1999 (8) TMI 428 - AT - Central Excise

Summary

Issues:
1. Clubbing of clearances under excise law for two manufacturers.
2. Determination of related persons and mutuality of interest.
3. Financial flow back evidence between manufacturers and distributor.

Clubbing of Clearances:
The Collector of Central Excise concluded that two manufacturers had to club their production and clearances under the excise law due to manufacturing goods for the same manufacturer. However, the appellants argued their independence with separate units, financial arrangements, and no control over each other. They highlighted the lack of evidence regarding financial flow back to the unnamed manufacturer. Citing precedents like Rang Udyog v. C.C.E., Ahmedabad, the Tribunal emphasized the need for evidence of financial flow back to club clearances. As no such evidence existed, the Tribunal found the Collector's decision unsustainable.

Determination of Related Persons and Mutuality of Interest:
Regarding the relationship between the manufacturers and a distributor, the Commissioner held them as related persons without substantial reasons. The appellants contended that the distributor operated independently without mutual financial interests. Referring to the case of International Computer India Mfg. Co. Ltd. v. C.C.E., the appellants argued that being subsidiaries of the same holding company did not establish relatedness without direct or indirect business interests. The Tribunal concurred, finding no evidence of mutual interest between the parties, leading to the allowance of the appeal.

Financial Flow Back Evidence:
The issue of financial flow back between the manufacturers or to the undisclosed manufacturer lacked evidentiary support in the impugned order. As the Tribunal stressed the necessity of evidence for clubbing clearances, the absence of such proof rendered the adjudicating authority's decision unsustainable. Similarly, in assessing the mutuality of interest with the distributor, the Tribunal found no direct or indirect business connections between the manufacturers and the distributor. Relying on precedent and lack of evidence, the Tribunal set aside the impugned order and allowed the appeals.

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