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TMI Blog1998 (2) TMI 196X X X X Extracts X X X X X X X X Extracts X X X X ..... to them, that they thereby, paid short duty and excise amounting to Rs. 3,25,494.84 during these years and hence the same is recoverable as duty paid short under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A(1) of Central Excises Salt Act, 1944. The appellants in their reply dated 4-8-1987 to the show cause notice stated as follows : (i) The Indore company is an independently incorporated company different from Bombay company and the fact that their company is different from the Indore Company is recognised and accepted by various authorities, viz. Income Tax, Sales Tax, Provident Fund, Employees State Insurance Corporation; upto the date of issue of the subject show cause notice even the Central Excise authorities treated the Indore Company and Bombay company as two separate and independent units; (ii) They are carrying out their manufacturing activities independently in terms of purchase of raw materials, looking after their personal and manpower requirements and also sale of finished products. The Indore company is no way concerned with their activity and the Indore Company takes care of their own finances and operations. None of the senior executives ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade to the proper officer, who was the concerned Asstt. Collector, who decides the fate of the classification list and grant of exemption. He has confirmed the duty demand and has also imposed a penalty of Rs. 50,000/- besides order of confiscation of land, building, plant and machinery, material, conveyance or animal and every other thing used in connection with manufacture, production, storage, removal or disposal of such goods or any other excisable goods on such land or machineries, material and other things under Rule 173Q(2) of Central Excise Rules, 1944. However, he has granted an option to redeem them on payment of fine of Rs. 1,00,000/-. 4. In Appeal No. E/1823/89-B, the charge was similar to the above appeal and pertained to the period 1983-84 to 1987-88 demanding a differential duty of Rs. 1,56,891.20. In this case, a penalty of Rs. 1,00,000/- has been imposed besides confirming the duty. However, there was no order of confiscation of land, building etc. The plea of wholly owned subsidiary unit being an independent manufacture and the fact that there has been no mis-statement or suppression in the matter, has been rejected by the Collector. 5. We have heard both side ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... two units have been established, much before the issue of exemption notification, then the benefit has to be granted. He submitted that the Bombay unit was in existence from 1963 and the Indore Unit was established in 1979 under a different name and registered independently and both the manufacturer are manufacturing independent items and claimed independently the benefit of notification by filing classification list and the same had been approved. He submitted that the subsidiary company of a holding company is a separate legal entity in the eye of law as can be seen from the meaning of holding company and subsidiary company appearing under Section 4 of the Companies Act, 1956 (Extracts) which is reproduced herein below : 4. Meaning of holding company" and subsidiary - (1) For the purposes of this Act, a company shall, subject to the provisions of sub-section (3), be deemed to be a subsidiary of another if, but only if, (a) that other controls the composition of its Board of Directors; or (b) that other - (i) where the first mentioned company is an existing company in respect of which the holders of preference shares issued before the commencement of this act have the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discussed in these judgments. It has been brought out that clubbing of clearances can be effected only when a dummy unit has been established on paper only, inasmuch as that the established unit was with an avowed objective of evading excise duty or for evasion purpose and it did not exists in law or in reality (see Alpha Toyo Ltd.). It has also been held that holding of shares or commonness of Directors between one company and another, especially when both companies are geographically apart without any financial flow back in such events also clubbing of clearances cannot be done [see Prime Control (P) Ltd.]. In the case of Prime Controls (P) Ltd. a similar situation arose pertaining to the holding of common shares between M/s. Avcon and M/s. Prime Control and the law has been discussed in great detail and it has been held conclusively that no independent companies which exists geographically apart and without any financial flow back or being dummy of one another then in such event the clearances of both the companies cannot be clubbed. In the case of Cheryl Laboratories, the three members Bench of the Tribunal considered the question of clubbing of clearances of two units which we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tification; so long as no such funding or flow back is seen in the case. As the law has been clearly laid down in all the judgments, the ratio would apply to this case also. It is further seen that there was no suppression in the matter. It is also an admitted fact that balance sheets were filed regularly and the affidavit of Shri K.K. Janardanan also shows that the department had knowledge of the existence of both the units. In otherwise the revenue has not brought anything on record to show that the subsidiary unit has been set up as a dummy unit with financial flow back and set up to unjustly avail the benefit of Notification. There is also no cause to impose penalty and order of confiscation of land and machinery on the aspect pertaining to confiscation of land and machinery. The Tribunal has considered at length the case law on the aspect and has laid down the circumstances under which confiscation can be imposed as in the case of Reliance Industries Ltd. v. CCE, Bombay as reported in 1998 (24) RLT 29, we do not find existence of such features in the present case for confiscating plant and machinery and hence the ratio laid down in this case is applicable to the facts of the p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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