9911796707
TMI Blog1996 (9) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... ing Private Ltd., is a partner in ARE Educational Equipment, M/s. Applied Research Engineering is the manufacturer in both the units and hence value of the clearances from the two factories belonging to the same manufacturer can be clubbed in terms of Notification No. 77/85-C.E. and also as per CEGAT decision in the case of Shree Packaging and Bhagwandas Kanodia. As the value of plant and machinery in both the units is required to be clubbed for computing the value of clearances as per small scale exemption Notification applicable. The demand in this case is, therefore, liable to be confirmed as the combined value of the industrial unit is more than 20 lakhs. Setting up a separate partnership with the private Ltd. company as one of the partners is a colourable device to avoid payment of duty. In this regard the Supreme Court decision in the McDowell case is a fitting one. In view of the foregoing, I pass the order as under :- [Order]. - The demand of Rs. 34,681.35 issued on the assessee is hereby confirmed. It is reported that they have already paid Rs. 18,396.20. If so, the remaining amount of Rs. 16,285.15 should be paid immediately." 2. The facts of the case are that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... so submitted before the lower authorities that M/s. ARE Educational Equipment was formed in Nov. 1984; that they took on lease, premises of M/s. Applied Research Engg. Pvt. Ltd.; that is a private limited company; that ARE Educational Equipment took charge of the factory from 1-1-1985; that the main allegation that both the units produced goods in the same factory did not exist now as M/s. Applied Research Engg. have started manufacturing in separate premises from October, 1986. After careful consideration of the submissions made, the ld. Collector, Central Excise, confirmed the demand and also imposed personal penalty. 4. Shri A.P. Kumtakar, the ld. Constt. appearing for the appellants submitted that the order passed by the ld. Collector, Central Excise was without jurisdiction inasmuch as the cases for demand of duty within six months fall within the jurisdiction of the Asstt. Collector; that in the process, the appellants have been deprived of right of second appeal to the Tribunal; that the ld. Collector has mixed up the two issues namely, the quantum of exemption to industrial units and capital investment; that Notification No. 77/85 refers to capital investment of plan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty stating that there was neither any suppression of facts or any misdeclaration and, therefore, the imposition of personal penalty was not warranted in the present case. 6. Shri A.K. Agarwal, the learned SDR reiterated the findings of the ld. Collector, Central Excise and submitted that M/s. Applied Research Engg. Pvt. Ltd. had created M/s. ARE Educational Equipment only when they found that they were to cross the exemption limit; that the new unit was created by creating a partnership concern in which 90% profit was shared by Applied Research and Engg. Pvt. Ltd. and the other partners who were Directors of M/s. Applied Research Engg. Pvt. Ltd. had created the firm; that the entire financing was done by M/s Applied Research Engg. Pvt. Ltd. He submitted that this proved that the two appellants had financial link-up inasmuch as the goods were being sold only by one appellant and that both the units were controlled by the same person. 7. Heard the submissions of both sides. The first question that has been raised in the grounds of appeal is about jurisdiction. We find that under Section 11A, the Asstt. Collector is competent to adjudge a case in which the demand is for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ibunal in the case of Malleable Iron Steel Castings Co. P. Ltd. v. C.C.E., Bombay reported in 1987 (30) E.L.T. 1019. In Para 17 of this judgment, the Tribunal about industrial unit had held that The value of machinery producing Item 68 goods alone should be included for the purpose of construing the term industrial unit occurring in Notification No. 89/79. The Hon ble Bombay High Court in the case of Devidayal Electronics Wires Ltd. and Another v. UOI and Another reported in 1984 (16) E.L.T. 30 had held that Notification No. 74/78 uses the words `factory and `industrial unit , it must therefore, be assumed that these two words are intended to bear different meanings. Put differently, the word `industrial unit must mean something other than `factory . An industrial unit must mean that separate isolated part of the plant which is exclusively used in the manufacture of goods on which exemption is claimed. Thus, while computing the capital investment made on the plant and machinery installed in an industrial unit, the capital investment made on that part of plant and machinery would also be taken into account which is exclusively used in the manufacture of goods which are sub ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
