2007 (9) TMI 57 - AT - Central Excise

SSI Exemption - Revenue raised the demand on the ground that the respondent and their sister unit using the common brand name and also controlled by common partners but no allegation regarding the financial flow-back - Tribunal found no corroborative evidence and set aside clubbing of clearance

Summary

Issues:
- Clubbing of clearances of two units for the purpose of levy of duty.

Analysis:
The case involved appeals by the Revenue against the decision of the Commissioner (Appeals) vacating a demand of duty raised on the respondents by the original authority. The respondents were engaged in the manufacture of excisable goods under the brand name "Butterfly," with a sister concern also involved in similar activities. The original authority held that the clearances of the two units should be clubbed, leading to a demand of duty. However, the Commissioner (Appeals) set aside this decision, stating that the clearances of the two units were not liable to be clubbed. The reasons included that the units used the brand name on different products, did not meet the conditions for clubbing, and lacked financial flow-back between them.

The Revenue argued that the Tribunal's decision in a similar case was set aside by the Apex Court, but the respondents contended that this would not affect their case as the Revenue failed to establish grounds for clubbing clearances. The Tribunal noted that the demand was solely based on clubbing of clearances and not on other factors like brand ownership. It was observed that there was no evidence of financial flow-back between the units, and they operated separately with distinct resources and registrations. The conditions for clubbing clearances were not met, and there was no mutuality of interest or financial interdependence between the units.

Ultimately, the Tribunal upheld the decision of the Commissioner (Appeals), dismissing the Revenue's appeals. The judgment emphasized the lack of evidence supporting the clubbing of clearances and highlighted the separate operational structures of the units as crucial factors in determining the levy of duty. The case underscored the importance of establishing clear grounds for clubbing clearances before imposing duty demands, especially in instances where related units operate independently without financial interlinkages.