2017 (4) TMI 373 - AT - Central Excise

SSI exemption - inter-related units - clubbing of clearances - whether the eight units are inter-related and whether the clearance needs to be clubbed for arriving at benefit of exemption under N/N. 175/86-C.E., dated 1-3-1986? - Held that - there is no common control or financial flowback, or movement of finished goods between units, each unit is having independent manufacturing unit registered with the Excise Authority, accordingly the findings of adjudicating authority is correct - there is nothing on record to show that manufacturing activity was distributed amongst of the manufacturing units to create a facade for evasion of duty - appeal dismissed - decided against Revenue.

Summary

Issues:
Whether eight units are inter-related and whether the clearance needs to be clubbed for arriving at benefit of exemption under Notification No. 175/86-C.E., dated 1-3-1986.

Analysis:

Issue 1: Inter-relationship of eight units and clubbing of clearances
The appeal was filed by the Revenue against the Order-in-Original passed by the Commissioner of Central Excise, Pune-III. The key issue was whether the eight units mentioned were inter-related and if their clearances needed to be clubbed for the purpose of availing exemption under Notification No. 175/86-C.E., dated 1-3-1986. The Revenue contended that all eight units belonged to the same family group and should be clubbed together. However, the adjudicating authority found that each unit was separately registered as a small-scale unit, partnership concern, and with various government departments. Each unit acquired its own raw materials and sold finished goods directly to customers. The adjudicating authority concluded that the units were independent, and there was no evidence of manufacturing activity being distributed among them to evade duty or for the benefit of individuals. The Revenue did not contest these factual findings. The Tribunal concurred with the adjudicating authority, stating that there was no common control, financial flowback, or movement of finished goods between units. Each unit had an independent manufacturing setup registered with the Excise Authority. Consequently, the Tribunal upheld the adjudicating authority's decision, rejecting the Revenue's appeal.

In conclusion, the Tribunal found that there was no basis for clubbing the clearances of the eight units as they operated independently without any evidence of collusion or evasion. The decision was in line with established legal principles, and the appeal by the Revenue was dismissed.