2017 (3) TMI 604 - AT - Central Excise

SSI exemption - Dummy unit - imposition of penalties - Held that - demands have been raised jointly against two firms and two partners. The impugned order does not specify as to the person against whom the demands have been confirmed. Both, the Revenue as well as other appellants, have invoked this ground for setting aside the impugned order. In the case of Shiv Exim Industries 2005 (2) TMI 294 - CESTAT, NEW DELHI , it has been held that for clubbing of clearances of two units it has to be held that one unit is principal unit and other is a dummy unit floated with a view to camouflage the other. In such circumstances demands can only be confirmed against the principal unit - matter is remanded to the Commissioner to decide afresh - appeal allowed by way of remand.

Summary

Issues:
Confirmation of demand and imposition of penalties by the Commissioner of Central Excise, Mumbai-I, regarding the constitution of firms, diversion of inputs, clubbing of clearances, and imposition of penalties on partners and firms.

Detailed Analysis:

1. Constitution of Firms and Diversion of Inputs:
The appeals were filed against the confirmation of demand and penalties imposed by the Commissioner of Central Excise, Mumbai-I. The investigation revealed that M/s.Plasto Flex Industries, M/s.Miko Enterprises, and M/s.Urvish Plastics had interlinked constitutions with common partners. It was found that inputs purchased by M/s.Plasto Flex Industries were diverted to M/s.Miko Enterprises without proper invoices or consideration, leading to the retention of Modvat Credit. The Commissioner confirmed the demand against M/s.Plasto Flex Industries and imposed penalties on the appellants, including the partners. The Tribunal remanded the matter back to the Commissioner to decide based on previous court decisions and observations.

2. Clubbing of Clearances and Penalties Imposed:
The learned Counsel argued that the firms were established before the investigation period and were not created to avoid duty payments. Show-cause notices were issued jointly against the firms and partners. The Tribunal directed the Commissioner to re-determine clubbing in light of previous court decisions. The Commissioner confirmed a demand without specifying the entity, which was challenged by the appellants. The Tribunal found that demands should be confirmed against the principal unit in cases of clubbing clearances, as per relevant court decisions.

3. Commissioner's Order and Remand:
The impugned order did not specify against whom the demands were confirmed, leading to the setting aside of the order. The matter was remanded to the Commissioner for a fresh decision in line with the Tribunal's earlier order and the observations of the Hon'ble Apex Court. The appeals were disposed of accordingly.

In conclusion, the judgment addressed issues related to the constitution of firms, diversion of inputs, clubbing of clearances, and imposition of penalties, emphasizing the need for specific identification in demand confirmation and adherence to relevant court decisions. The matter was remanded for a fresh decision by the Commissioner in accordance with legal precedents.