2005 (11) TMI 152 - AT - Central Excise

Summary

Issues:
1. Clubbing of clearances made by two separate units.
2. Allegation of one unit being a dummy of the other.
3. Common funding and financial flow back between units.

Analysis:
1. The main issue in this case is the clubbing of clearances made by two separate units. The Revenue contended that the Order passed by the Commissioner (Appeals) should have upheld the clubbing of clearances. However, the Tribunal found that there was no evidence of common funding, financial flow back, or profit sharing between the units. The Tribunal emphasized that in order to establish one unit as a dummy of the other, there must be a common source of funding and financial flow back, which was not proven in this case. Therefore, the demand for clubbing clearances was deemed unsustainable both on limitation and merits.

2. Another crucial issue raised was the allegation of one unit being a dummy of the other. The Commissioner's Order alleged that Unit-2 was a dummy unit as there was no manufacturing activity and it was floated as such. However, the Tribunal found that there was no evidence presented to prove common funding, financial flow back, or property sharing between the units. The Tribunal upheld the Commissioner's Order, stating that Unit-2 was independently assessed, paying taxes, and there was no concrete basis to prove the allegations made in the Show Cause Notice. The judgments cited by the Commissioner supported the decision to reject the appeal.

3. The issue of common funding and financial flow back between the units was central to the decision. The Tribunal noted that the Show Cause Notice did not provide grounds to club clearances and failed to establish the necessary elements to prove one unit as a dummy of the other. The lack of evidence regarding the flow back of funds, common funding, or property sharing led the Tribunal to conclude that the charges in the Show Cause Notice were not substantiated. The judgments referenced by the Counsel supported the argument that there was no infirmity in the Commissioner's Order, as there was no proof of common funding or financial transactions between the units.

In conclusion, the Tribunal upheld the Order passed by the Commissioner (Appeals) as it correctly determined that there was no evidence of common funding, financial flow back, or property sharing between the units to support the clubbing of clearances. The judgments cited by both parties were considered, and the Tribunal found no merit in the appeals, ultimately rejecting them.