2008 (2) TMI 101 - AT - Central Excise

Clubbing of clearances assessee have adduced sufficient evidence to prove that PSDE isn t a dummy unit Both PSDE & PPI have paid duty on crossing the initial SSI exemption limit both are separate legal entities providing of an interest free loan to PSDE by one of partners of PPI will not affect the independent existence of PSDE clearances were not required to be clubbed - issue of brand name not raised in SCN or in OIO and hence cannot be raised before tribunal SSI exemption allowed

Summary

Issues:
Alleged creation of a dummy unit for availing inadmissible SSI exemption, suppression of facts leading to duty evasion, imposition of penalty, and the independent existence of the units.

Analysis:
The case involved the manufacturing units, with a common partner, accused of creating a dummy unit to avail inadmissible SSI exemption. The department alleged that the dummy unit was used to evade duty by suppressing facts. The Additional Commissioner confirmed duty demands and imposed penalties on the units. The Commissioner (Appeals) later set aside the demands and penalties, leading to the Revenue's appeal.

The adjudicating authority and the Revenue relied on various factors to establish that the alleged dummy unit was a facade, including shared machinery, common insurance, joint marketing activities, and financial interlinking. The department contended that the dummy unit was used to evade duty by the main unit.

However, the Tribunal disagreed with the Revenue's stance. It found that the job work undertaken by the main unit for the alleged dummy unit did not make the latter a facade. The Tribunal highlighted that the alleged dummy unit had its own factory, machinery, and workmen, and the machinery found idle was not a sufficient basis to declare it a dummy. The Tribunal also noted that the issue of brand name was not raised initially and that personal assistance from a partner did not affect the independent existence of the alleged dummy unit.

Moreover, the respondents presented substantial evidence to establish the independence of the alleged dummy unit. Both units were registered separately, had distinct machinery and power connections, and procured materials independently. The Tribunal upheld the lower appellate authority's finding that the alleged dummy unit was independent and eligible for SSI exemption, thereby rejecting the Revenue's appeal.

In conclusion, the Tribunal ruled in favor of the respondents, upholding the lower appellate authority's decision that the alleged dummy unit was not a facade. The units were deemed eligible for SSI exemption, and the appeal by the Revenue was rejected.