2017 (8) TMI 1106 - AT - Central Excise

Search and seizure - Denial of SSI exemption - turnover of the two business entities was clubbed - Held that - both the business entities are different having distinct and separate entity being the Proprietary concern and Private Limited Company. The assessment of turnover for Income Tax purposes was being made separately and their factory premises are also differently located. Only that the Directors of the Private Limited Company are the sons of the Proprietor of the firm, does not mean that they are the same business entities, especially when in the subsequent assessment year the Department has accepted these facts. Regarding seizure - After considering the totality of the facts and circumstances of the case, it is evident that when the turnover of both the business entities cannot be clubbed, as stated above, then we direct the adjudicating authority to decide the issue afresh but by providing a reasonable opportunity to the assessee-Appellants - Appeal allowed partly.

Summary

Issues involved:
1. Denial of SSI Exemption based on clubbing of turnover of two business entities.
2. Levying duty on items purchased from the open market.
3. Inclusion of inspection charges in the sale price.
4. Retention of seized amount under Customs Act.
5. Imposition of penalties on the Proprietor, Directors, and Firm.

Issue 1: Denial of SSI Exemption based on clubbing of turnover:
The appeals were filed against the Order-in-Original denying SSI Exemption to the assessee-Appellants. The Tribunal analyzed the case in light of similar precedents and observed that separate manufacturing premises with distinct legal entities are eligible for SSI exemption. The Tribunal noted that both business entities were separate, being a Proprietary concern and a Private Limited Company, with different factory premises and legal registrations. The Department had accepted these facts in subsequent assessments, leading the Tribunal to set aside the denial of SSI Exemption.

Issue 2: Levying duty on items purchased from the open market:
The assessee-Appellants contested the imposition of duty on items purchased from the open market, arguing that the Department wrongly considered these as manufactured in their own factory. The Tribunal found a lack of proper discussion and quantification in the impugned order on this issue. Consequently, the matter was remanded to the adjudicating authority for a fresh decision, allowing the assessee-Appellants a reasonable opportunity to present their case.

Issue 3: Inclusion of inspection charges in the sale price:
Regarding the inspection charges paid by Indian Railways to RITES Ltd., the Tribunal noted that the charges were not raised by the assessee-Appellants and were unrelated to their invoicing. Citing legal precedents, the Tribunal found no justification to include these inspection charges in the price charged by the assessee-Appellants, thereby setting aside the impugned order on this matter.

Issue 4: Retention of seized amount under Customs Act:
A total sum was seized during a search at the premises, with a portion transferred to the Income Tax Department and the rest retained under the Customs Act. The assessee-Appellants argued against the retention, emphasizing the non-clubbing of business turnovers. The Tribunal directed the adjudicating authority to reconsider the issue with a reasonable opportunity for the assessee-Appellants.

Issue 5: Imposition of penalties on the Proprietor, Directors, and Firm:
In light of the discussion and findings on the above issues, the Tribunal concluded that there was no justification for the imposition of penalties on the Proprietor, Directors, and Firm. Therefore, the penalties were dropped.

In conclusion, the appeals were partly allowed based on the specific findings and directions provided by the Tribunal on each issue, ensuring a fair and thorough reconsideration of the matters at hand.