.
3. Applicability of precedents set by the Apex Court in similar cases.

Issue-wise Detailed Analysis:

1. Eligibility for Small Scale Industry (SSI) Exemption under Notification No.7/97-CE:

The appellant, engaged in the manufacture of FRP Fans and FRP Cooling Towers, claimed SSI exemption under Notification No.7/97-CE for the financial year 1997-98. Simultaneously, another firm, M/s. Parag Industries, also availed SSI exemption. The Central Government issued show cause notices alleging that both units were owned by the same manufacturer, thus disqualifying them from SSI exemption. The appellant contested this, asserting that both units manufactured different products, operated independently with separate factory licenses and Central Excise Registrations.

2. Clubbing of clearances of two units for the purpose of SSI exemption:

The Assistant Commissioner, Central Excise, Ujjain, confirmed the demand and imposed penalties, holding that the clearances of both units should be clubbed as they belonged to the same manufacturer. The CESTAT initially remanded the matter to the Commissioner (Appeals), who set aside the Assistant Commissioner's order. However, the CESTAT later reversed this, supporting the clubbing of clearances based on consolidated financial statements, common balance sheets, shared administrative staff, and interdependent financial operations between the units.

3. Applicability of precedents set by the Apex Court in similar cases:

The appellant cited the Apex Court's decision in Rollatainers Limited v. Commissioner of Central Excise, which held that two factories with separate staff, management, and Central Excise Registrations, producing different products, should be treated as separate entities eligible for exemption. Conversely, the respondent referred to Parle Bisleri Private Limited v. Commissioner of Customs & Central Excise, where the Court emphasized that interdependent companies with consolidated financial control should have their clearances clubbed. The Tribunal found the latter case more applicable, highlighting pervasive financial and management control as key factors.

Judgment:

The High Court dismissed the appeal, finding no substantial question of law. It upheld the Tribunal's decision, aligning with the precedents set by the Apex Court in Modi Alkalies & Chemicals Ltd. and Parle Bisleri Pvt. Ltd., which emphasized financial and management interdependence as grounds for clubbing clearances. The Court concluded that the Tribunal's view was well-founded and based on binding precedents, thereby affirming the clubbing of clearances and denying the SSI exemption to the appellant.