2018 (8) TMI 882 - AT - Central Excise

SSI Exemption - Clubbing of clearances - dummy units - SCN not issued to other parties, whose clearances are sought to be clubbed, but Addendum was issued including the names of the other four units, who were not a party in the first Show Cause Notice and the subsequent Adjudication Order. Held that - Once an Order-in-Original is withdrawn, the Show Cause Notice, which had already merged with the Order-in-Original, is no longer available, in which case the Addendum subsequently issued by the Revenue and adjudicated upon cannot be held to be in accordance with law - demand set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Clubbing of clearances of multiple units for duty demand.
2. Validity of Show Cause Notice and subsequent Addendum.
3. Jurisdiction of the Tribunal regarding withdrawal of Order-in-Original.

Analysis:
1. The appeals arose from the impugned order passed by the Commissioner, where M/s D. P. Garg & Co., engaged in manufacturing Door Hinges, faced duty demand due to clubbing clearances of four other units with theirs. The Show Cause Notice was issued only to M/s D. P. Garg & Co., not to the other units. The Original Adjudicating Authority confirmed the demand and penalties, leading to confiscation of goods of the other units. The Revenue's action was challenged in courts, culminating in the Hon'ble Supreme Court permitting withdrawal of the original order, disposing of the matter with liberty to take further legal action.

2. Post the Supreme Court's order, Revenue issued an Addendum to the Show Cause Notice, including the names of the other four units not initially party to the proceedings. The Commissioner confirmed the demand and penalties based on this Addendum. However, the Tribunal noted that the Show Cause Notice had merged with the withdrawn Order-in-Original, rendering the subsequent Addendum and adjudication legally questionable. Following a similar precedent, the Tribunal set aside the impugned order, allowing the appeals and relieving the appellants of the duty demands and penalties imposed.

3. In a similar scenario involving six other units and M/s Garg Industries, the Tribunal had previously set aside the confirmation of demands against them, following the principle that once an Order-in-Original is withdrawn, the Show Cause Notice ceases to exist. The Tribunal applied this reasoning to the present case, setting aside the confirmation of demands and penalties on all the appellants. The appeals were allowed with consequential relief, aligning with the legal precedent established in similar cases before the Tribunal.