2005 (3) TMI 283 - AT - Central Excise

SSI Exemption - Clubbing of clearance - Duty demand - Penalty - Principles of natural justice - HELD THAT - In the present impugned order the Commissioner had not considered it necessary to issue the notice to the second unit whose clearance are to be clubbed relying on the decision of the Supreme Court in the case of V Madhu @ CV Maadhesh 2002 (10) TMI 97 - SUPREME COURT . The judgment in the case of V Madhu @ CV Maadhesh is not applicable to the facts of the present. We, further observe from the various evidence mentioned in the earlier Tribunal's Final Order dated 13-9-2001 that both units are situated at different premises having different small-scale Registration number, Central Excise registration number, GST registration, CST registration number and separate Income-tax PAN number. It has also been mentioned therein that they have been filing RT 12 returns which have been duly approved by the Department and both of them have discharged duty liability on the goods cleared by them during the financial year 1992-1993 and 1993-94. In view of these facts, non-issue of show cause notices to M/s. VME Foundary Pvt. Ltd. makes the proceedings assailable as the Department have not been given any opportunity of proving to them that they are not a dummy unit. Learned Advocate has relied upon the decision in the case of Dawn Fireworks Factory 1998 (10) TMI 553 - CEGAT CHENNAI wherein the Tribunal has held that if show cause notice is not issued to all the units whose clearances are said to be clubbed together, the proceedings are vitiated. Similar views have been expressed by the Tribunal in the case of CCE, Jaipur v. Sethia Foods 2002 (10) TMI 185 - CEGAT, COURT NO. IV, NEW DELHI wherein it has been held that principle of natural justice requires that assessee should be put to notice regarding their commission or omission for following the principles of Central Excise Act or Rules. In the present case, the Revenue wants to club the clearance of M/s. Sethia Foods with M/s. Sethia Sweet Products without issuing notice to M/s. Sethia Sweet Products which is not permissible . Thus following these decisions, we are of the view that clearance of both the Appellants and M/s. VME Foundary Pvt. Ltd. can not be clubbed together as no show cause notice had been issued to the other unit that is M/s. VME Foundary Pvt. Ltd. Accordingly, without going into any other aspect of the matter on merits, we set aside the impugned order on this aspect alone and allow the Appeal.

Summary

Issues:
1. Clubbing of value of clearances of two units for levying Central Excise duty.
2. Requirement of issuing show cause notice to all units before clubbing clearances.
3. Determination of separate entity status for two units under small-scale exemption Notification.

Analysis:
1. The appeal was filed against the Order-in-Original confirming demand of duty and penalty. The Appellant contested the demand of duty amounting to Rs. 2,81,223/-. The issue revolved around whether the value of clearances of two units should be clubbed for levying Central Excise duty under Chapter 84 of the Central Excise Tariff Act.

2. The Appellant argued that the clubbing of clearances of both units cannot be ordered without issuing a show cause notice to both units. They relied on legal precedents emphasizing the necessity of issuing show cause notices to all units whose clearances are proposed to be clubbed. The Department contended that the two units were not separate entities and should be treated as one for availing small-scale exemption Notification.

3. The Tribunal noted that the Commissioner did not issue a show cause notice to the second unit, M/s. VME Foundary Pvt. Ltd., whose clearances were to be clubbed. The Tribunal found that both units had different registrations, premises, and tax details, indicating separate entities. Citing legal principles of natural justice, the Tribunal held that non-issuance of show cause notices to M/s. VME Foundary Pvt. Ltd. rendered the proceedings flawed. The Tribunal referenced previous judgments emphasizing the necessity of notice to all units involved in clubbing clearances.

4. Ultimately, the Tribunal set aside the impugned order solely based on the non-issuance of show cause notice to M/s. VME Foundary Pvt. Ltd. It was concluded that without proper notice to the other unit, the clubbing of clearances with the Appellant was not permissible. The decision highlighted the importance of following principles of natural justice and providing opportunities for all units to present their cases before clubbing clearances for duty determination.

This detailed analysis showcases the legal intricacies and arguments presented in the judgment regarding the clubbing of clearances of two units for Central Excise duty purposes and the necessity of issuing show cause notices to all units involved.