1999 (12) TMI 272 - AT - Central Excise

Summary

Issues:
- Clubbing of clearances for payment of Central Excise duty
- Separate registration under Sales Tax Act
- Common control of production and sales
- Financial flow back between units

Clubbing of Clearances for Payment of Central Excise Duty:
The appellants challenged the Order-in-Original where their clearances were clubbed for Central Excise duty payment purposes. The appellants argued that M/s. Verma Frost and M/s. Freezland were separate concerns, not eligible for small-scale exemption notification due to different activities. They emphasized separate registration under the Sales Tax Act and separate assessment for Income tax. The appellants relied on a Rajasthan High Court decision, stating that without common funding or financial flow back, clearances of two units cannot be clubbed solely based on shared premises. However, the respondents contended that both units were situated in the same premises, with common labor and management control, as evidenced by invoices signed by the father for M/s. Freezland. The Tribunal found common control of management and sales, leading to the rejection of the appeals.

Separate Registration under Sales Tax Act:
The appellants argued that M/s. Verma Frost and M/s. Freezland were separately registered under the Sales Tax Act, indicating distinct entities. They claimed that a written agreement between the father and son demarcated separate premises for each unit, further supporting their separate status. However, the respondents presented evidence that M/s. Freezland shifted its manufacturing activity to the same premises as M/s. Verma Frost, with shared labor and management control. The Tribunal concluded that despite separate registrations, the common control and shared premises justified clubbing the clearances for duty payment.

Common Control of Production and Sales:
The central issue revolved around the common control of production and sales between M/s. Verma Frost and M/s. Freezland. The appellants argued that without financial flow back or common funding, the clearances of both units should not be clubbed. They cited a Rajasthan High Court decision emphasizing the significance of special financial relationships for clubbing clearances. However, the respondents demonstrated that the father, controlling both units, signed invoices for M/s. Freezland and admitted to shared labor utilization. The Tribunal found that the common control of management and sales justified the clubbing of clearances, leading to the rejection of the appeals.

Financial Flow Back Between Units:
The appellants contended that without evidence of financial flow back between M/s. Verma Frost and M/s. Freezland, their clearances should not be clubbed for Central Excise duty payment. They emphasized the absence of common funding and financial connections between the units. However, the respondents presented statements and evidence indicating shared premises, labor, and management control, suggesting a financial relationship between the units. The Tribunal considered these factors, concluding that the common control and shared activities justified clubbing the clearances, resulting in the dismissal of the appeals.