2019 (8) TMI 954 - AT - Central Excise

SSI Exemption - clubbing of clearances - dummy unit - it was alleged that no manufacturing activity had taken place in the factory premises of Siddanth - all the issues raised were not considered - principles of natural justice - HELD THAT - All the issues raised by the appellants have not been considered by Commissioner (Appeals). There is no finding on the issue of theft; on purchasing the CNC machine by M/s Siddanth; on the issue of the goods having been sent on job work; on the financial intertwining between the two units; on M/s Siddhant, being independently registered with other government departments etc. In the absence of these findings on the factual aspects, the impugned order is set aside and matter of all the four appeals remanded to the original adjudicating authority for fresh decision after taking into consideration each and every issue raised by the appellants - appeal allowed by way of remand.

Issues:
1. Clubbing of clearances of two units for unauthorized small scale exemption.
2. Allegations of clandestine removal and excess goods found in one unit.
3. Demand confirmation and penalties imposed on both units and directors.
4. Manufacturing process and clubbing of clearances of two units.
5. Grounds taken by the appellants against the demand.
6. Consideration of various submissions and issues by the Commissioner (Appeals).
7. Lack of findings on key issues in the impugned order.

Issue 1: Clubbing of clearances of two units for unauthorized small scale exemption.
The Anti-Evasion Branch found excess goods in one unit, leading to suspicions of clandestine removal. Further investigations revealed alleged unauthorized small scale exemption benefit availed by both units. The show cause notice proposed clubbing clearances of both units, culminating in a demand confirmation and penalties imposition. The original adjudicating authority upheld the order, which was subsequently affirmed by the Commissioner (Appeals).

Issue 2: Allegations of clandestine removal and excess goods found in one unit.
During a visit, excess goods were discovered in one unit, not recorded in statutory records, leading to suspicions of clandestine removal. Separate show cause notices were issued for this matter, independent of the present appeal.

Issue 3: Demand confirmation and penalties imposed on both units and directors.
The demand of ?36,61,768 against one unit, along with penalties, was confirmed by the original adjudicating authority. Penalties were also imposed on the other unit and its directors, a decision upheld by the Commissioner (Appeals), leading to the present appeals.

Issue 4: Manufacturing process and clubbing of clearances of two units.
The Revenue justified clubbing clearances of two units based on shared machinery and monitoring by a common individual. The appellants contested this, providing detailed submissions on the independent functioning of each unit's manufacturing processes and machinery ownership.

Issue 5: Grounds taken by the appellants against the demand.
The appellants raised multiple grounds against the demand, emphasizing separate registrations, independent manufacturing processes, and lawful job work arrangements. They disputed the validity of the grounds cited for the demand, especially concerning the installation of machinery and threading operations.

Issue 6: Consideration of various submissions and issues by the Commissioner (Appeals).
The appellants' submissions on theft, machinery ownership, job work processes, financial integration, and procedural lapses were not adequately addressed by the Commissioner (Appeals). The lack of findings on crucial factual aspects prompted the appellate authority to remand the appeals for a fresh decision.

Issue 7: Lack of findings on key issues in the impugned order.
The impugned order by the Commissioner (Appeals) failed to address critical issues such as theft, machinery ownership, job work processes, and registration with other government departments. Due to these omissions, the appellate authority set aside the order and remanded the appeals for a comprehensive reconsideration.

The judgment highlights the complexities of excise duty disputes, involving allegations of unauthorized exemptions, clandestine removal, and shared manufacturing processes between two units. The detailed analysis of manufacturing operations, machinery ownership, and procedural compliance underscores the importance of factual findings and thorough consideration of submissions in adjudicating tax disputes. The remand of the appeals emphasizes the need for a comprehensive review of all issues raised by the parties to ensure a just and informed decision.

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