2017 (10) TMI 833 - AT - Central Excise

SSI exemption - dummy units - mutuality of interest - Held that - there is no infirmity in the impugned order wherein the Commissioner(Appeals) has given detailed reasons for his finding that the appellant is a dummy unit of M/s.FFL. Further, the appellants have not been able to bring any evidence to prove that both the units are independent - both the units have been using the same logo in all their documents and they have common management and personnel working for both the units. Further, there is a mutuality of interest and the fund flow between the two companies. Also, both the units have a common Managing Director and General Manager and both the units have invested in the share capital of M/s. Shetron Ltd. M/s. FFL has provided unsecured loan of ₹ 35 lakhs without any conditions - appeal dismissed - decided against appellant.

Summary

Issues:
- Whether the appellant is entitled to SSI exemption under Notification No.9/2000 as amended?
- Whether the appellant and another unit are independent entities or a dummy unit?
- Whether the demand of duty, interest, and penalties imposed on the appellant is justified?

Analysis:
1. Entitlement to SSI Exemption: The appellant, engaged in manufacturing excisable goods, availed SSI exemption under Notification No.9/2000 as amended. The issue arose when the Department observed a related unit also engaged in similar goods, leading to a show-cause notice proposing to deny the SSI exemption. The Addl. Commissioner confirmed the demand, leading to appeals. The appellant argued independence, citing minimal shareholding in a related company. However, the authorities found evidence of mutual interest, shared management, common infrastructure, and financial transactions, leading to the rejection of the appeals.

2. Independence of Entities: The core issue revolved around whether the appellant was a dummy unit of the related company. The appellant contended independence, emphasizing separate infrastructure, funding, and operations. However, the authorities noted shared management, common records, logo, personnel, and financial transactions, indicating a lack of independence. The Commissioner(Appeals) detailed various instances supporting the conclusion that the appellant was not an independent entity, ultimately upholding the decision.

3. Justification of Demands: The appellant challenged the demand of duty, interest, and penalties, arguing against the findings of mutual interest and shared management. The authorities, considering documentary and oral evidence, found substantial support for the conclusion that the appellant was a dummy unit. Citing instances of financial transactions, shared resources, and lack of independence, the authorities upheld the demand. The Tribunal concurred, emphasizing the shared management, personnel, and financial transactions as evidence of the lack of independence, leading to the dismissal of all appeals.

In conclusion, the judgment addressed the issues of SSI exemption entitlement, independence of entities, and justification of demands, emphasizing evidence of mutual interest, shared management, and financial transactions to support the decision that the appellant was not an independent unit entitled to the exemption. The detailed analysis considered various factors, including shared infrastructure, personnel, and financial dealings, leading to the dismissal of the appeals.