9911796707
TMI Blog1997 (9) TMI 220X X X X Extracts X X X X X X X X Extracts X X X X ..... ion Nos. 71/78, 80/80 and 83/83, which exempted small scale industries from payment of duty for goods manufactured and cleared up to the value of Rs. 5 lakhs, Rs. 7.5 lakhs and Rs. 7.5 lakhs respectively. Appellant was filing declarations indicating the annual production to be of the value of Rs. 4 lakhs in each of the years and since this value was less than 80% of Rs. 7.5 lakhs (that is, Rs. 6 lakhs), appellant was exempted from licensing control. Appellant-firm, M/s. Precision Tool Room (for short, PTR) is constituted of two partners, namely, B.R. Padaria and Kalubhai M. Khokhar. In November, 1979, another firm by name M/s. Precision Electrical (for short, PEC) was brought about, with partners Kalubhai M. Khokhar and Mrs. K.B. Padaria, wife of Shri B.R. Padaria, as partners. Declarations were being submitted in the name of PEN also under the later two of the aforesaid Notifications and PEN also purported to avail the benefit of the Notifications and was clearing goods without payment of duty. In January, 1995, a third partnership firm by name M/s. Patel Engineering Company (for short, PEN) was brought about with partners B.R. Padaria and Mrs. C.K. Khokhar, wife of Kalubhai M. Kh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the name of the three concerns bore the unregistered brand name NAGMANI . While B.R. Padaria and Kalubhai M. Khokhar are partners of PTR, the latter is partner of PEC and his wife is a partner of PEN and the former is a partner of PEN and his wife is a partner of PEC. 6. Statements of three workers referred to above and others were recorded, which, according to the show cause notice, showed that motors partially manufactured in the premises of PEC were being sent to PTR for winding and painting and fixing number plates and that the three workers ostensibly employees of PEC were actually working in PTR. M.K. Makhwana, one of the owners of shed L 90, stated that the shed was rented out in the name of PEN from January, 1995 to September, 1995. S.M. Parmar, a transporter stated that he used to deliver bodies for making electric motors from shed L 84 to shed L 541 and that no papers relating to the goods had been given to him. It was also found that raw materials and machinery belonging to PEN were in the premises of PTR after the closure of PTR. B.R. Padaria in his statement also referred to certain debit and credit entries in their account in the name of PEN and PEC evidencing s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... really not present for work in the premises. Statements of workers were written by the excise officers themselves and were deliberately recorded to create confusion. The workers were all temporary daily wagers. Many a time it happened that workers of one employer having two factories move from one factory to another for petty work and this did not show that the two factories are one and the same. The brand name is not registered in the name of any of the concerns and can be used anyone. All the financial transactions were made under account payee drafts or cheques. There was no justification to club the clearances of two or three concerns for the purpose of the Notifications. The materials belonging to PEN, when they were asked to vacate the premises, were temporarily kept in the premises of PTR at their request. The charge of suppression and misdeclaration is not correct. The larger period of limitation under the proviso to Section 11A(1) of the Act cannot be invoked and the notice is barred by time. 9. The Collector rejected the aforesaid contentions and acted on the material factual statements in the show cause notice and held that PEC and PEN had been set up by the two partne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the units and there has been no common management or common financial control or arrangement and no financial flow from PEC and PEN to PTR. In these circumstances, according to him, there was no justification for clubbing the clearances of the two units in the first four years and of three units in the last year of the period covered by the impugned order. He also contended that there was no suppression of facts by the parties and no justification to invoke the larger period of limitation, namely, 5 years prescribed under the proviso to Section 11A(1) of the Central Excise Act, 1944 and hence the claim is wholly barred by limitation and there was no justification to impose penalty. It is pointed out that if clubbing cannot be resorted to, exemption under the exemption Notifications and no duty was payable. 11. Shri J.M. Sharma, JDR rebutted the above contentions and supported the inferences drawn and conclusions arrived at by the adjudicating authority. He also referred to the various circumstances relied on by the adjudicating authority. He contended that though limit of exemption was clearances of the value of Rs. 7.5 lakhs, the Notifications required the manufacturer to give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore than one factory by or on behalf of a manufacturer . 13. According to the appellant commonality of partners in a plurality of firms has no relevance. If this is the only circumstance available in the case, that may not be sufficient to hold that the clearances of goods by or in the name of the firms are clearances by a manufacturer. Nature of the commonality and other circumstances available in the case have to be taken into consideration. The goods produced in the name of the three units are same, namely, electrical motors and the same brand name (not registered) NAGMANI is affixed on all the goods. In other words, the three units proposed to manufacture and clear motors having the same brand name. The first firm established by B.R. Padaria and Kalubhai M. Khokhar was PTR and that was in 1974. SSI Notification No. 71/78, dated 1-3-1978 prescribed limit of exemption as Rs. 5 lakhs and exemption from licensing control was available as long as value of clearances during a year did not reach 80% of Rs. 5 lakhs, i.e. Rs. 4 lakhs. PTR filed declarations in 1978-79 and 1979-80 to the effect that the value of clearances for the respective years would not reach Rs. 4 lakhs. Notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... averred that the three units were under the common direction and control, administratively and financially, of the two male partners. The denial of this averment as seen in paragraph 15 of the PTR s reply is as follows :- This also does not mean that there was any common direction and control, administratively or financially, because all the transactions have taken place through bank and in accordance with the normal trade practice. The denial is not effective and is based on the plea that financial transactions among the units were through bank and as per trade practice. That the direction, control and management of all the affairs of the units were in the hands of B.R. Padaria and Kalubhai M. Khokhar is also in accordance with probability, particularly since the reply of PTR did not indicate that the two lady partners had anything to do with direction, control, management or financial dealings and no reply was submitted in the name of PEC or PEN or the two lady partners. There was also no specific case that the two lady partners had any financial sources of their own from which they could have contributed to the share capital or working capital. All these circumstances are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... name of PEC was also attended to by employees of PTR and PEC in the factory of PTR. This position is seen supported by the statement recorded on 4-11-1985 of S.M. Parmar who was operating a hand car. He stated that he had brought several pieces of bodies of motors from the premises of PEC (L 541) to L 84 shed and he used to regularly transport electric motors from L 84 shed to L 541 shed and such transport was done without papers. The reference to absence of accompanying papers evidently was to documents such as gate pass, etc. In the reply to the show cause notice submitted eight months later, it was stated PEC was sending to M/s. Kirti Products burnt out motors for heating which was necessary to separate the burnt wire from the motors and after such heating operation, they were being sent to the door of PTR and thereafter they were being taken to premises of PEC. This version which is in conflict with the earliest version of the transporter cannot be believed. This statement supports statements of some of the employees suggesting that a part of the work on motors subsequently cleared in the name of PEC was being attended to in PTR factory. The explanation that the employees are ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
