9911796707
TMI Blog1999 (2) TMI 350X X X X Extracts X X X X X X X X Extracts X X X X ..... represented the respondent/Revenue. 3. Shri Vikas Khare, Company Secretary, submitted that out of the seven appellants, five were private limited companies and two were partnership concerns. They were producing different type of goods and had come into existence at different point of time. It was only for the purpose of inviting foreign buyers that the units were projected as one group. It was a common strategy to raise resources, to effect modernisation, to improve efficiency and to extend the market share that all the units operated as a group. It was admitted that their Chartered Accountant, Company Secretary, Quality Control Executive, Labour Adviser etc. were common, but it was argued that it was on account of the fact that the each individual unit could not afford the services of independent experts in their field. It was also admitted that monthly sales targets were fixed by one agency and that there were common loans and that a common list of creditors was prepared. It was, however, argued that none of these could be taken to mean that all the units were one. The purpose of the meetings taken by Shri Madhav Kirloskar was to apprise him with the activities of different co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e eligibility or non-eligibility to the benefit of small scale exemption was to be determined after taking into account the total value of clearances of all the noticee units together. 6. Under Notification No. 77/83-C.E., dated 1-3-1983 excisable goods falling under Item No. 68 of the erstwhile Central Excise Tariff, in respect of the first clearances of the said goods for home consumption by or on behalf of a manufacturer from one or more factories upto a value not exceeding Rs. 30 lakh, cleared on or after the first day of April in any financial year, enjoyed exemption from Central Excise Duty, subject to the provisions and conditions as given in that notification. Under Notification No. 77/85-C.E., dated 17-3-1985 full exemption was restricted to the first clearances of the said goods upto an aggregate value not exceeding Rs. 20 lakh. For the next clearances of Rs. 5 lakh, exemption of 50% of the duty otherwise chargeable was provided. For the next clearances of Rs. 15 lakh, exemption of 25% of the duty otherwise chargeable was provided. It was also provided that the small scale exemption was not available if the aggregate value of clearances of all excisable goods by a manuf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll scale exemption. It was proposed that the duty evaded was liable to be recovered within a period of five years as provided in Proviso to sub-section (1) of Section 11A of the Central Excises and Salt Act, 1944 read with Rule 9(1) of the Central Excise Rules, 1944. It was also proposed as to why penalty should not be imposed on them under the provisions of Rule 9(2) and Rule 173Q of the Central Excise Rules, 1944. It was also proposed that the clearances of all the seven manufacturing units under the Lubricare group of industries were required to be clubbed together for determining their eligibility to avail of the exemption under the provisions of the relevant exemption notifications relating to small scale exemption scheme. Duty of Rs. 47,60,833.39 was demanded under the provisions of Rule 9(2) of the Central Excise Rules, read with Section 11A(1) of the Central Excises Salt Act, 1944. The confiscation of the land, building, plant machinery, material etc. was also proposed. 8. Small scale exemption provided in the exemption notifications, referred to in the show cause notice, had a reference to the manufacturer/factory, and by various provisions it had been provided that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al interest, free loans/advances, common establishment financial assistance etc., among the units of the group. The different personnel were working for common purposes in different units from time to time, irrespective of the units from where they were drawing their salary. It had been admitted that various key personnel and specialists were responsible for the working of the group as a whole. Various activities having financial implications and having a bearing on the profitability of the units were inter-mingled. Controls and directions were centralised. In his statement, Shri Madhav Kirloskar had admitted "We have common facilities mostly located in Lubricare Office at Plot No. 114, MIDC, Bhosari. People like Mr. Khare looks after secretial, Mr. Gado for taxation, Mr. Pandhe for Quality Control, R.E. Kulkarni for personal, Mr. Datar for Design and Production Development, Mr Karader for Computer Department for other company other than they are employed whenever it is needed." In a communication dated 30-5-1989 addressed to the Maharashtra State Financial Corporation, it was mentioned that "Mr Madhav Kirloskar had decided to devote his full time to the Lubricare Group of Companie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ial facilities like standards room critical beat treatment and metallurgical analysis are available to Lubricare from the Kirloskar group of companies of which it is an associate in addition the best training facilities are available. It was mentioned, among others, that M/s. Techser Tools Pvt. Ltd. was the result of a long and careful study of tool room activities and requirements of the Lubricare group and of various engineering companies. M/s. Kotobuki Fine Cut Pvt. Ltd. assisted Techser Tools in the manufacture of precision tools. All enquiries relating to the credit were to be directed to Lubricare Pvt. Ltd. 11. Genuine small scale units had a number of constraints and per force had to take help from others for their operation. Such a help does not blur their identity as a small scale unit for central excise duty exemption, but if the identity is only to avail of the benefit of small scale exemption and the fact of common manufacturer is hidden behind the veil of a individual units, then the Revenue authorities could go behind the identity and unveil the beneficiary of such exemption for which the individual units are not otherwise eligible. There is also no dispute that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that for extended limitation visits by officers were not mitigating circumstances. In the case of Lotus Chemical Indus. Aurobindo Chemical Indus. v. C.C.E., Tribunal's Final Order No. 458-459/91-C, dated 21-5-1991, the Tribunal had observed that mere fact that units are separately registered as small scale industrial units or that they were separately assessed for the income-tax or sales tax purposes would not make any difference for clubbing the clearances of the firms. In the case of Super Engg. Works, Super Blacks Engg. Farmers and Super Plating Engg. Corpn. v. C.C.E., - 1996 (82) E.L.T. 102 (Tribunal), the Tribunal had held that when different units were acting in tandem, then the clubbing of clearances was justified. 15. The appellants had contended that the small scale exemption notification did not require that any relationship of manufacturer with other firm/company/manufacturer was to be disclosed to the excise department and that the only requirement of the notification was that the clearances of a manufacturer in one or more factories was to be clubbed for ascertaining the eligibility for availing the exemption. The facts and circumstances of the present case establi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntity and that the value of clearances was required to be aggregated for determining the eligibility or non-eligibility to the small exemption. 19. While various instructions and case law provide for safeguarding the interests of genuine small scale units, the various judicial authorities had also emphasized the need to lift the viel of corporate entity to reflect the real identity of the units. We consider that based on the true state of affairs coupled with the understanding of the units themselves, the adjudicating authority had taken a correct view in the matter. We, therefore, do not consider it necessary to discuss the individual case law referred to by the appellants separately. 20. The differential duty demanded by the adjudicating authority comes to Rs. 47,60,833.39. In the facts and circumstances of the case, we confirm that part of the order which relates to the above demand of central excise duty. The adjudicating authority had imposed a redemption fine of Rs. 12,30,000/- and had imposed a penalty of Rs. 12 lakh. In the facts and circumstances of the case, we reduce the amount of redemption fine from Rs. 12,30,000/- to Rs. 5,00,000/- (rupees five lakhs only). The am ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
