2023 (3) TMI 1070 - AT - Central Excise

SSI Exemption - clubbing of clearances - in both the firms, the partners are same with the same sharing of 25% each - applicability of N/N. 8/2003-CE dated 01.03.2003 - whether the value of M/s. Himalaya Engineers and Manufacturers can be clubbed with the value of the present appellant? - HELD THAT - Even though there is a different name of the firm but both the firms are owned by same partners therefore, there is a common ownership by same partners. From the para 2 of Notification, it is clear that for the purpose of aggregating value of clearance under notification no. 8/2003-CE, the value of clearance of manufacturer must be taken for the clearance of one or more factories and as per Para 7, the aggregate value of clearance of excisable goods for home consumption by manufacturer from one or more factories should not be exceeded Rs. 300 lakhs in the preceding financial year - In the present case, as it is observed that the ownership of both the units i.e. M/s. Himalaya Equipments and M/s. Himalaya Engineers and Manufactures is with the same partners which is to be considered that the one manufacturer has cleared the excisable goods from their both the factories therefore, for the purpose of exemption limit as well as for the purpose of eligibility limit of Rs.300 lakhs, the value of clearance of both the factories have to be taken together. In the present case, the appellant have heavily emphasized on the fact that both the factories have separate set up in respect of other aspects therefore, cannot be treated as one. As stated, the findings clearly provides that even two different factories of same manufacturer needs to be combined therefore, in the present case the clubbing is not on the basis of the common facility between both the units but because of the common ownership, being same partners in both the firm. Therefore, the adjudicating authority has rightly clubbed the value of clearance of both the units and demanded excise duty from M/s. Himalaya Equipments. Appeal dismissed.

Summary

Issues involved:
The judgment involves the issue of clubbing the value of two units owned by the same partners for the purpose of Central Excise Duty exemption under notification no. 8/2003-CE.

Issue 1: Clubbing the value of two units for exemption

The appellant challenged the Order-In-Original that confirmed the differential demand of Central Excise Duty against M/s. Himalaya Equipments based on the inclusion of the clearance value of M/s. Himalaya Engineers and Manufacturers, both having common partners. The appellant argued that a show cause notice should have been issued to the other unit before clubbing their value. The Tribunal examined various judgments and found that common ownership by the same partners justifies aggregating the clearance value of both units for exemption purposes.

Issue 2: Legal interpretation of common ownership

The Tribunal analyzed the constitution of both firms and noted that the partners in M/s. Himalaya Equipments and M/s. Himalaya Engineers and Manufacturers were the same with equal sharing. Referring to notification no. 8/2003-CE, the Tribunal concluded that since both units were owned by the same partners, the value of clearances from both factories needed to be combined for exemption eligibility, regardless of separate registrations or licenses.

Separate Judgement:
The Tribunal dismissed the appeal, upholding the impugned order that clubbed the value of both units owned by the same partners for Central Excise Duty calculation. The decision was based on the common ownership structure, leading to the conclusion that the value of M/s. Himalaya Engineers and Manufacturers should be included in the value of M/s. Himalaya Equipments. The Tribunal emphasized the relevance of common ownership in determining the aggregation of clearance values for exemption limits.