2014 (4) TMI 42 - AT - Central Excise

Benefit under the SSI Notifications - Clubbing of different units - Held that - Revenue wants to club the clearance of three units i.e. M/s Mahavir Group of Industries, M/s Rupani Metal Reed Manufacturing Works and M/s Rupani Textile Industries. The Revenue filed one appeal i.e. against M/s Mahavir Group of Industries and there is no appeal filed by the Revenue against M/s Rupani Textile Industries for clubbing their clearances with M/s Mahavir Group of Industries - in the absence of appeals the clearances of these units cannot be clubbed with M/s Mahavir Group of Industries - Decided against Revenue.

Summary

Issues:
Revenue appeal against dropping of proceedings under Show Cause Notice for clubbing clearances and denying SSI Notification benefit.

Analysis:

Issue 1: Dropping of Proceedings under Show Cause Notice
The Revenue filed an appeal against the adjudication order passed by the Commissioner of Central Excise, challenging the dropping of proceedings initiated under a Show Cause Notice dated 8.1.1990. The Show Cause Notice was issued to multiple entities for clubbing clearances and denying the benefit of the Small Scale Industries (SSI) Notification. The adjudicating authority found that all goods were manufactured and cleared from the same factory without any financial flow back. It was noted that certain firms were established after the relevant SSI Notifications came into effect, indicating that they were not created to avail undue benefits. The adjudicating authority subsequently dropped the proceedings based on these findings.

Issue 2: Clubbing of Clearances
The Revenue contended that all the firms were controlled by one family and operated as separate entities in name only. They argued that there was a free flow of money between the firms, and all business activities were controlled by specific entities. The Revenue sought to club the clearances of multiple units for the purpose of SSI exemption notification. However, the Respondents pointed out that the appeal was filed against only one of the units, and the other units were not party to the appeal. The Respondents emphasized that the findings of the adjudicating authority, based on the evidence on record, were not challenged in the present appeal. The Tribunal noted that the Revenue wanted to club the clearances of three units but had only filed an appeal against one unit. As a result, the Tribunal found merit in the Respondents' argument that without appeals against the other units, their clearances could not be clubbed together.

In conclusion, the Tribunal dismissed the appeal filed by the Revenue, upholding the dropping of proceedings under the Show Cause Notice and rejecting the clubbing of clearances due to the absence of appeals against all relevant units.