9911796707
TMI Blog1998 (2) TMI 531X X X X Extracts X X X X X X X X Extracts X X X X ..... al Excise, Bombay on 6th September, 1990. 3. He stated that both the appellants are manufacturer of printed cartons, labels, packages etc. The appellants M/s. Pharma Art Pack, C-21, Shalimar Industrial Estate, Matunga, Bombay-400 019 are a proprietary concern having SSI registration whereas M/s. T.R. Corporation situated at D-6, Shalimar Industrial Estate, Matunga, Bombay - 400 019 are a proprietary firm legally different and distinct from the former. However, the Department has clubbed both of them and denied them the benefit of exemption Notification Nos. 80/80, 83/83 and 85/85 on the ground that the combined production and clearances exceeded the prescribed limits. 4. It was their contention that they were distinct units having separ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration in accordance with the agreement dated 8-3-84 and no charges were paid and no rent collected as the punching machine was installed in the premises of M/s. T.R. Corporation and the electricity charges were fully met and maintenance of machine was also their responsibility i.e. M/s. T.R. Corporation were not charging for the job work and they were not charging for this much. It was also their contention that as per Tribunal s decision in the case of Jagjivandas Co. reported in 1985 (19) E.L.T. 441 (T), one firm s machinery being used by another firm would not attract clubbing provisions, hence, they could not be clubbed. 7. It was also their submission that there were no financial transactions between the two firms and orders and p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s contained in the order-in-original and emphasised that the Collector has, in his finding portion of the order, given detailed reasons which go to show that for all practical purposes, the units had been functioning as one unit as highlighted in paragraphs 10 12 of the show cause notice. He would like to emphasise that the firms were interdependent and each using the facilities of the other for manufacturing the end product and the two firms had interest in the business of each other and for all practical purposes, they worked as one unit and therefore, the value of their clearances was required to be clubbed for the purpose of determining eligibility for exemption. And, in this respect, he would like to cite the decision of the Tribunal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in particular. The aspect of financial relationship or commercial relationship is undoubtedly important and therefore, the factor of financial flowback, and it is open to the assessees/defendents to show that the relationship was at arm s length on principal-to-principal basis but, once the Department is able to show that many of the activities or utilisation of machinery or staff or facilities were in common, the onus shifts on to the other side to show that in spite of it all, they were still functioning, in fact, as in law as distinct units. In the present case, the Department has been able to show its case from the facts and circumstances narrated in the Collector s order and therefore, what is to be seen is that whether commonality of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny, are by themselves not sufficient when organisation method of functioning and control disclose them to be in effect, one single whole and the two so-called units were merely acting as parts of the whole. Therefore, it is the entire production of both taken together which will be required to be considered for the purpose of assessment. 14. We, therefore, hold that the order of the Collector is correct and confirm the demand. However, we notice that the Collector has erred in imposing a penalty of Rs. 15,000/- on each of the two firms. 15. Once the Department had come to the conclusion that there was, in reality, only one organisation in existence and the legal cover did not matter, it will be inappropriate to say that the above pena ..... X X X X Extracts X X X X X X X X Extracts X X X X
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