2017 (4) TMI 212 - AT - Central Excise

SSI exemption - benefit of N/N. 8/2003-C.E., dated 1-3-2003 - dummy units - it is the case of Revenue that Appellants 2 to 4 are basically front companies floated by Appellant No. 1 in order to avail small scale unit exemption - Held that - apart from filing documents of incorporation the appellants themselves have not submitted any documentary evidence to controvert the factual finding as recorded by the lower authorities. While the bottling units involved in the earlier proceedings were different, the manufacturers of gas (Appellant No. 1) is same in both the proceedings. Hence, we find it is not totally out of place to draw inference from earlier findings involving same set of facts as well as Appellant No. 1 - appeal dismissed - decided against appellant.

Summary

Issues:
1. Whether the appellants are front companies floated by the main appellant to avail small scale unit exemption.
2. Whether the Department's demand for excise duty is justified.
3. Whether the lower authorities' findings regarding the control exercised by the main appellant over the other appellants are valid.

Analysis:
1. The central issue in these appeals is whether Appellants 2 to 4 are front companies created by the main appellant to benefit from small scale unit exemption. The Department alleged that these companies were not independent entities but were controlled by the main appellant. The appellants argued that they were separate legal entities, engaged only in bottling hydrogen gas, which does not amount to manufacture. The main appellant's involvement in the creation of these companies was based on unsecured loans and control over management and marketing. The Tribunal found that the lower authorities had sufficient evidence to support the Department's claim, including the location of units, management control, and financial arrangements.

2. The Department initiated proceedings to demand excise duty from the appellants, alleging that they were not eligible for the small scale unit exemption. The appellants challenged this demand, arguing that the Department failed to provide substantial evidence to support its claims. The Tribunal noted that the earlier Supreme Court decision involving the main appellant had similarities with the present case, such as the involvement of the same gas manufacturer. The Tribunal found that the appellants did not provide enough evidence to refute the Department's findings, and the control exerted by the main appellant over the other companies was evident. Therefore, the appeals were dismissed, upholding the demand for excise duty.

3. The lower authorities had recorded detailed factual findings regarding the control exercised by the main appellant over the other appellants. The appellants failed to provide documentary evidence to counter these findings, leading the Tribunal to uphold the lower authorities' conclusions. The Tribunal emphasized the substantial control exerted by the main appellant over the business activities of the other companies, as evidenced by various factors like management control, financial arrangements, and procurement practices. Without sufficient evidence to challenge these findings, the Tribunal found no reason to interfere with the lower authorities' decision, ultimately dismissing the appeals.