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TMI Blog2002 (7) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... n is given; both the companies are using the same telephone for which no financial consideration is given; both the companies are managed by one person viz, Shri Krishnakumar who signs for both the companies in the capacity of Manager, a single person is looking after the accounts of both companies, workers of both the companies are utilised in both the companies and a single salary statement is prepared and maintained, both the companies are financed by one another by way of interest free loans, both the units are under the same management, raw materials of the two companies are stored together, both companies are having only one Mixer Grinding Machine and Belling Machine which are required for the manufacture but no charge is paid or collected by either of the companies, the same products are manufactured by the two companies and marketing is done through the same marketing agency floated by the Managing Partner and one partner each of both the companies and raw materials purchased from a single firm owned by the partners of the two companies who are father and sons, all partners in the two firms are from an individual family viz. Father, mother and two sons, transporting of raw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts, that difference in the raw materials stock noticed during the verification is due to the fact of storing of the raw materials of both units at one place, that products of both companies are packed in the packing section of M/s. Five Star and kept there. Shri P. Prasad, Accountant, deposed in his statement given before Superintendent of Central Excise on 3-9-97 that he is looking after accounts of both the units, that difference in the account and physical stock of raw materials because of the fact that raw materials for both the companies are stored together that there is only one compounding machine for mixing raw materials for both companies; that both the companies undertake job work for other companies and raw material mixing/compounding of which is done by M/s. Super Star but accounts are maintained separately, that reason for finding ready for sale product with brand name Super Star in the store room of M/s. Five Star is that the product of both the companies are cleared together, that the door caps with the brand name Super Star is manufactured in both the units by fitting the die for the said item in any injection moulding machine installed in both the companies as an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... It is also a fact that there is only one office for both the units, which is owned by M/s. Super Star but no financial consideration is given by M/s. Five Star to M/s. Super Star. The telephone used by both of the units is in the name of M/s. Super Star for which no contribution towards telephone charges are paid by M/s. Five Star. Evidence on record suggests that Shri K. Krishnakumar attend to production work of both the units and P. Prasad attend to the accounts work of both the units and they sign for both the units. It is also seen that a single salary statement of employees of both the units are prepard. Shri Prasad has vide his statement dated 5-9-97 stated that though accounts of salary/wages are maintained separately for the purpose of accounting, the payments are made combinedly and these workers work in both the companies. Shri P.J. Saju, Managing Partner of Super Star has vide his statement dated 25-9-97, stated that day-to-day affairs of the company is managed by his father who is the power-of-attorney holder and that he does not know any thing about receipt of the money for the company or giving any loan or advance to any company during last two years. Smt. Philo Jo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing a recent one prevails over the earlier decisions. In the instant case, offices of both the companies are situated in the same room and both the companies use the same telephone for which no financial consideration is given from one unit to the other, both companies are managed by one person and a single person is looking after the accounts of both the companies, and salaries, though different amounts, of the former is accounted in one unit and that of the latter in the other unit, a single salary statement of the workers of both the units is prepared and maintained, as seen from file mentioned against Sl. No. 34 of the Annexure C (relied documents) of the Show Cause Notice, workers of both the companies are utilized in either of the companies as stated by the accountant of the companies, interest free loans are given from one unit to the other unit. It is also a fact that both the companies are having only one Mixer, Grinding Machine which are essential for manufacture of the finished products and no charge is seen paid or collected by either of the companies. The raw materials of the two companies are stored together and same products are manufactured by the two companies an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons, S.S.I. Registration and Panchayat licence, of both the units have been obtained on the same date. As stated above, all the partner in the two units are from an individual family (i.e.) father and son in one unit and mother and another son in the other unit. As per the statements of S/Shri K. Krishnakumar, Production Manager and P. Prasad, Accountant, Shri P.J. Saju, Managing Partner of M/s. Super Star is looking after the affairs of both the companies. Smt. Philo Jose, Partner of M/s. Five Star has stated that she does not know anything about the working of the company and she used to sign documents as desired by her husband and Shri P.J. Seejo, Managing Partner of M/s. Five Star has stated that he had given power-of-attorney to his father Shri P.K. Jose till April, 1997. A close analysis of the facts of the case reveals that S/Shri P.K. Jose, partner of M/s. Super Star and P.J. Kaju, Managing Partner of M/s. Super Star are controlling the affairs of both M/s. Super Star and M/s. Five Star. Accordingly, I hold that M/s. Super Star is liable to pay the Central excise duty . Besides holding M/s. Super Star to be liable for duty on the Show Cause Notice dated 20-5-98 proposed d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the units. The Commissioner, on the one hand, is clubbing the value of clearance of two units, by not considering that these units are separately entitled to SSI exemption, on is demanding duty on M/s. Super Star amounting to Rs. 57,58,581/-. However, in his finding at Para 23, he is coming to a finding that M/s. Five Star is responsible for the duty demand of Rupees 60,000/- consequent to Show Cause Notice dated 20-5-98, which in addition to clubbing, had also proposed a demand of duty on 4000 Nos of Single Y Products alleged to manufactured and cleared clandestinely. While in findings in Para 24, it is observed by the Commissioner that no evidence has been adduced to prove clandestine manufacture and clearance, the same Commissioner, in Para 25, for another charge in Show Cause Notice dated 20-5-98, confirms a duty liability of Rs. 1,56,750/- on 5225 Kgs of PVC resin used in manufacture of goods. In his findings in this Para 25, he concludes :- It is that issue of PVC resin noted in the paper sheet relates to Five Star and Super Star only. It is also seen that some of the goods mentioned in the production slip seized under mahazar have not been accounted in the RG I Register ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was submitted, there is no controversy, either on the side of the department or on the side of the appellant s, on the aspects of issues/criteria applicable as in the Board Circular and the demand of duty has not been made on the basis of any of the aspects/issues/criteria and principles laid down in this circular, since the ingredients of this Circular are not satisfied, those issue have not been raised in the impugned proceedings. They have prepared a chart of the issues and the reasons alleged/found for clubbing and submitted that the parameters prescribed by Board Circular under Section 37B are not alleged/found to be existing and are not applicable. While the case law on the grounds and issues as found for clubbing, are covered in the appellants favour by catena of decisions as listed in this chart, we found the charts to be relevant. We also find that the learned DR has not controverted the facts as given in this chart, which are as follows :- Sl. No. Issues(as found in the impugned order) Board Circular No. V(30)(379) /T-II/92/26815, dt. 26-11-1992 as in 1993 Case Laws covered in the appellants favour 1. The Offices of the two com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. Both the companies are having only one mixer, Grinding Machine and Belling machine which are essentially required for the manufacture, but no charge is paid or collected by either of the companies. This Aspect does not figure in the Board Circular. 2001 (138) E.L.T. 651 (T) 1999 (108) E.L.T. 593 (T) 1996 (83) E.L.T. 648 (T) 11. The same products are manufactured by both the companies and marketing is done through the same marketing agency floated This Aspect does not figure in the Board Circular. 2000 (118) E.L.T. 221 (T) 1997 (90) E.L.T. 175 (T) 1993 (66) E.L.T. 375 (RHC) 1992 (62) E.L.T. 469 (T) 1991 (53) E.L.T. 152 (T) by Mg. Partner and Partner of both the companies and raw materials purchased from a single firm owned by the partners of the two companies who are father and sons. 12. All the partners in the two firms are from an individual family viz. Father, mother and two sons. Clause V in the circular has held that even commonness of partners will not disentitle for separate exemption. In the present case there is no commonality of the partners. 1996 (86) E.L.T. 229 (T) 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... these factories should be combined. Facts are not disputed even in the show cause notice or in the order, partners do not have more than one factory. 4. Limited companies, whether public or private, are separate entities, distinct from the shareholders composing it. Hence each limited company is a manufacturer by itself and will be entitled to a separate exemption limit. Facts are not disputed even in the show cause notice or in the order as the units are partnership firms and not limited companies. 5. If there are only two firms with only some of the partners in common, each firm is entitled to a separate exemption limit, and hence the question of distributing the exemption does not arise. Facts are not disputed even in the show cause notice or in the order since there are no common partners. 6. If One individual or one firm owns several factories and the manufacturer being only one entity, there is no question of distributing the exemption. Facts are not disputed even in the show cause notice or in the order since proceedings recognised the existence and identity of two units. 7. If there is more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r before he could order clubbing of clearance, therefore, we can not upheld the demand of duty, penally and interest as arrived on the basis of clubbing of the value of clearance and denial of exemption notification. We find that the units to be independent units separately liable for duty under the law and demands on clubbing cannot be sustained. (e) We have considered the submissions of both sides on the law as laid down by a bench of this Tribunal in the case of Balmurugan Balmurali [1988 (38) E.L.T. 54 (T)] and find that in the facts of that case, it was found that the creation of Balmurali was nothing but a subterfuge in the form a sham, a shadow, without substance and intended to create a facade behind which the State was to be deprived by its legitimate Tax. Therefore clearances of Balmurali were held to be those of Balmurugan. This case was not followed in many decisions of this Tribunal. There is no finding arrived at in this case to consider M/s. Five Star a sham, a shadow or a facade. In fact the Commissioner is coming to a finding in this very same order that M/s. Five Star on its own was manufacturing and indulging in clandestine removal and exist separately for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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