2004 (9) TMI 276 - AT - Central Excise

Summary

Issues:
1. Clubbing of clearances of two units for computation of value under Small Scale Exemption Notification.
2. Imposition of penalty on M/s. Shiplachem and related individuals.

Analysis:
1. The case involved two appeals against the Order-in-Appeal passed by the Commissioner (Appeals) regarding the clubbing of clearances of M/s. Shiplachem and M/s. Herbal Formulations for Central Excise duty computation. The Commissioner (Appeals) held that the sale price of M/s. Shiplachem Distributors, owned by an individual related to M/s. Shiplachem, should be considered for valuation. However, the clubbing of clearances of both units was disallowed as no show cause notice was issued to M/s. Herbal Formulations. The Revenue contended that the clearances of Herbal Formulations should be clubbed due to common control and financial flow back. The Tribunal rejected the Revenue's appeal, citing the requirement of a show cause notice to both units for clubbing clearances, as established in the case of Ramsay Pharma (P) Ltd. v. C.C.E., Allahabad, 2001.

2. Regarding the imposition of penalty on M/s. Shiplachem, the Commissioner (Appeals) upheld the related person status between M/s. Shiplachem and Shiplachem Distributors. M/s. Shiplachem challenged the penalty confirmation, arguing that the penalty amount should be linked to the confirmed duty amount. The Tribunal agreed with this argument, stating that the penalty must be based on the quantified duty amount. As the duty demand was to be recomputed due to the clubbing issue, the Tribunal set aside the penalty imposition and remanded the matter to the Adjudicating Authority for reconsideration after quantifying the duty and providing a hearing opportunity. The appeals were disposed of accordingly.