1999 (10) TMI 209 - AT - Central Excise

Summary

Issues involved: Challenge to the validity of the order disallowing clubbing of clearances of three units u/s Rule 173Q and 209A.

Summary:
The Revenue challenged the order disallowing clubbing of clearances of three units, alleging deliberate fragmentation to evade Central Excise duty. The units shared finance, machinery, and created a new unit, M/s. Film Plast Packaging. The Collector disallowed clubbing but imposed penalties. The Revenue contended that the units exchanged loans, had common premises, and machines, supporting clubbing. However, the Collector found no reliable evidence of financial flowback among the units, and the units maintained independent identities. The Tribunal cited precedent stating clubbing is not maintainable without conclusive evidence of financial flowback. The Revenue's grounds were rejected as insufficient for clubbing clearances. The second ground of common premises and equipment was also dismissed based on legal precedent, ruling that common factors were not enough to prove one unit worked on behalf of others. The Tribunal upheld the Collector's findings, dismissing the Revenue's appeals.

In conclusion, the Tribunal upheld the Collector's decision, finding no merit in the Revenue's appeals challenging the order disallowing clubbing of clearances of the three units.