2015 (2) TMI 133 - AT - Central Excise

Clubbing of clearances - Held that - Admittedly M/s. Saron Mechanical Works was established in 1994. The same cannot be held a dummy unit of M/s. Jagatjit Agro Industries, which was established in 2001. A unit which was already working for almost six to seven years cannot be held to be a dummy of another unit, which is yet to become into existence. - it is not the Revenue s case that both the units are not having complete machinery so as to manufacture the goods in question. Merely because a common electricity connection was used by both the units by itself will not make it a dummy of one another. Similarly, a common accountant or a common store room for raw-materials cannot be held to be a reason for clubbing the clearances of both the units, when there is no dispute about both the units being complete in themselves and manufacturing goods independently of each other. - Decided against Revenue.

Summary

Issues:
1. Clubbing of clearances of two units for excise duty calculation.

Analysis:
The case involved the clubbing of clearances of two units for excise duty calculation. The appellant, Revenue, filed appeals against the order passed by the Commissioner (Appeals) regarding the clubbing of clearances of M/s. Saron Mechanical Works and M/s. Jagatjit Agro Industries. The Central Excise officers found loose slips indicating clearances during a visit to the factory, leading to the initiation of proceedings. The Revenue contended that since both units were located on the same plot, used a common electric connection, and shared a common storage place for raw materials, their clearances should be clubbed. The demand against M/s. Jagatjit Agro Industries was confirmed, and a penalty was imposed on both units.

The Commissioner (Appeals) ruled in favor of the assessees, stating that unless M/s. Saron Mechanical Works was declared a dummy unit, its clearances could not be clubbed with M/s. Jagatjit Agro Industries. Upon hearing the arguments, the tribunal found that M/s. Saron Mechanical Works was established in 1994, while M/s. Jagatjit Agro Industries was set up in 2001, making it unreasonable to consider the former as a dummy unit of the latter. The tribunal noted that both units had complete machinery to manufacture goods independently, and the shared facilities like electricity connection, accountant, and raw material storage did not justify clubbing their clearances.

Consequently, the tribunal rejected the Revenue's appeals, emphasizing that the mere sharing of certain resources did not make one unit a dummy of the other. The judgment highlighted the independence and completeness of both units in manufacturing goods, dismissing the Revenue's argument for clubbing clearances based on shared facilities.