2015 (10) TMI 447 - SC - Central Excise

Clubbing of clearances - whether the excisable goods manufactured by the holding company and the subsidiary company have to be clubbed together has not been satisfactorily answered either by the learned Commissioner or by the CESTAT in the impugned judgment - Held that - Sole basis on which the CESTAT has decided the issue of clubbing is bad in law. Equally, on the issue of suppression of material facts leading to the extended period of limitation being applicable to the first of the six Show Cause Notices, the CESTAT is equally cursory, relying upon one letter dated 20.07.1998 sent by the subsidiary company in which nothing is stated from which it can be said that there is suppression or otherwise of facts except the fact that M/s. Margo Bio Controls (P) Ltd. happens to be a 100 per cent subsidiary of the holding company viz., M/s. P.J. Margo (P) Ltd. - case should be remanded to the CESTAT to decide afresh as to whether any case for clubbing of excisable goods manufactured by the holding company and the subsidiary company is or is not made out on facts. Equally, the issue as to whether or not there has been suppression of material facts by both the aforesaid companies is also sent back for a re-determination on facts. - Decided in favour of Revenue.

Summary

Issues Involved:
Appeal arising from CESTAT order on excisable goods manufactured by holding and subsidiary companies, clubbing of clearances for exemption under Notification No. 7/97, suppression of material facts by companies.

Analysis:

1. Clubbing of Excisable Goods:
The appeal involved the issue of whether the excisable goods manufactured by a holding company and its subsidiary should be clubbed together. The Revenue contended that the subsidiary company was a dummy entity, and its goods should be combined with the holding company's for calculation purposes. The CESTAT's decision was challenged on the grounds that it did not adequately address this issue. The Supreme Court found that the CESTAT's reliance on a circular from 1992 was misplaced, as it did not pertain to the relevant Notification No. 7/97. Previous judgments were cited to support this position. Consequently, the Court remanded the case to CESTAT for a fresh determination on whether clubbing of goods was warranted based on the factual circumstances.

2. Suppression of Material Facts:
Another significant issue was the alleged suppression of material facts by both the holding and subsidiary companies. The Respondents argued that the grounds presented by the Commissioner were not sufficiently discussed, and the CESTAT's reliance on a single letter was inadequate to establish suppression. The Supreme Court agreed that the CESTAT's assessment on this matter was cursory and lacked detailed consideration of the facts. The case was sent back to CESTAT for a reevaluation of whether suppression of material facts occurred, leading to the application of an extended period of limitation. The Court directed CESTAT to decide the matter within six months from the date of the order due to the case's age.

In conclusion, the Supreme Court disposed of the appeal by remanding the case to CESTAT for a fresh determination on the clubbing of excisable goods manufactured by the holding and subsidiary companies and the issue of suppression of material facts. The Court highlighted the inadequacies in the previous judgments and directed CESTAT to reexamine the case thoroughly within a specified timeframe.