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2009 (12) TMI 384 - AT - Central ExciseSSI exemption - misuse Demand- joint show cause notice- proposal to club the clearance of two units contained in joint notice and both the units subsequently represented the case before adjudicating authority. - Held that - the show cause notice issued jointly to both the units in this case does not appear to suffer from any infirmity. At the stage of issuing the show cause notice, it was the department s view that SGE was a fictitious dummy unit, the proposal to club the clearances of both the units was contained in the joint notice and both the units were put on notice and both the units subsequently represented their cases before the adjudicating authority - it was more appropriate to examine the matter together in this case which has been done by the department.
Issues Involved:
1. Clubbing of clearances of two units. 2. Validity of show cause notice. 3. Liability to pay duty and penalty. 4. Application of extended period of limitation. Issue-wise Detailed Analysis: 1. Clubbing of Clearances of Two Units: The case involves two units, M/s. SLI and M/s. SGE, where M/s. SGE was alleged to be a dummy unit used to evade central excise duty. The original authority found that M/s. SGE did not have the necessary facilities to manufacture RTS Grills and that the goods were actually manufactured by M/s. SLI but cleared in the name of M/s. SGE to avail small scale exemption. The clearances of both units were clubbed, and the duty demand was confirmed. The appellate authority upheld this decision, noting that the clearances were correctly clubbed as M/s. SGE was not operational during the period in question. 2. Validity of Show Cause Notice: The appellant argued that separate show cause notices should have been issued to both units, citing case laws such as Ogesh Industries v. CCE and Ramsay Pharma (P) Ltd. v. CCE. However, the department issued a joint notice to both units, proposing the clubbing of clearances and penal actions. The Tribunal found that the joint notice was valid, as both units were put on notice and participated in the proceedings. The Tribunal referenced the Supreme Court's decision in CCE, Coimbatore v. V. Madhu, which supported the issuance of a joint notice when one unit is alleged to be a dummy. 3. Liability to Pay Duty and Penalty: The original authority confirmed a demand of Rs. 2,36,898/- and imposed a penalty of Rs. one lakh on M/s. SLI. M/s. SGE was not penalized as the proprietrix was not involved in the manufacturing activities. The Tribunal upheld the penalty and duty demand, citing clear evidence of duty evasion and the fact that M/s. SLI had crossed the exemption limit. The Tribunal found no merit in the appellant's arguments against the clubbing of clearances and the imposition of penalties. 4. Application of Extended Period of Limitation: The Tribunal justified the application of the extended period of limitation under Section 11A(1) of the Central Excise Act, 1944, due to willful suppression of facts by M/s. SLI. The evidence showed that M/s. SLI had deliberately cleared goods in the name of M/s. SGE to evade duty, warranting the extended period for demand. Conclusion: The Tribunal dismissed the appeal, upholding the clubbing of clearances, the validity of the joint show cause notice, the duty demand, and the penalties imposed. The Tribunal found that the appellants had no case on merits or technical grounds, and the extended period of limitation was applicable due to the clear evidence of duty evasion.
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