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TMI Blog1999 (5) TMI 452X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the factory premises by the Central Excise Officers of M/s. CRI, Amritsar and M/s. DR, Amritsar both located at the same address, a show cause notice was issued on 6-1-92 to M/s. CRI, DR, Shri Harish Mehra, Proprietor of CRI and the two partners of DR, namely, Shri Ravinder Mehra and Smt. Lata Mehra. The SCN alleged that M/s. DR was not an independent workable unit but was only an artificial fragmented unit set up to evade Central Excise duty since DR and CRI had united management, common labour, common machinery like vulcaniser, building, generator set, drying chambers, common production facilities and mutual interest and money transactions, inter se. It was further alleged that Shri Harish Mehra, Sole Proprietor of CRI and Ravinder Mehra were living in a joint family and Smt. Lata Mehra was the wife of Shri Vijay Mehra. It was further alleged that both the units were one and the same and, therefore, clearances made by them over and above the exemption limit for small scale industries under Notification No. 175/86 during the five years period prior to the issue of the Show Cause Notice were chargeable to duty and as per the duty demand worked out, an amount of Rs. 4,68,547.75 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arat State Fertiliser Corporation v. UOI [1988 (34) E.L.T. 442 (S.C.)] and Synpack v. CCE [1994 (71) E.L.T. 98 (T)]. 4.2 On merits ld. Counsel contended that there was enough material on record to show that CRI and DR were two separate and independent manufacturing units capable of manufacturing the impugned goods. In support, he submitted that it was on record that DR which started manufacture in 1984 had purchased mixer with one vulcaniser on 1-8-84; another mixer was purchased on 17-2-86; extruder was purchased on 30-7-84; a breeding machine on 9-3-84; Chamber purchased on 28-11-85; vulcaniser on 10-1-86; two baby boilers purchased on 17-9-84 and 28-12-85; round trays and motors purchased from time to time. Further, the partnership was registered with Registrar of firms on 29-5-86; registered with Income Tax authorities, Director of Industries and Small Scale Industries; Tenancy Agreement with Shri Harminder Singh; registration with Shops and Commercial Establishment Department in 1985; separate Bank Account with State Bank of India and insurance taken for machineries; Sales Tax Registration dated 1-6-84 and registration with the Municipal Authorities for carrying on business ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He also relied on RP Industries v. CCE [1996 (82) E.L.T. 129] in support of this contention. 4.4 Shri Rawal, ld. Counsel also emphasised that there was no averment in the statements relied on by the Department or in the Show Cause Notice about financial flow back. The finding was only a general one, namely that either unit could not survive independently. 4.5 As regards penalties on the Sole Proprietor as well as the Proprietorship concern, ld. Counsel submitted that imposition of penalty on the Proprietorship concern and separate penalty on sole proprietor was not sustainable in law; he also drew attention to the fact that there was no duty demand on M/s. Dupont. 5.1 Defending the impugned order ld. JDR Shri Sanjeev Srivastava submitted that it has to be noted that during the period in dispute neither of the units were L-4 Licencees. The machineries installed in CRI premises were, subsequently scrapped and the machinery purchased in the name of M/s. Dupont was installed in the place of scrapped machinery of M/s. Continental. Further, Shri Harish Mehra, Proprietor of M/s. CRI had clearly stated that they were manufacturing only two items. There was also no dispute that Shri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied on the Apex Court judgment in Jaishri Engineering v. CCE [1989 (40) E.L.T. 214]. He submitted that the case of the Department was that there was deliberate suppression of facts inasmuch as the machinery bought in the name of M/s. Dupont were in fact, installed at the premises of M/s. Continental. 5.4 He also referred to Shri Harish Mehra s statement saying that he is ready to pay duty. Once the assessee accepts the duty liability he cannot back out from the said commitment. He relied on M/s. Polycone v. CCE [1987 (30) E.L.T. 1001] in support. 6. In rejoinder ld. Counsel submitted that in Jagjivan Das case, supra, also the premises were common. He also submitted that Shri Harish Mehra s statement admitting duty liability, if any, did not bind him. It was also not correct to say that the machinery installed at CRI had become scrap as there was no allegation in the SCN to that effect nor was any evidence shown to that effect. It was also evident that there was a gap of two years between the alleged scrapping of machinery and the installation of new machinery. He also submitted that the statements attributed to Shri Harish Mehra had been retracted. He referred to inadmissibilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR did not have any boiler, drying chamber or vulcaniser and that the extruder and braiding machine lying in the premises of DR was not in working order. Collector had further relied on the statement dated 24-1-91 given by Shri Harinder Singh working in the factory of CRI that he did not know of the fact that there were two factories working in Plot No. 282. Shri Ravinder Mehra, partner in DR had also in his statement dated 25-1-91 confirmed that DR did not have the following machinery viz., boiler, vulcaniser, drying chamber and thread re-winding machine. He had also stated that DR had only roller machines and an extruder which were being used only when there was pressure of production; that the goods sent or received from CRI were not covered by any challan and that no interest was being charged on any transaction because the bifurcation of CRI and DR was purely for official purposes. Shri Harish Mehra in his statement dated 25-1-91 had stated that due to paucity of space, only one set of machinery had been installed and that the machinery purchased on account of DR had been installed at the premises of CRI and some of the machinery installed at CRI earlier had been scrapped. As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not allow installation of two sets of machinery. 8. Arguing the appeal ld. Counsel had urged before us that the statements relied upon by the Collector were not voluntary statements but were statements dictated by the visiting officers. They had not been told that their statements will be used against them. Such statements were not admissible in evidence and for the said proposition he relied on the A.P. High Court decision in N.S.R. Krishna Prasad Rao v. C.C. [1992 (57) E.L.T. 568]. Ld. Counsel had argued that though it was not denied that the two units were helping each other on many occassions, they were still independent legal entities with independent infrastructure for manufacturing their products. Ld. Counsel also emphasised the fact that appellants had demonstrated on the basis of documentary evidence about the purchase of various machinery by the two units to show that they had independent infrastructure. 9. After considering the facts on record and the contentions advanced from both sides we hold as under : As regards the objections raised by appellants that Addl. Collector was not competent to issue the show cause notice for the extended period, we hold that there i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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