2014 (1) TMI 1743 - AT - Central Excise

Waiver of pre-deposit - Demand of duty - formation of different units and operating with the common object or contributory factors - Held that - taking into consideration the financial difficulties, we do appreciate that the appellant may be deprived of process of hearing if undue hardship is cause to them. But no merit found in the plea of financial hardship because the interest of Revenue on the other-hand shall suffer if there is no direction for pre-deposit. Not only we appreciate that there shall be no hardship to the appellants by our interim order but also no undue hardship is expected to be caused to appellant. Public interest demands direction for pre-deposit is essential to safeguard interest of justice without causing irreparable injury to either side. Therefore, the appellant is directed to deposit ₹ 50,00,000/- (Rupees fifty lakhs) in 10 equal monthly instalments of 5 Lakhs each to be payable by 25th of each month and first instalment shall commence from February, 2014. So far as stay application of Shri Ashok Kumar is concerned, we direct that the said appellant shall deposit ₹ 5,00,000/- in 3 instalments of ₹ 2,00,000/- each by 25th February and 25th March. The cost instalment of ₹ 1,00,000/- is to be deposited 25th April.

Summary

Issues:
1. Allegation of clubbing of multiple business concerns under Central Excise law.
2. Financial and managerial control over different units by father and son.
3. Allegation of interconnected deals and commonality between the units.
4. Financial hardship plea and time bar submission.

Issue 1: Allegation of Clubbing of Multiple Business Concerns:
The case involved the allegation of clubbing multiple business concerns under Central Excise law. The appellant argued that the mere relation between individuals did not automatically make a person an assessee under the law. The Tribunal observed the sequential formation of different concerns by the father and son, noting the commonality of certain deals and intimate connections between the units. The Department had alleged that all four units were controlled and administered by the father and son duo, constituting one manufacturer. The Tribunal acknowledged the Department's stance but emphasized the need for a detailed examination of evidence during regular hearings.

Issue 2: Financial and Managerial Control Over Different Units:
The Tribunal considered the financial and managerial control exercised by the father and son over different units. It was noted that there were common financial interests and management personnel across the units. The Tribunal highlighted the possibility of forming different units to potentially take advantage of exemptions, but refrained from making any conclusive judgments at that stage. While acknowledging the financial difficulties faced by the appellants, the Tribunal emphasized the importance of safeguarding the Revenue's interests through a pre-deposit directive. The Tribunal directed the appellants to make specified deposits in monthly installments to ensure compliance with the order.

Issue 3: Allegation of Interconnected Deals and Commonality:
The case involved allegations of interconnected deals and commonality between the units. The Department presented various grounds, including shared labor, administrative staff, office space, and financial transactions among the units. The Tribunal considered these allegations and the admissions made by the individuals involved. Despite the appellant's plea of financial hardship and time bar, the Tribunal stressed the necessity of a pre-deposit to protect the interests of justice and the Revenue. The Tribunal issued specific directives for deposit amounts and timelines, emphasizing the importance of compliance to avoid further litigation.

Issue 4: Financial Hardship Plea and Time Bar Submission:
The appellants raised a plea of financial hardship and argued that the demand was time-barred. However, the Tribunal found no merit in the financial hardship plea, stating that the Revenue's interests would suffer without a pre-deposit directive. The Tribunal acknowledged the appellants' concerns but emphasized the need to balance the interests of both parties. Despite the submission of a time bar, the Tribunal found it impractical to accept the plea at that stage, considering the elements presented in the case. The Tribunal directed the appellants to make specified deposits to ensure compliance with the order and safeguard the interests of justice.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, and the Tribunal's reasoning behind its directives regarding the clubbing of multiple business concerns under Central Excise law, financial and managerial control over different units, interconnected deals, and the plea of financial hardship and time bar submission.