2005 (6) TMI 171 - AT - Central Excise

Summary

Issues:
Clubbing of clearances based on subsidiary relationship for the purpose of availing SSI Notification benefit.

Analysis:
The appeal in this case arises from an Order-in-Appeal (OIA) dated 18-3-2004, where the Commissioner upheld the clubbing of clearances of the appellant-factory with another company solely because the appellant was considered a subsidiary. The denial of the benefit of SSI Notification No. 1/93-C.E. was also upheld by the Commissioner on this ground. The appellant contended that being a subsidiary alone cannot justify the clubbing of clearances, emphasizing that there was no flow back of funds between the companies. The appellant relied on various judgments to support this argument, including those of ASPI Castings Pvt. Ltd., Dentsply India Pvt. Ltd., Kiran Biscuits & Foods Ltd., and Sapthagiri Cements & Others.

The learned Counsel pointed out that the Commissioner incorrectly applied the judgment of CCE, Bangalore v. Gammon Far Chems. Ltd. (2003) in this case. The Gammon judgment was based on Notification 85/85-C.E., which required clubbing of units if a subsidiary had manufactured on or above the main unit. However, the present case was governed by Notification 1/93, which did not contain similar provisions. The key argument was that being a subsidiary company should not automatically lead to the clubbing of clearances, especially when there is no mutual interest or flow back of funds between the entities. The Tribunal noted that the Commissioner had misapplied the ratio of the Gammon judgment, as the circumstances were different under Notification 1/93. The Tribunal found that the appellant being a subsidiary unit was not sufficient grounds for clubbing clearances, especially when there was no interdependence or financial connection between the companies.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, citing the misapplication of the legal principles by the Commissioner. The Tribunal emphasized that the mere fact of being a subsidiary company should not automatically result in the clubbing of clearances, especially when there is no financial interdependence or mutual interest between the entities. The decision was based on the interpretation of relevant notifications and supported by the judgments cited by the appellant.