9911796707
TMI Blog1999 (11) TMI 673X X X X Extracts X X X X X X X X Extracts X X X X ..... he clearances of the appellants with the clearances made by other two units working at the same premises under the name and style of M/s. Konark Pumps & Presses (P) Ltd., and M/s. Konark Wood Works. 2.1 Shri S.C. Mohanty, ld. Advocate appearing on behalf of the appellant submitted that the appellant is a manufacturer of LPG cylinders in its factory located at the Mancheswar Industrial Estate of Bhubaneswar. LPG cylinders manufactured by the appellant are exclusively being supplied to three Public Sector Oil Companies, i.e., (i) Indian Oil Corporation Ltd., (ii) Hindustan Petroleum Corporation Ltd., & (iii) Bharat Petroleum Corporation Ltd. 2.2 The appellant commenced production of cylinders in the month of October, 1984 after ge ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all scale units. (c) Separate Books of Accounts and Balance Sheet certified by Chartered Accountants under the Companies Act. (d) Separate registration certificates under both State and Central Sales Tax Acts. (e) Separately assessed under the Sales Tax Laws. (f) Separate income tax assessees. (g) Separate agreements with the State Electricity Board for supply of power. (h) Separate certificates of registration under the Factories Act. (i) Separate Bank Accounts. (j) Separate L-4 licences issued by the Central Excise Deptt. (L-4 licence is issued to M/s. Konark Pumps & Presses Pvt. Ltd. in March, 1986 after exhausting the exemption limit applicable to SSI units under the Central Excise Law. Prior to this, declaration was filed with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... traneous circumstances inasmuch as all the three units were independent units as is evident from the various factors narrated above. He also draws our attention to a number of decisions and judgments of the Tribunal which are to the effect that common premises, sharing of power, common directors and occasional financial transaction by themselves are not sufficient to hold that the other two units were dummy of the appellant's unit. He submits that the other two units working at the same premises, submitted all the relevant documents such as Memorandum and Articles of Association, Factory Registration Certificate, DIC Registration Certificate, Sales Tax Registration Certificate and Assessment Order, Income-tax Assessment Order, Balance Sheet ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were not independent legal entities and the appellant was having interest in other two companies and was guiding and controlling force behind the same. He submitted that merely because the other two units were separately being assessed to income tax and sales tax, is of no consequence and the evidences discussed by the Commissioner establishes beyond doubt the existence of mutual interest including financial interest of the appellant in the other two units. As such, it has been rightly held by the Commissioner that M/s. Konark Pumps & Presses Pvt. Ltd., was nothing but a dummy concern of M/s. Konark Cylinders and Containers (P) Ltd., and the appellant was the real manufacturer of the goods. As regards the appellant's contention on the poin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find that whereas the appellant had maintained that the cost of power being supplied to M/s. Konark Pumps & Presses is to be adjusted against their bills, the later has stated that payments were being made to the appellant as they have separate distribution system though not separate metres. This can hardly be called a contradiction in the version of the two units. Both have agreed that the units of power being consumed by the other unit were being paid. We do not find any merits in this stand of the department. Similarly, the main boundary being common with a common main gate does not further the department's case especially when the land has been allotted by IDCO to two units separately. The other factor relied upon by the Commissioner ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company incorporated under the Companies Act and acquired an independent status because of the said factors. No doubt piercing of corporate veil is permissible under the law but it must be proved on record that the second unit is only a make-belief arrangement and is only on paper and is façade. It has been held in a number of cases that when the units have distinct identities, they are not to be treated as one even if there are common or related persons in the management and one person is managing the affairs of all the units. Clubbing is upheld only in those cases where it is shown that one unit is owned by the other and there is financial or production control by the other and evidence to show flow back of profits [Reference : Swa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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