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2008 (4) TMI 109 - AT - Central ExciseSFP is just an extension of BCI and two units were being run as one unit only and the goods actually manufactured in BCI were being cleared through SFP without payment of duty, claiming SSI exemption - clubbing of clearances of BCI and SFP for the purpose of determining the aggregate value of clearances, is justified demand is justified since there is no proof of procurement of raw material by BCI or export sales by SFP, claim for reduction of demand is not allowed
Issues Involved:
1. Clubbing of clearances for SSI exemption. 2. Confirmation of duty demand and interest. 3. Imposition of penalties. 4. Determination of independent entities. 5. Time-barred demand. 6. Quantification of duty demand. Detailed Analysis: 1. Clubbing of Clearances for SSI Exemption: The Commissioner ordered the clubbing of clearances of M/s. Box & Carton (India) Pvt. Ltd. (BCI) and M/s Super Fine Packaging (SFP) to determine the aggregate value of clearances under various SSI exemption notifications. The Tribunal upheld this decision, noting that despite being separate entities on paper, BCI and SFP operated as a single unit. Factors such as common telephone and fax numbers, shared staff, and the signing of each other's letters without authorization indicated that SFP was merely an extension of BCI, used for clearing goods without paying duty. 2. Confirmation of Duty Demand and Interest: The Commissioner confirmed a duty demand of Rs. 49,39,323 against BCI under the proviso to Section 11A(1) of the Central Excise Act, 1944, along with applicable interest under Section 11AB. The Tribunal found that the clubbing of clearances was justified and that BCI and SFP were not independent units. Thus, the duty demand was valid. 3. Imposition of Penalties: Penalties were imposed on BCI and its directors under various sections of the Central Excise Rules. BCI was penalized Rs. 49,39,323 under Section 11AC, Rs. 15 lakhs under Rule 25(1), and additional penalties were imposed on the directors. The Tribunal upheld these penalties, finding that the clearances were clubbed correctly and that the units were not independent. 4. Determination of Independent Entities: The Tribunal examined whether BCI and SFP were independent entities. Despite having separate machinery, employees, and registrations, the Tribunal concluded that the two units operated as one. The shared resources and unauthorized signing of documents by each other's representatives supported this conclusion. 5. Time-Barred Demand: The appellants argued that the demand for the period from 27-3-03 to 31-7-03 was time-barred. However, the Tribunal cited the case of Nizam Sugar Factory v. CCE, stating that the date of knowledge of the departmental officers is not relevant for computing the five-year period. The relevant date is defined in Section 11A(3), making the demand within the permissible period. 6. Quantification of Duty Demand: The appellants contended that the duty demand should be reduced to Rs. 27,95,873, considering input duty credit and export sales. However, the Commissioner found that BCI failed to provide necessary documents to support this claim. Consequently, the Tribunal upheld the original duty demand. Conclusion: The Tribunal dismissed the appeals, affirming the Commissioner's order to club the clearances of BCI and SFP, confirm the duty demand, and impose penalties. The Tribunal found that BCI and SFP were not independent entities and that the duty demand was not time-barred. The quantification of the duty demand was also upheld due to lack of supporting documentation from BCI.
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