2017 (12) TMI 1373 - AT - Central Excise

SSI Exemption - clubbing of clearances - dummy unit - it was alleged that SSI exemption benefit availed was ineligible to the appellant and that the value of clearances of appellants should be clubbed with that of CHFE - Held that - From the initial adjudication proceedings and upto the proceedings which culminated in the impugned order, appellants have maintained that CHFE was actually existing and had provided documents like registration under the Companies Act as also with the Sales Tax and Income Tax Departments - non-issue of SCN to a dummy unit will undermine the entire proceedings - appeal allowed - decided in favor of appellant.

Summary

Issues:
Alleged suppression of manufacture of excisable goods and clandestine clearance, clubbing of clearances of two units, validity of SCN issuance to alleged dummy unit, consideration of evidences and documents, applicability of Board's Circular on clubbing clearances.

Analysis:
The case involved allegations against M/s. Heavy Fab Industries for suppressing the manufacture of excisable goods and clandestinely clearing them without duty payment under the guise of a dummy unit, M/s. Coimbatore Heavy Fab Engg. P. Ltd. (CHFE). The initial adjudication resulted in a demand for payment and penalties. On appeal, the matter was remanded to consider clubbing the clearances of both units, among other aspects like job work and cum duty benefit. Subsequent proceedings led to a reduced duty amount, penalties, and an upheld order by the Commissioner (Appeals).

During the hearing, the appellant's advocate argued that the absence of a Show Cause Notice (SCN) to CHFE rendered the order invalid, citing various judgments supporting this view. They emphasized the lack of financial flow back between the two units, the existence of CHFE backed by documents, and the inapplicability of clubbing clearances between a private limited company and a partnership firm based on a Board's Circular.

The Assistant Commissioner supported the original adjudication order, noting that the Commissioner (Appeals) had already decided in principle that the clearances of both units could be clubbed, making the issue non-agitable before the Tribunal. However, the Tribunal found merit in the appellant's argument that the non-issuance of SCN to CHFE undermined the proceedings, citing precedents that supported this stance. Consequently, the impugned order was set aside, and the appeal was allowed with any necessary consequential relief as per the law.

In conclusion, the Tribunal's decision was based on the principle that the non-issuance of an SCN to a dummy unit like CHFE would invalidate the proceedings, as supported by established legal precedents. The appeal was allowed, and the impugned order was set aside, emphasizing the importance of procedural fairness and adherence to legal requirements in such cases.