2016 (7) TMI 1116 - AT - Central Excise

SSI Exemption - Dummy units - Clubbing of clearance - it has been alleged that both units were managed and controlled by the Proprietor of the appellant - determination of turnover - SSI exemption notification No. 08/2003-CE dated 01.03.2003. - Held that - Analysing the uncontradicted evidences, we do not harbour any doubt that even though M/s Accurate Engineers, on record, a separate unit, but, its day to day function and management was handled by Shri Asgarali A. Siddiqui, proprietor of M/s Libra Engineering Works and his wife Smt. Halimakatun A. Siddiqui has lent her name as proprietress of the firm. In other words, for all practical purposes, the management/control of the business of manufacture and sale has been handled by Mr. Asgarali A. Siddiqui, proprietor of the Appellant. In these circumstances, we do not find any error in the order of the authorities below in clubbing the clearance value of both the units for the financial year 2005-06 in computing the eligible limit of 100 Lacs for the Appellant Unit prescribed under notification No. 08/2003-CE dated 01.03.2003 and confirmed the duty short paid and penalty imposed. - Demand confirmed - Decided against the assessee.

Summary

Issues:
Clubbing of clearance values for SSI exemption eligibility.

Analysis:
The case involved an appeal against an order passed by the Commissioner of Central Excise, Ahmedabad, regarding the clubbing of clearance values of two units for the purpose of determining eligibility for SSI exemption. The appellant's unit and another unit, M/s Accurate Engineers, were visited by Central Excise Officers and found to be engaged in manufacturing industrial valves under Chapter 84 of CETA, 1985. The appellant had exceeded the exemption limit during the financial year 2005-06, leading to a demand notice for duty recovery and penalty imposition. The main contention was whether the clearance value of M/s Accurate Engineers should be clubbed with the appellant's unit for SSI exemption eligibility.

The appellant argued that both units had separate legal existence with distinct PAN numbers, Sales Tax Registrations, and filed separate tax returns, making each unit eligible for the exemption limit. They cited various case laws to support their argument. On the other hand, the Revenue Authority contended that statements from the appellant and his wife indicated that the management and control of M/s Accurate Engineers were handled by the appellant, suggesting that both units were effectively the same entity for practical purposes. The Revenue Authority argued that the case laws referenced by the appellant were not applicable due to differing facts and circumstances.

After analyzing the evidence, the tribunal found that the appellant admitted to managing both units and that buyers contacted him for purchases, with goods invoiced under M/s Accurate Engineers. The appellant's wife confirmed her lack of involvement in the business operations. The tribunal concluded that while M/s Accurate Engineers was a separate unit on paper, the day-to-day functions and management were effectively controlled by the appellant. Therefore, the tribunal upheld the order of clubbing clearance values for both units to determine the eligibility for SSI exemption, confirming the duty shortfall and penalty imposition. Consequently, the appeal was rejected, and the order passed by the Commissioner (Appeals) was upheld.