2017 (4) TMI 95 - AT - Central Excise

SSI exemption - N/N. 8/2003 dated 01.03.2003 - clubbing of clearances - It was the case of the respondents before the adjudicating authority that respondents 1, 2, 4 and 5 are independent units, they are procuring their own raw materials, working separately having separate plant & machinery, registered with various Government departments like Sales Tax, Income Tax, Service Tax, Property and Professional Tax - whether the adjudicating authority was correct in dropping the proceedings initiated by the show-cause notice for clubbing of clearances of respondent No.1 and respondents 2, 4 and 5 and demanding Central Excise duty and also for imposing penalties on other respondent? Held that - the adjudicating authority has held the benefit of N/N. 8/2003 is available to all the respondent 1, 2, 4 and 5 after reading the benefit of notification independently - He has come to a fair conclusion with a reasoned order as to how the respondents have satisfied the conditions as reproduced herein above in para 137 of the adjudication order. Reliance placed in the case of Commissioner of Central Excise v. Sotex 2006 (11) TMI 39 - SUPREME COURT OF INDIA . Benefit allowed - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Clubbing of clearances for Central Excise duty.
2. Denial of Small Scale Industries (SSI) exemption under Notification No. 8/2003-CE.
3. Imposition of penalties on various respondents.

Issue-wise Detailed Analysis:

1. Clubbing of Clearances for Central Excise Duty:
The Revenue authorities argued that the clearances of respondent units should be clubbed, and duty demanded from respondent No.1, citing that all units were managed by the Saboo family, with free flow of funds among them, common procurement of raw materials, and shared basic infrastructure. The adjudicating authority, however, found that the units were independent legal entities with separate registrations, premises, and financial arrangements. The authority noted that the units were established at different times and operated independently, with no evidence of one unit's resources being used by another. The Tribunal upheld these findings, agreeing that clubbing of clearances was not warranted as per the facts and legal precedents, including the decisions in Balsara Hygiene Products and Unity Industries.

2. Denial of SSI Exemption under Notification No. 8/2003-CE:
The Revenue sought to deny the SSI exemption to the respondent units by arguing that the units were not independent. The adjudicating authority, however, found that each unit had separate SSI registrations, maintained independent accounts, and operated independently. The authority noted that the units were geographically apart, had their own funding, and were assessed separately for taxes. The Tribunal agreed with these findings, citing that the units met the conditions for SSI exemption and that the Revenue had not provided contrary evidence. The Tribunal referenced several judicial decisions supporting the independence of the units and their eligibility for SSI exemption.

3. Imposition of Penalties on Various Respondents:
The show-cause notices also sought to impose penalties on respondents for alleged infractions. The adjudicating authority, after considering the evidence, found no basis for imposing penalties, as the respondents were operating independently and had not violated any provisions warranting penalties. The Tribunal upheld this view, noting that the Revenue had not rebutted the factual findings with any substantial evidence.

Conclusion:
The Tribunal, after extensive review, concluded that the adjudicating authority was correct in dropping the proceedings for clubbing of clearances and denying the SSI exemption. The Tribunal found that the respondents were independent units entitled to the benefits of Notification No. 8/2003-CE and that the Revenue's appeal lacked merit. The appeals were thus rejected, affirming the legality and correctness of the adjudicating authority's order.