2016 (1) TMI 1332 - AT - Central Excise

SSI Exemption - clubbing of clearances - Held that - To club the turn-over of two units which are statutorily recognized by various Government authorities, evidences should have been put forth by the Revenue to the effect that one or other of these units is merely a dummy unit with no manufacturing facility or clearance of its own - In the present case, no such evidence has been brought on record - clubbing of turn-over is not permissible - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Clubbing of turnover for SSI exemption.
2. Allegations of shared resources and financial transactions.
3. Recognition as separate legal entities by various government departments.
4. Distinct manufacturing processes and premises for each unit.
5. Lack of evidence to support clubbing of turnover.

Analysis:
1. The case involved two appeals by the Revenue against the order of the Commissioner(Appeals-III), Hyderabad, regarding the denial of SSI exemption by clubbing the turnover of two respondent units. The original authority confirmed the demand for Central Excise duty and penalties on both units. The Commissioner(Appeals) allowed the appeal, setting aside the clubbing of turnover, leading to the Revenue's appeals before the Appellate Tribunal.

2. The Revenue argued that the partners of both units were common, shared resources, and had unaccounted financial transactions. They contended that the Commissioner(Appeals) erred in not allowing the clubbing of turnover for SSI exemption. On the other hand, the respondents' counsel emphasized the units' recognition as separate legal entities by various government departments, different manufacturing processes, establishment in different years, and absence of financial flow between them, supported by maintained accounts and a Chartered Accountant's certificate.

3. After hearing both sides and examining the records, the Tribunal found a lack of material evidence from the Revenue to contest the Commissioner(Appeals)'s findings. The Tribunal highlighted that for clubbing turnover of statutorily recognized units, evidence of one unit being a dummy entity was essential, which was absent in this case. The Commissioner(Appeals) had thoroughly analyzed the case and concluded that clubbing turnover was not permissible based on factual and legal considerations, as detailed in the order.

4. The Tribunal, therefore, dismissed the Revenue's appeals, upholding the Commissioner(Appeals)'s decision. The judgment emphasized the importance of presenting substantial evidence to support allegations of clubbing turnover for SSI exemption and affirmed the recognition of the units as separate legal entities by various government departments.