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2014 (12) TMI 1087 - AT - Central ExciseSSI exemption - clubbing of clearance - flow of funds - mutuality of interest - common partner, common premises, common purchase of raw materials, exchange of raw material from one unit to another, common managerial control, transfer of fund from unit to another - Notification No. 175/86-CE dated 1.3.1986 - Held that - the Tribunal in the earlier round held that all the units are independent and the benefit of exemption Notification is required to be extended. It is noticed that the order of the Tribunal was not challenged by the Revenue before the higher appellate forum. So, the Revenue is not permitted to proceed on the same grounds in the remand proceedings. Clubbing cannot be established without any evidence of flow of funds. In the case of VIR Industries Vs. CCE, Bombay - 1997 (4) TMI 269 - CEGAT, NEW DELHI , it has been held that the three units having some common partners operating from the same premises and having common facilities, entire production of two units sold to third unit, no finding of special financial relationship involving common funding and financial flow back or manipulation of accounts and therefore clearance cannot be clubbed and assessable value to be the sale price of each unit. In the case of Techno Device Vs. CCE, Chennai - 2009 (6) TMI 219 - CESTAT, CHENNAI , it has been held that maintenance of accounts of various units by a single person and at one office is not a ground for justifying clubbing. - Revenue has not placed any material for clandestine removal of the goods as directed by the Tribunal in earlier order. Regarding, the clubbing of the four units, we have already observed that the Tribunal decided the issue in favour of the respondents. Further, the Commissioner (Appeals) has also given detail findings and we agree with it - Decided against Revenue.
Issues involved:
- Eligibility for SSI exemption benefit under Notification No. 175/86-CE dated 1.3.1986 - Clubbing of clearances of multiple units for exemption limit reckoning - Mutuality of interest and financial flow between units - Clandestine removal of goods - Appeal against the order passed by the Commissioner (Appeals) Eligibility for SSI exemption benefit under Notification No. 175/86-CE dated 1.3.1986: The case involved central excise officers visiting multiple fireworks manufacturing units and questioning their eligibility for the Small Scale Industries (SSI) exemption benefit. The officers alleged that the units controlled by a couple were not individually eligible for the exemption. Show Cause Notices were issued, but both the adjudicating authority and the Commissioner (Appeals) dismissed the appeals filed by the Revenue. The Tribunal had previously remanded the matter for further consideration, emphasizing the need for a fair examination of evidence and a speaking order. The Tribunal had already allowed the appeals, considering the units as independent entities eligible for the exemption. The Revenue's contentions were not permitted in the remand proceedings as the Tribunal's order had not been challenged further. Clubbing of clearances of multiple units for exemption limit reckoning: The Commissioner (Appeals) provided detailed findings on the issue of clubbing clearances of various units. Citing relevant case laws, the Commissioner highlighted the importance of separate registrations, financial independence, and lack of financial flow between units in determining clubbing for exemption purposes. The Commissioner's decision was supported by references to legal precedents from the CEGAT, emphasizing the independence of units registered separately under various authorities. The Commissioner concluded that the dropping of further proceedings demanding duty was maintainable in law, and the departmental appeal was deemed not maintainable. Mutuality of interest and financial flow between units: The Tribunal emphasized the necessity of evidence of financial flow for clubbing to be established. Previous cases were cited where the absence of a special financial relationship or manipulation of accounts led to the rejection of clubbing clearances. The Tribunal reiterated that maintaining accounts at one office by a single person does not justify clubbing. The Revenue failed to provide evidence of clandestine removal of goods as directed by the Tribunal in the earlier order. The Tribunal upheld the previous decision in favor of the respondents, agreeing with the detailed findings of the Commissioner (Appeals) regarding the lack of financial flow between the units. Clandestine removal of goods: The Tribunal noted the absence of material presented by the Revenue regarding clandestine removal of goods, as directed in the earlier order. The lack of evidence in this regard contributed to the dismissal of the Revenue's appeals. Appeal against the order passed by the Commissioner (Appeals): After thorough consideration of the issues related to eligibility for SSI exemption, clubbing of clearances, mutuality of interest, and clandestine removal of goods, the Tribunal upheld the order passed by the Commissioner (Appeals). The Tribunal dismissed the appeals filed by the Revenue, emphasizing the lack of evidence supporting the Revenue's contentions and supporting the detailed findings of the Commissioner (Appeals) based on legal precedents and established principles. This comprehensive analysis of the legal judgment highlights the key issues involved, the arguments presented, and the decisions made by the authorities, providing a detailed overview of the case and its implications.
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