2016 (8) TMI 936 - AT - Central Excise

Demand and imposition of penalty - Confiscation of goods seized - diversion of 1022 pieces of compressors procured by M/s. Thermoking at concessional rate of duty - clandestine removal of gas compressor to M/s. Flevel International and consequent manufacture of air conditioner by the said M/s. Flevel International - Held that - there is no need for assessing the evidentiary value of all the facts placed on record by the revenue inasmuch as the same very facts and evidences stand scrutinized by the Hon ble Delhi High Court and have been held to be insufficient to uphold the charges. The allegations in the present proceedings is in respect of same number of gas compressors i.e. 1022 procured by the assessee under Chapter X Procedure and alleged diversion which were the subject matter of the earlier proceedings. As such, in terms of Hon ble Delhi High Court decision in the earlier proceedings, the allegation of diversion of 1022 pieces of gas compressor and the consequent demand of duty along with imposition of penalty cannot be upheld. Consequently, the confiscation of the seized goods is required to be set aside. Clubbing of clearances - units related to each other - Held that - the issue stand decided in the same appellants case vide the earlier order of the Tribunal wherein both the Members agreed that the allegations of clubbing of clearances cannot be upheld. Reference is made to the decision reported in 2014 (2) TMI 1094 - CESTAT NEW DELHI (LB) . we also note that the Revenue s appeal against the said order of the Tribunal before the Hon ble Delhi High Court stand dismissed. As such, as the issue stand decided in the same assesssee s case, we find no reasons to interfere in the impugned order of the Commissioner on this ground. - Decided in favour of appellant

Summary

Issues:
1. Clubbing of clearances between related units.
2. Allegation of diversion of gas compressors and clandestine clearance of air conditioners.

Analysis:
1. The judgment deals with two appeals, one by the assessee and the other by the Revenue, arising from the same impugned order confirming a demand of ?70,51,800 along with penalties and confiscation of seized goods. The issue of clubbing clearances was raised, but the Commissioner dropped the proceedings. The Revenue appealed this decision.
2. M/s. Thermoking, engaged in manufacturing domestic electrical appliances, availed small-scale exemption for most products. Water coolers were fully exempted from Central Excise duty. The Revenue alleged that clearances from other units owned by Smt. Neera Khanna, wife of the proprietor of M/s. Thermoking, should be clubbed. Investigations revealed alleged diversion of gas compressors to another unit for manufacturing air conditioners clandestinely.
3. The Tribunal initially set aside the clubbing of clearances between related units but upheld the charge of clandestine diversion of gas compressors. The High Court later set aside the majority Tribunal decision, concluding insufficient evidence for the diversion allegation.
4. The present judgment, based on previous decisions, held that the diversion allegation could not be upheld. The Delhi High Court's decision in the earlier proceedings was considered final. The appeal by the assessee was allowed, setting aside the demand of duty, penalties, and confiscation of goods.
5. Regarding the Revenue's appeal on clubbing clearances, it was noted that the issue had been decided in the assessee's favor previously, with the High Court dismissing Revenue's appeal. As the issue was already settled, the impugned order vacating the show cause notice on clubbing clearances was upheld, and the Revenue's appeal was rejected.

This comprehensive analysis covers the issues of clubbing clearances between related units and the allegation of diversion of gas compressors, providing a detailed summary of the legal judgment.