1999 (3) TMI 236 - AT - Central Excise

Summary

Issues Involved:
1. Suppression of relevant particulars to evade excise duty.
2. Clubbing of three firms for exemption notification and clearances.

Detailed Analysis:

Issue 1: Suppression of Relevant Particulars to Evade Excise Duty

The Collector's impugned order found that the appellants, M/s. Accurate Engineering Company, along with M/s. Ahilya Udyog and M/s. Aditya Engineering Co., were essentially one entity. The Collector concluded that the appellants suppressed relevant facts to evade excise duty, invoking the extended period of limitation under Section 11A of the Act. The appellants argued that the firms were separate legal entities with distinct registrations and that close family relationships did not justify clubbing them together. They cited several decisions supporting their contention that common partners or directors do not make separate firms a single unit for excise purposes. The Tribunal, however, found no evidence of control by the appellants over the other two firms. The fact that machinery was leased without remuneration did not make the other firms dummy units. Thus, the Tribunal concluded that there was no suppression of facts justifying the extended period of limitation.

Issue 2: Clubbing of Three Firms for Exemption Notification and Clearances

The Collector held that the three firms were not eligible for exemption under various notifications as their combined clearances and plant and machinery value exceeded permissible limits. The appellants contended that they were separate entities and should not be clubbed together. The Tribunal examined the facts and found no evidence of financial flow back or profit sharing between the firms. The Tribunal referenced the case of Alpha Toyo Limited, which held that a dummy unit is one that exists only on paper without real investment or operational independence. The Tribunal concluded that the other two firms were not dummy units and, therefore, their clearances should not be clubbed with those of the appellants. Consequently, the extended period of limitation could not be invoked, and the firms were entitled to separate exemptions.

Separate Judgments:

Judgment by A.C.C. Unni, Member (J):
The appeal was allowed, and the impugned order was set aside. The Tribunal found that the test for holding the other two units as dummies was not satisfied, and there was no suppression by the appellants.

Judgment by S.K. Bhatnagar, Vice President:
The matter was remanded for de novo consideration. The Vice President emphasized that the totality of facts and circumstances, including financial relationships and control, must be considered. He noted that the appellants failed to prove that their trading activity was genuine and separate from their manufacturing activity.

Final Order by Lajja Ram, Member (T):
Agreeing with the Vice President, the matter was remanded to the Commissioner for de novo consideration. The Member (T) highlighted the need to consider the totality of events and the relationship between the firms.

Conclusion:
In view of the majority opinion, the matter was remanded to the Commissioner for de novo consideration in accordance with the law. The Tribunal emphasized the need to evaluate the totality of facts and circumstances, including financial relationships and operational control, to determine the eligibility for exemption notifications and the applicability of the extended period of limitation.