1997 (4) TMI 321 - AT - Central Excise

Summary

Issues:
1. Clubbing the value of clearances of Water Storage tanks of POLYCON brands from two separate units for computing aggregate value under Notification 175/86.
2. Allegation of treating two independent partnership firms as one unit due to similarity in brand names and related partners.
3. Examination of evidence and legal provisions regarding separate treatment of two units for excise purposes.

Analysis:
The appeal in question challenges the decision of the Collector of Central Excise (Appeals), Jaipur, confirming the order of the Assistant Collector, which clubbed the value of clearances of Water Storage tanks of POLYCON brands from two distinct units to calculate the aggregate value under Notification 175/86. The appellants, two independent partnership firms, were alleged to be operating as one unit due to similarities in brand names and related partners. The Assistant Collector held that the units were not separate manufacturers and approved the classification list by combining the clearances from both units. The appellate tribunal examined the facts and legal provisions in detail to determine the appropriate treatment of the two units.

The tribunal noted that the two units were independent entities with no common partners, situated at different locations, and operated with separate premises, plant, and machinery. While the brand names were similar, there was no evidence to suggest that one unit was a dummy of the other. The tribunal emphasized that the similarity in brand names alone was not sufficient grounds to club the clearances of both units. The tribunal also considered the supplier's mistake in addressing invoices and concluded that it did not impact the separate identity of the units. The tribunal scrutinized the evidence presented, including registration certificates and partnership deeds, to establish the distinct nature of each unit.

Regarding the legal provisions, the tribunal referred to Notification 175/86, which allowed SSI units to clear goods bearing another brand name. The tribunal highlighted the importance of proving any commonality of interest or financial flow-back between the units to justify treating them as one entity. The tribunal also referenced case law to support the argument that separate registration and operational independence are crucial factors in determining the individuality of units for excise purposes.

Ultimately, the tribunal held that the department failed to establish sufficient evidence to support the clubbing of clearances from both units. Each unit was deemed to be independent and entitled to consideration for benefits under relevant notifications based on its own merits. The impugned orders were set aside, and the appeal was allowed in favor of the appellants. The tribunal emphasized the need for a thorough examination of facts and circumstances to determine the true nature of the relationship between related but separate entities for excise classification and benefits.