1990 (5) TMI 116 - AT - Central Excise

Summary

Issues Involved:
1. Whether M/s. Sanghi Gases & Pimpri Gases have got interest in the business of each other and whether they can be clubbed together.
2. Whether the value of air separating column purchased from Sanghi Oxygen, Bombay was undervalued so that Sanghi Gases get exemption under Notification No. 77/83 on the basis that the value of plant and machinery is less than 20 lakhs.

Summary of Judgment:

Issue 1: Clubbing of Businesses
The Collector concluded that M/s. Sanghi Gases and Pimpri Gases should be clubbed together for exemption purposes due to several factors indicating mutual interest:
- Common Use of Staff: There was some common staff serving both appellants.
- Financial Assistance: Discrepancies in the financial transactions between the two units suggested financial assistance.
- Common Telephone: The telephone was shared between the two units, indicating mutual business interest.
- Other Circumstances: Transactions such as sale-purchase of each other's products, purchase of calcium carbide, and use of trucks were considered as supporting evidence for mutual interest.

However, the Tribunal found that these factors, including common use of staff and telephone, do not prove that the units were one in the eyes of law. Citing previous judgments, the Tribunal held that such commonalities are not conclusive evidence of financial interest or dummy operations. The Tribunal concluded that the Collector's decision to club the units was not justified and cannot be sustained.

Issue 2: Undervaluation of Air Separating Column
The Collector determined that the air separating column purchased by M/s. Sanghi Gases from M/s. Sanghi Oxygen was undervalued, leading to a conclusion that the investment in machinery and plant exceeded Rs. 20 lakhs, thus disqualifying them from exemption under Notification Nos. 77/83-C.E. and 77/85-C.E.

The Tribunal found that the evidence used to determine the undervaluation was unreliable. The Investigating Officer admitted to not verifying the original voucher, gate pass, or whether the components and specifications of the column matched those in other invoices. The Tribunal concluded that the Collector's decision on undervaluation was not justified, and thus, M/s. Sanghi Gases did not violate the conditions of the exemption notifications.

Final Order:
The appeals were allowed, and the impugned order was set aside with consequential relief to the appellants.