2018 (3) TMI 1541 - AT - Central Excise

SSI exemption - clubbing of clearances - dummy unit - Held that - Admittedly the two units were separately registered with the other statutory authorities and were showing separate clearances of their final product - Merely because the partner of two units happen to be the same, by itself, is not sufficient to establish that one unit is dummy of another - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Clubbing of clearances of two units for duty demand confirmation.
2. Imposition of penalties without specifying the unit.
3. Determination of units as separate entities based on financial independence.
4. Rebuttal of Revenue's claim of financial inter-twining between units.
5. Dismissal of appeal due to lack of evidence supporting clubbing of clearances.

Analysis:
1. The appeal was filed by the Revenue against the order passed by the Commissioner (Appeals) regarding the clubbing of clearances of two units, M/s. Shree Plastics and M/s. Shree Ram Plastics, for the confirmation of duty demand amounting to &8377; 44,54,232. The original adjudicating authority treated one unit as a dummy of the other, leading to the combined demand. However, the Commissioner (Appeals) found no common funding or financial flow between the units, holding them as separate entities with individual income tax and sales tax registrations.

2. The original order failed to specify against which unit the demand was confirmed and upon whom the penalties were imposed. The lack of clarity in the order raised issues regarding the proper identification of the units and the basis for imposing penalties. This ambiguity was a crucial factor considered in the appeal process.

3. The Commissioner (Appeals) based the decision on various precedents and evidence on record, emphasizing the absence of financial interdependence between the two units. The determination of units as separate entities was supported by the distinct registration details and the absence of shared expenses or fund flow, indicating independent operations.

4. The Revenue's appeal lacked evidence to challenge the finding of separate entities by the Commissioner (Appeals). Despite common partners, the units maintained individual registrations and operated independently with separate clearances of final products. The absence of financial inter-twining or insufficient machinery in the alleged dummy unit weakened the Revenue's argument.

5. Ultimately, the Tribunal dismissed the Revenue's appeal due to the failure to provide substantial evidence supporting the clubbing of clearances. The lack of proof of financial connections or shared resources between the units led to the rejection of the appeal, affirming the independent status of the two units for the benefit of exemption Notification No.8/2003 dated 01.03.2003. The decision highlighted the importance of concrete evidence in establishing relationships between entities for duty demand calculations.