2005 (2) TMI 294 - AT - Central Excise

Summary

Issues Involved:
The issues involved in the judgment are clubbing of clearances of two firms, interpretation of inter se relationships of partners, application of Notification No. 9/2002, and imposition of duty and penalty.

Clubbing of Clearances:
The Adjudicating Authority had clubbed the clearances of the respondents' firm with another firm based on the inter se relationships of the partners and common infrastructure facilities. However, the Commissioner (Appeals) reversed this decision stating that both firms were working independently with no flow back of money and had factories located at different places. The Tribunal noted that clubbing of clearances can only be ordered if one unit is the principal unit and the other is a dummy one. The duty demand should be from the principal unit only, not both. The Tribunal cited the Apex Court judgment in Gajanan Fabrics Distributors v. CCE, Pune, to support this principle. As the show cause notice did not specify which firm was the principal one, and duty demand was raised against both firms, the Tribunal upheld the Commissioner's decision to set aside the duty demand against both firms.

Application of Legal Principle:
The Tribunal found that the Adjudicating Authority's order was contrary to the law laid down by the Apex Court in Gajanan Fabrics Distributors v. CCE, Pune. The duty demand against both firms with penalties was not in line with the legal principle that duty can only be demanded from the principal unit in cases of clubbing clearances. Therefore, the Commissioner's decision to set aside the duty demand against both firms was deemed appropriate.

Conclusion:
Based on the above discussion, the Tribunal upheld the impugned order of the Commissioner (Appeals) and dismissed both appeals filed by the Revenue.