2011 (1) TMI 806 - AT - Central Excise

SSI Exemption - Clubbing of turnover of two or more companies - common storage tank - financial flow back of funds - non-existence of a concrete wall between the two companies - held that - as both the units are having separate directors, separately registered with Registrar of Companies, separate sales tax registration, income tax, bank account, and separate lease deed with MIDC and are having separate premises also. In that event the clearance of both units cannot be clubbed. SSI - Exemption under Notification 8/2000 and 9/2000 - The appellants has been able to produce the certificate issued by MIDC certifying that the factory of the appellants is located outside the limit of Nagpur Municipal Corporation and comes within the village Digdoh - The Commissioner denied the benefit to the appellants holding that MIDC is a notified area where the factory of the appellants are located is the area notified by MIDC - it is clear that notified area committee is used in conjunction with the term municipality - Revenue fails to give the correct interpretation to municipal corporation as the municipalities has been defined in part 9 of the Constitution of India which defines municipal area as territorial area of the municipality as notified by the governor - Article 243(g) of the Constitution of India defines the term village as a village specified by the Governor by publishing Notification to be village. The terms municipal corporation / village are having concerns with the Land Revenue Authorities and the same are notified by the Governor from time to time on the basis of census - The MIDC cannot be equated with Municipal Corporation - Thus, the certificate issued by various authorities which certified that the area in which the factory is located is within limit of village Digdoh, Taluka Hingna, district Nagpur - Hence, do not have any hesitation to hold that the factory of the appellants is located in a rural area - Accordingly, the appellants are entitled for the benefit of SSI Notification 8/2000 and 9/2000 - As the appellants are entitled for the benefit of Notification 8/2000 and 9/2000 as SSI Notification, are not required to go into the issue is using the brand name of others, as the appellants succeeded on this ground only.

Summary

Issues Involved:
1. Extended period of limitation.
2. Clubbing of clearances of the appellant's firm and Vaibhav.
3. Entitlement to exemption under Notification No. 8/2000 and No. 9/2000 for being situated in a rural area.
4. Allegation of manufacturing branded goods and using the brand name of others.

Detailed Analysis:

1. Extended Period of Limitation:
The appellants argued that the extended period of limitation is not invocable as they had disclosed the use of brand names to the department through letters dated 30-12-1999, 4-5-2000, and 1-3-2001. The Tribunal found that the department's inaction on these disclosures cannot amount to suppression of facts. Hence, the extended period of limitation was deemed not applicable.

2. Clubbing of Clearances:
The appellants contended that it is not a case of clubbing of clearances since both companies, the appellant's firm and Vaibhav, are separate legal entities with different directors, independent registrations, separate factory premises, and distinct financial and operational setups. The Tribunal analyzed the facts and found that both companies had separate directors, separate registrations with various authorities, independent bank accounts, and distinct operational premises. The Tribunal cited several precedents, including the Supreme Court's decision in Supreme Washers (P) Ltd. v. CCE and other relevant cases, which supported the view that clearances of separate legal entities cannot be clubbed merely based on common management or shared resources. The Tribunal concluded that the clearances of the appellant's firm and Vaibhav could not be clubbed.

3. Entitlement to Exemption Under Notification No. 8/2000 and No. 9/2000:
The appellants argued that their factory is located in a rural area and thus entitled to the benefit of SSI exemption under Notification No. 8/2000 and No. 9/2000. They presented certificates from MIDC, the local Gram Panchayat, Zilla Parishad, and Tehsildar, confirming that the factory is located outside the Nagpur Municipal Corporation limits and within the village limits of Digdoh. The Tribunal found that the term "notified area committee" used in the SSI Notification should not be confused with "notified area," and the factory's location in a rural area was supported by the certificates provided. Consequently, the Tribunal held that the appellants are entitled to the SSI exemption.

4. Allegation of Manufacturing Branded Goods:
The appellants argued that even if they were manufacturing branded goods, they are entitled to the benefit of exclusion under Clause (c) of para 4 of SSI Notification No. 8/2000 and 9/2000, as their unit is located in a rural area. Given the Tribunal's finding that the factory is indeed in a rural area, the issue of using the brand name of others was rendered moot. The Tribunal did not need to further address this issue as the appellants succeeded on the ground of being situated in a rural area.

Conclusion:
The Tribunal concluded that the clearances of the appellant's firm and Vaibhav cannot be clubbed and that the appellant's factory is located in a rural area, making them eligible for SSI exemption under Notification No. 8/2000 and No. 9/2000. The impugned order was set aside, and the appeals were allowed with consequential relief.