9911796707
TMI Blog1999 (7) TMI 223X X X X Extracts X X X X X X X X Extracts X X X X ..... ctory premises of M/s. L.D. Industries and M/s. L.R. Industries situated at 66/65, Lonawala Co-operative Industrial Estate on receipt of information that the said two units were in fact only one unit and they were availing the benefits of tax exemption for Small Scale Industries which they were not entitled to. During the visits to their premises on 14-12-1988 and 22-12-1988, certain documents and unaccounted goods were seized under Panchanama and statements of the partners of the two units and Employees were recorded under Section 14 of the Central Excise Act, 1944. After further investigation, a show cause notice was issued to the present appellants, among others, alleging that the three units had mutuality of interest among themselves by way of common overall control of the three units by Shri S.L. Raheja, common procurement of raw material by virtue of which the three units got the raw materials at lower price with 90 to 120 days credit facility instead of normal credit facility of 30 days available to other persons, common stock accounting and planning, interdependence in manufacturing operations, common stock of raw-materials and semi-finished goods, common use of machinery ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o independent unit would undertake heat treatment work on the product of another unit without charging any money. The charges relating to heat treatment was therefore a flow back of monetary benefit from M/s. L.D. Industries to M/s. Supreme Washers, according to the Collector. He further found that one machine of M/s. Supreme Washers had been kept at the premises of M/s. L.D. Industries. There was no evidence to show that the said placing of machine was a purely innocent arrangement. Collector also found that the appellants had not given any explanation for the stock of manufactured goods belonging to M/s. Supreme Washers lying in the premises of M/s. L.D. Industries. He relied on the statement given by Shri S.L. Raheja on 6-2-1989 admitting that the product manufactured at the premises of M/s. Supreme Washers was delivered in loose condition without any Central Excise documents. Collector also found that there was substantial flow of funds from M/s. L.D. Industries to M/s. Supreme Washers as evidenced from Bank records and account books. Shri Shyamal Raheja, who was the Director of M/s. Supreme Washers and also partner of M/s. L.R. Industries in his statement dated 9-6-1989 had ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of previous order of the Addl. Collector alleging that M/s. L.D. Industries did not exist independently. Ld. Counsel submitted that the principle of constructive res judicata would apply. He relied on the decision of the Tribunal in Hind Lamp Ltd. v. C.C.E., Kanpur reported in 1987 (28) E.L.T. 429. 5. On the question whether M/s. L.R. Industries and M/s. L.D. Industries were dummy units created by M/s. Supreme Washers (P) Ltd. and whether there was mutuality of interest between the three units and therefore their production should be clubbed, ld. Counsel submitted that mutuality of interest was relevant only for purpose of valuation of excisable goods. He submitted that once it is accepted that there was mutuality of interest between the two manufacturers, it automatically proves that there were two manufacturers. In such a situation, it cannot be held that the unit whose production is proposed to be clubbed with another unit, is a dummy unit. In the show cause notice, it had been alleged that M/s. Supreme Washers (P) Ltd. had created M/s. L.D. Industries and M/s. L.R. Industries as dummy units and the Collector had in the impugned order come to the conclusion that the evidence o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, M/s. Supreme Washers Pvt. Ltd. Instead, his examination was confined to the question whether the two firms, namely, M/s. L.D. Industries and M/s. L.R. Industries were partnership firms divided in such a way as to defeat the provisions of Notification No. 175/86, dated 1-3-1986 in order to avail independent SSI benefits concessions. It was held that the said two units were a single composite unit having common raw-material procurement, management and planning, common manufacturing facilities, common marketing network and strategy, common furnace and common stocks of finished goods. In Hind Lamp Ltd. (supra), the Tribunal had held that though the plea of res judicata will not be applicable in taxation matters to the extent that financial assessment of one year does not apply to the next year, it will apply when the question decided by the High Court relates not to the assessment of any one year or any assessment of goods in respect of a particular price list, but it relates to the question of value of goods relevant to continuing assessment. Further, in J.K. Synthetics v. U.O.I. [1981 (8) E.L.T. 328] it was held that the Income-tax authorities cannot change their views capriciousl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered in the impugned order under consideration but only two units namely, L.D. Industries and L.R. Industries. We do not find that the earlier proceedings culminating in the order of adjudication by the Additional Collector has dealt with the issues arising between the same parties or between the parties under whom they make any claim as provided in Section 11 of the Civil Procedure Code. In the earlier proceedings, no action has admittedly been taken against M/s. Supreme Washers Pvt. Ltd. and the inter-se relationship between M/s. Supreme Washers Pvt. Ltd. and the two other units, was also not the subject matter of the dispute before the Additional Collector. Since the issue considered in the earlier order was not the same as the one which arose for consideration in the impugned order, we are of the view that the plea of constructive res judicata does not apply in the present case. The case law relied on by the appellants are therefore, not applicable to the facts of the present case. 10. As regards the question of mutuality of interest for purposes of clubbing the clearances of two or more units and thereby denying the benefit of Notification No. 175/86, while we agree tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
