9911796707
TMI Blog2002 (12) TMI 381X X X X Extracts X X X X X X X X Extracts X X X X ..... the manufacture of the said Biscuits : - Shri Bijaya Kumar Sahu, S/o Shri Indramani Sahu Shri Suryamani Sahu, W/o Shri Indramani Sahu Smt. Snehalata Sahu, W/o Shri Rajendra Kumar Sahu Smt. Bharati Sahu, W/o Shri Narayan Ch. Sahu (c) Appellant - M/s. Hindustan Confectionery, Aparna Nagar, Cuttack (hereinafter referred to as Hindustan in short) is a proprietorship firm, the proprietor being Shri Rabindra Kumar Sahu, S/o Shri Indramani Sahu and is engaged in the manufacture of Chocolates falling under Chapter 18 of the Cental Excise Tariff Act, 1985. 2. Based on an intelligence that these firms are under the common command and control of the family of Shri Indramani Sahu and have been created separately only to irregularly avail of the exemption/concessional rates of duty applicable to small-scale manufacturers under Notification No. 175/86-C.E., dated 1-3-86 as amended from time to time; and there is a large scale suppression of production and removal thereof by the said firms, the officers of the DG(AE) in association with the officers of Collectorate (now Commissionerate) of Central Excise and Customs, Bhubaneswar, conducted a search in the above mentioned premises and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d on 5-12-90 from the premises of Maniraj shall not be confiscated under rule 173Q ibid. (iv) Macborn shall not be required to pay Central Excise duty amounting to Rs. 4,69,551.81 under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A on which is leviable the quantities of goods removed by them clandestinely during 1988-90 to 1990-91 (up to 4-12-90) as detailed in Annex. C-1 to the show cause notice and elaborated in Para 7 read with para 5 of the statement of facts enclosed to the show cause notice. (v) Macborn shall not be required to pay an amount of Rs. 66,868.23 leviable on the commission to the distributors which should have been included in the assessable value under Section 4 of the Central Excise Act, 1944 read with Valuation Rules, 1975, and the facts of which was suppressed by them as discussed in Para 9 of the statement of facts enclosed to the show cause notice. (vi) Goods valued at Rs. 87,935.43 seized from the premises of Macborn shall not be confiscated under Rule 173Q ibid. (vii) Cash amounting to Rs. 1,40,000/- seized from Macborn shall not be confiscated under Section 121 of the Customs Act as made applicable to Central Excise matters by Notf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that the above seized goods totally valued at Rs. 2,06,939.97, were released provisionally to Shri Indramani Sahu, partner of M/s. Maniraj Industries on their request dated 6-12-1990, on execution of a B-11 Bond of a face value of Rs. 2,10,000.00 with cash security of Rs. 55,000.00. Since, the goods are not available for confiscation, I order appropriation of an amount of Rs. 21,729.00 (Rs. Twenty-one thousand seven hundred twenty-nine only) (BED Rs. 20,694.00 + SED Rs. 1,035.00) towards Central Excise duty and Rs. 33,271.00 (Rs. Thirty-three thousand two hundred seventy-one only) towards fine in lieu of confiscation of the goods, in terms of the B-11 bond executed by them. 1.5 I confirm demand of Central Excise duty of Rs. 4,58,022.00 (Rs. Four lakhs fifty-eight thousand twenty-two only) (BED Rs. 4,36,211.00 + SED Rs. 21,811) on M/s. Macborn Industries in respect of goods removed clandestinely during the period 1988-89 to 1990-91 (up to 4-12-1990), under Rule 9(2) read with Section 11A of the Central Excise Act, 1944. 1.6 I drop the proposed demand of Rs. 66,868.23 (Rs, Sixty-six thousand eight hundred sixty-eight and Ps. Twenty-three only) against M/s. Macborn Industrie ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sence of corroboration of not defraying the expenses thereto by Macborn, similarly the absence of an agreement between Maniraj and Macborn, would be conclusive to find that Shri Indramani Sahu was managing these units, as one combined concern. He has further come to a finding that nature and scope of the job to be undertaken by Maniraj was, what is in general trade commercial parlance understood as marketing , since the four distributors of Maniraj s products were the distributors of Macborn product and the payment of 4% commission agreed to Maniraj as a result of delivery van use was erratic and all products of Macborn were sold by Maniraj would lead to a conclusion that Shri Indramani Sahu of Maniraj Industries was in full control and command of the financial affairs relating to all the three units. In Para 2.12 of the order impugned before us he finds that financial transactions between the three firms were not on principal to principal basis. Thereafter, he concluded as follows :- 3.0 In the background of the above mutuality of financial interests between Maniraj/Macborn/Hindustan as discussed under Paras 2.2.1 to 2.2.11, other aspects in their relationship like common owne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case before him without discussions how. For the same reasons, he did not rely upon the Commissioner s Trade Notice No. 47/GL-37/92, dated 20-7-92 or and Order-in-Original No. 61(19) C.E.-92-DC-12/97, dated 28-10-97 passed by the Deputy Commissioner (now Joint Commissioner, Central Excise) where the issue regarding clubbing of these three very units were to be and decided in their favour. He gives no reasons why the Public Notice issued by him is not being followed by him. He found that that order of the Deputy Commissioner does not justify non-existence of a case for clubbing of the three units and found as follows : I find that the order to justify non-existence of a case for clubbing of the three units was, inter alia, found to be based on the following findings of the Deputy Commissioner. 3.7.1 There was no evidence on record that Macborn had enjoyed the transport facility without any payment. 3.7.2 Though the Show Cause Notice alleged about common ownership, command and control and financial interest yet the notice did not bring on record any documentary/corroborative evidences to prove the same. 3.7.3 Case of mutual financial transactions and flow back did not exist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ach under Central Excise Laws, separate registration for each with District Industries Center, separate status of each as assessees under Income-tax Act, Sales Tax Act, Factories Act, etc., it is established that Maniraj, Macborn and Hindustan have mutuality of interest in the business of each other and also the transactions between them are eminently characterized by extra commercial considerations. Thus, their transactions are not on a principal to principal basis and therefore this is a case where the aggregate value of clearances of the excisable goods manufactured by all the three units are required to be clubbed together. For the periods 1988-89, 1989-90 and 1990-91 Macborn, Maniraj and Hindustan are not eligible for availing concessional rates of duty under Notification No. 175/86, dated 1-3-86 as amended because the aggregate value of their clearances was Rs. 1,63,56,021.19 p and Rs. 2,10,87,376.17 p for the years 1988-89 and 1989-90 respectively. And ordered that the amounts have to be recovered as determined by him. (b) On the issue of clubbing of the units enjoying exemption under Notfn. No. 175/86-C.E., an order under Section 37B under the Central Excise Act, has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of distributing the exemption. (iii) If there are more than one mill under the control of one manufacturer, there is no question of choosing any mill for the purposes of exemption. The Central Excise department is concerned with a manufacturer which may be an individual; a firm, a limited company etc. These instructions and orders were based on the following advice of the Ministry of Law, Justice and Company Affairs (enclosed to the Section 37B order) : - ......The question whether different partnerships having common partners are treatable as separate manufacturers or the same manufacturer, would be a question of fact in each case to be determined on the basis of such factors among other, like composition of the partnership, existence of the factory, licence, nature of goods manufactured etc. Different firms will be treated as different manufacturers for the purpose of exemption limit. But if a firm consisting of certain partners any A, B and C has got more than one factory, all these factories should of course, be combined. Limited companies whether public or private, are separate entities distinct from the shareholders composing it. Hence, each limited company is a man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot totaling up to 4% of the total cost or a share. We therefore, find a strong case in favour of the appellants on the grounds of limitations as regards the clubbing of clearances. (d) We find that if the Commissioner came to a finding, that other units are a facade, a dummy and a smoke screen and have been created to only for the purposes of availing separate exemption limits under Notfn. No. 175/86. Then, we do not find, how, a demand of duty which has been confirmed and allegations of clandestine removals being made and arrived at separately as on these units, which in the light of findings of the Commissioner did not exist as separate principal units in their own rights could be effected. A unit is either existing or not existing. Following the Supreme Court decision, in the case of Gajanan Fabrics Distributors [1997 (92) E.L.T. 451 (S.C.)], we would set aside the order and remit the matter back for re-determination of the liability on clandestine clearances, if any, by any unit, to be arrived separately afresh. Since, we are setting aside the order on clubbing of clearances and remitting the order of the adjudicator for re-determining clandestine clearance, if any, we set as ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
