2018 (1) TMI 970 - AT - Central Excise

SSI units - clubbing of clearances - dummy units or not? - Held that - both the units are registered separately under various authorities and being limited companies have to be held as separate units and entitled to the benefit of small scale Notification separately - benefit of SSI extended - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Interpretation of small scale exemption Notification for PVC Pipes manufacturer.
2. Clubbing of clearances of two factories with common directors for exemption eligibility.
3. Distinctiveness of units with common directors for exemption entitlement.

Analysis:
1. The appeal revolved around the interpretation of the small scale exemption Notification for a PVC Pipes manufacturer. The Revenue challenged the entitlement of the manufacturer to the exemption based on the aggregate value of clearances of excisable goods for home consumption.

2. The issue of clubbing clearances of two factories with common directors was crucial. The Revenue contended that since another factory with the same directors had clearances exceeding the exemption limit, the PVC Pipes manufacturer should also be denied the exemption. This led to the initiation of proceedings against the manufacturer.

3. The judgment delved into the distinctiveness of the units with common directors for exemption entitlement. The Commissioner (Appeals) observed that despite common directors, the units were distinct and separate entities. The judgment referred to various precedent decisions and the Board Circular to support the conclusion that each limited company is a manufacturer by itself and entitled to a separate exemption limit.

4. The judgment extensively quoted the relevant Circular and precedent decisions to establish that common directors do not necessarily imply a single entity for exemption purposes. It highlighted that both units had separate registrations, ISO certifications, and were engaged in manufacturing different products, reinforcing their distinctiveness.

5. The judgment emphasized that the impugned order considered the legal principles laid down by higher courts and concluded that the units, despite common directors, were registered separately under various authorities and operated independently. This distinctiveness warranted the entitlement to the small scale exemption Notification separately for each unit.

6. Ultimately, the Revenue's appeal was rejected as it failed to provide any substantial reasons to interfere with the impugned order of the Commissioner (Appeals). The decision was based on the Board's clarification and supported by various legal authorities, affirming the separate entitlement of each unit to the exemption.

By meticulously analyzing the issues of interpretation of the small scale exemption Notification, clubbing of clearances of units with common directors, and the distinctiveness of units for exemption entitlement, the judgment upheld the separate eligibility of the PVC Pipes manufacturer for the exemption, dismissing the Revenue's appeal.