2006 (7) TMI 54 - AT - Central Excise

Central Excise SSI exemption Clubbing of clearances In the absence of financial flow back between two units owned by brother s clearances cannot be clubbed

Summary

Issues:
Challenge on the issue of clubbing of two units.

Analysis:
The appeal was filed by the revenue against the order passed by the Commissioner (Appeals) regarding the clubbing of two units, M/s. Switching Electronics and M/s. Mangalam Electronics, situated in the same premises. The revenue argued that the units shared common facilities, brand name, office premise, and were owned by real brothers, leading to the clubbing of their clearances. They also highlighted instances of common operations between the units. However, the Commissioner (Appeals) ruled in favor of the assessees, emphasizing the absence of financial flow back between the units. The appellate tribunal noted that the units were registered separately, had distinct operations, and lacked evidence of interdependence. The tribunal cited the Supreme Court's decision on indicators of interdependence and concluded that the revenue's case lacked merit. Therefore, the appeal filed by the revenue was rejected.

This judgment primarily revolves around the issue of clubbing the clearances of two units situated in the same premises. The revenue contended that the units should be treated as one entity due to shared facilities and common operations. In contrast, the Commissioner (Appeals) and the appellate tribunal focused on the absence of financial flow back and the separate registrations of the units as indicators of their independence. The tribunal highlighted the significance of financial and management control in determining interdependence, citing relevant legal precedents to support their decision. Ultimately, the tribunal found in favor of the assessees, rejecting the revenue's appeal based on the lack of substantial evidence supporting the clubbing of clearances.