2019 (10) TMI 95 - AT - Central Excise

SSI Exemption - clubbing of clearances - independent units or not - adjudicating authority has dropped the demand holding that all the three units are independent in respect of manufacture and clearance of the goods, therefore, they should not be clubbed - time limitation - Cum-duty benefit - HELD THAT - The Revenue had filed appeals against all the respondents which further get reinforced on the basis that even though the appellants have raised specific ground for restoration of appeal that the appeals were not filed against M/s Kinitronics and M/s Jolly Enterprises but the same was dismissed, therefore, the issue that the Revenue s appeal was against all the noticees attained finality. The appellants have not challenged either the remand order or the Miscellaneous Order by which the application for restoration of appeal was dismissed. In this position, the appellant has no locus standi to dispute or to raise the issue that the Revenue s appeal was only against one party i.e. M/s Jolly Electrical Industries. We therefore, hold that the Revenue s appeal was filed against all the noticees before this Tribunal; therefore, the issue related to all the noticees were open before the adjudicating authority in de novo adjudication. The appellants have strongly argued that the present adjudicating authority has not considered the findings of fact narrated by the predecessor Commissioner in the first Adjudication Order dated 06.10.1995. In this regard, we find that the first adjudication order was set aside in the Revenue appeal, therefore, the present adjudicating authority is not judicially required to look into the said order as the same was not in existent. Once, the earlier adjudication order was set aside the entire case has gone back to the stage of SCN and thereafter since the entire matter was kept open the present adjudicating authority was free to take independent view on the overall case without getting influenced by the first order and finding of the predecessor Commissioner, therefore, the submission of the Ld. Counsel on this count is fatal and cannot be accepted. The dropping of modvat demand has no impact as far as clandestine removal of goods manufactured and cleared by M/s Jolly Electrical Industries in the guise of manufacture and clearances of M/s Kinitronics and M/s Jolly Enterprises, therefore, merely because the case proceedings of modvat credit has been dropped against M/s Kinitronics and M/s Jolly Enterprises it will not affect the case of clandestine removal against M/s Jolly Electrical Industries, therefore, this argument is of no help to the appellant. Time limitation - HELD THAT - M/s Jolly Electrical Industries were indulged into clandestine removal of excisable goods to intention to evade duty in the guise of manufacture and clearance of goods from M/s Kinitronics and M/s Jolly Enterprises, there is a clear fraud, suppression of fact, misstatement, collusion with intention with evade duty, therefore, as per the facts of the present case it is a fit case to invoke the extended period, therefore, the demand for extended period is clearly sustainable. Benefit of cum-duty price - HELD THAT - The appellant is entitled for the cum duty benefit. Accordingly, the demand of duty and corresponding penalty needs to be recomputed by extending the benefit of cum duty price. The appeals are dismissed except for the re-quantification of the duty by extending the cum duty price - appeal disposed off.

Summary

Issues Involved:
1. Clubbing of clearances of M/s Jolly Electrical Industries, M/s Kinitronics, and M/s Jolly Enterprises.
2. Demand of Modvat Credit.
3. Time-barred demand.
4. Eligibility for cum duty price.
5. Imposition of penalties.

Detailed Analysis:

1. Clubbing of Clearances:
The core issue was whether the clearances of M/s Jolly Electrical Industries could be clubbed with those of M/s Kinitronics and M/s Jolly Enterprises. Initially, the Collector of Central Excise, Vadodara, in an order dated 06.10.1995, dropped the proceedings against all noticees, holding that the three firms were separate and independent units. The Revenue appealed this decision, and the Tribunal remanded the matter for re-determination, leading to a de novo order confirming the duty demand against M/s Jolly Electrical Industries. The Tribunal found that the Revenue had filed appeals against all noticees, not just M/s Jolly Electrical Industries, and thus, the remand order applied to all parties involved. The adjudicating authority concluded that M/s Kinitronics and M/s Jolly Enterprises did not have the setup for manufacturing excisable goods and that all goods were manufactured by M/s Jolly Electrical Industries, justifying the clubbing of clearances.

2. Demand of Modvat Credit:
The SCN had proposed the recovery of Modvat Credit from M/s Kinitronics and M/s Jolly Enterprises, but this demand was dropped in the impugned order. The appellant argued that if these units were considered dummies, the Modvat Credit taken and utilized should have been denied and recovered. However, the Tribunal held that the dropping of the Modvat Credit demand did not affect the case of clandestine removal against M/s Jolly Electrical Industries, as the clearances were found to be made by M/s Jolly Electrical Industries under the guise of the other two units.

3. Time-barred Demand:
The appellant contended that the demand was time-barred, as all three manufacturers were licensed and their activities were within the knowledge of Revenue Officers. However, the Tribunal found that M/s Jolly Electrical Industries had indulged in clandestine removal of excisable goods with the intention to evade duty, constituting fraud, suppression of facts, and misstatement. Thus, the extended period for demand was rightly invoked.

4. Eligibility for Cum Duty Price:
The appellant sought the benefit of cum duty price, arguing that the demand should be recomputed by extending this benefit. The Tribunal agreed, citing settled legal positions that the sale price should be taken as cum duty price, and excise duty needs to be deducted from the sale price for the purpose of demand. The demand and corresponding penalty were ordered to be recomputed accordingly.

5. Imposition of Penalties:
The Tribunal upheld the penalties imposed under Rule 173Q(1D) and Rule 209A of the Central Excise Rules, 1944, on M/s Jolly Electrical Industries and its partner, respectively. The penalties were justified based on the findings of clandestine removal and evasion of duty.

Conclusion:
The appeals were dismissed except for the re-quantification of the duty by extending the cum duty price. The Tribunal ordered the re-computation of the duty demand and corresponding penalties, affirming the findings of clandestine removal and evasion of duty by M/s Jolly Electrical Industries.