1999 (11) TMI 178 - AT - Central Excise

Issues Involved:
1. Seizure of goods.
2. Demand of duty.
3. Independence of the three units.
4. Use of common brand names.
5. Sales and manufacture practices.
6. Maintenance of financial records.
7. Receipt of raw materials.
8. Correspondence on behalf of New International.
9. Imposition of penalties.

Detailed Analysis:

1. Seizure of Goods:
The impugned order involved the confiscation of 12 rolls seized in transit on 10-11-1986 and 68 rolls seized on 7-1-1987 under Rule 173Q. The appellants argued that the allegations regarding the 12 rolls and 68 rolls were outside the scope of the show cause notice (SCN) and could not be adjudicated upon. However, the Tribunal found that the seized goods were non-duty paid and were being clandestinely removed or had been removed without payment of duty. The Tribunal upheld the confiscation of these rolls as the appellants failed to produce any evidence of duty payment.

2. Demand of Duty:
The Collector demanded Central Excise duty amounting to Rs. 28,83,146.23 under Rule 9(2) of the Central Excise Rules. The Tribunal upheld this demand, noting that the appellants could not provide evidence of duty payment on the seized goods.

3. Independence of the Three Units:
The Department alleged that the three units-New India, Northern India, and New International-were not independent. The Tribunal found that the units did not have independent working machinery and that production was joint. The statement of Shri Mohan Lal indicated that only the mixing machine was operational in one unit, supporting the claim of joint production. The Tribunal concluded that the units were not independently producing goods and upheld the clubbing of clearances.

4. Use of Common Brand Names:
The Tribunal noted that the brand names NIRMILL, NIRULLA, NIRCO, and NIR were registered in the name of M/s. Northern India. The use of these brand names by M/s. New India and New International indicated that the goods were manufactured jointly. The Tribunal rejected the appellants' argument that the use of common brand names did not justify clubbing.

5. Sales and Manufacture Practices:
It was alleged that orders placed on one unit were executed by another. The Tribunal found evidence supporting this claim, including statements and power consumption records. The Tribunal concluded that the units were not independent in terms of sales and manufacture, as manufacture was taking place in some units but recorded in the statutory records of all three units.

6. Maintenance of Financial Records:
The Tribunal noted that M/s. New International did not maintain cash books, wage registers, or attendance registers. This non-maintenance indicated common funding and financial flow-back among the units. The Tribunal upheld the finding that the units were not independent.

7. Receipt of Raw Materials:
The Tribunal found that raw materials purchased by M/s. New International were received in the premises of Northern India. The appellants' technical objections were dismissed, and the Tribunal held that the documentary evidence supported the finding.

8. Correspondence on Behalf of New International:
The Tribunal considered letters indicating commonality among the three units. The appellants' objections were dismissed, and the Tribunal found that the correspondence supported the conclusion that the units were not independent.

9. Imposition of Penalties:
The Tribunal noted that no SCN was issued to Shri Vidya Dhari Mahajan, and therefore, no penalty was imposable on him. However, penalties on the other appellants were upheld but reduced to Rs. 25,000/- each.

Conclusion:
The Tribunal upheld the confiscation of the seized goods, the demand of Central Excise duty, and the clubbing of clearances of the three units. The penalties were upheld but reduced for the appellants, except for Shri Vidya Dhari Mahajan, who was not issued an SCN. The appeals were disposed of accordingly.

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