9911796707
TMI Blog2000 (6) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... ionery Pvt. Ltd. along with their principal M/s. Kores India Ltd.; (c) demand of Rs. 29,24,105/- has been confirmed against M/s. Nandini Stationery Pvt. Ltd. along with their principal M/s. Kores India Ltd.; (e) demand of Rs. 7,72,061/- has been confirmed against M/s. Neptune Stationery Pvt. Ltd. along with their principal M/s. Kores India Ltd. 3. Penalty of amount equal to duty has been imposed under Section 11AC of the Central Excise Act on appellants Nos. 5 to 8. Further penalty of Rs. 4 lakhs, Rs. 3 lakhs, Rs. 2.5 lakhs and Rs. 1 lakh under Rule 173Q has been imposed respectively on appellants Nos. 5 to 8. Penalty of Rs. 20 lakhs and Rs. 10 lakhs respectively has been imposed under Rule 209A of the Central Excise Rules on appellant Nos. 1 and 2 while a penalty of Rs. 5 lakhs each on appellant Nos. 3 and 4 has been imposed under Rule 209A. The duty demand has been confirmed on the ground that staple pins shown as having been manufactured by appellant Nos. 5 to 8 during the period from September, 1992 to December, 1996 and cleared without payment of concessional rate of duty by availing the benefit of SSI exemption, under Notification No. 175/86 and Notification N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... regular infrastructure such as installation of plant and machinery, procurement of raw materials etc. Appellant No. 1 created a Wire Division to develop and manufacture wire which was suitable for the production of staple pins. 5. Statements of Directors of the three SSI units were recorded from which it transpired that they had not invested any money for becoming Directors in the SSI units but money was made available to them by Shri S.S. Bhandari (appellant No. 3). 6. The Director of M/s. Neha Stationery Pvt. Ltd. stated that an amount of Rs. 10,000/- which he paid as Director s contribution was subsequently refunded to him by appellant No. 1. This statement of Lt. Col. Harbhajan Singh who was deployed by appellant No. 1 as Chief Executive officer of its Wire Division was also recorded. Examination of correspondence between appellant No. 1 and the four SSI units as well as foreign suppliers of raw materials, was also conducted and from the various records, documents and statements, it was brought out that the four SSI units were set up by appellant No. 1 who was the actual manufacturer of the staple pins (through the 4 SSI Units) and that all the activities of the four SSI un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, cannot be sustained. He submits that appellant No. 1 has no interest in the four SSI units, holds no shares in them and that the four SSI units also do not hold any shares in appellant No. 1. He contends that appellant No. 1 only assisted in the setting up of the four SSI units with a view to obtaining good quality staple pins from the four units and marketing them, and assistance by itself is no ground for holding that the four SSI units were controlled and managed by appellant No. 1. He challenges the adoption of the sustainable value of appellant No. 1 for determining the price of the staple pins manufactured and sold by the four SSI units to appellant No. 1 and highlights the aspect that the four SSI units have also sold staple pins manufactured by them to buyers other than appellant No. 1 and the Department has accepted the price at which goods were sold by the four SSI units to outside customers. The learned Counsel submits that the adjudicating authority has erred in treating appellant No. 1 and the four SSI units as related persons as there is no mutuality of interest between them. 9. On the aspect of limitation, the learned Counsel Dr. P.V. Jois submits that the De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... staple pins in India; that the supply requirement of the four SSI units were looked after by appellant No. 1; that the consolidated profit and loss account was prepared by Shri Sanjay Gupta who is the Commercial Manager of appellant No. 1; the cheques issued by all the four SSI units were signed by Shri Sanjay Gupta and Lt. Col. Harbhajan Singh; that Internal Audit reports of the SSI units were sent to the Chairman of appellant No. 1. He submits that complete involvement of appellant No. 1 in the affairs of the four SSI units is clearly brought out by the above facts and therefore, supports the Commissioner s findings that the four SSI units are dummy units set up by appellant No. 1 for duty evasion by fraudulent availment of SSI exemption through the four SSI units. 11. Regarding valuation, the learned DR reiterates the finding contained in paragraph 72 of the impugned order and states that sale of staple pins by the four SSI units to outsiders was of a small percentage of production and the suppliers were themselves customers of appellant No. 1 and therefore, the price at which the four SSI units sold the goods to them, does not reflect the normal price and that the price at w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pin project of appellant No. 1. All decisions regarding quality of raw materials to be used by the four units and modifications to be carried out in the machines installed in the four units were taken by Shri S.K. Thirani and the decisions were implemented by Lt. Col. Harbhajan Singh. Installation of machines, arrangement of spares and training of the staff in the SSI units were undertaken by appellant No. 1, as is clearly reflected in the correspondence between appellant No. 1 and M/s. Rudolf Grauer A.G. Switzerland who deputed an Engineer to train the staff and supply the spares. All administrative and financial control over the four units was in the hands of appellant No. 1 who also got insurance cover for the four SSI units. The Appellant No. 1 was also analysing the cost of the staple pins and while determining the cost, they considered the cost of wire, glue and interest cost, including the interest on the term loan of the Wire Division, interest on the amount invested for purchase of the different machines installed in the four SSI units, depreciation on the machines, wages paid to workers on the pay rolls of the four SSI units of the Kores India Ltd., Staple pin Division. C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. In the case of Gabriel John and Others v. CCE reported in 2000 (37) RLT 546, the Tribunal had set aside the finding that the clearances of M/s. Mercury Fire Industries, M/s. Saraswathi Fire Works, M/s. Bannari Amman Fire Works and M/s. Universal Fire Works, were to be clubbed together resulting in denial of the benefit of exemption in terms of Notification No. 175/86 on the ground that one person held 99% profit in all units and other partners had 1% profit only, for the reason that the units were in existence and were independently registered and were not dummy units on paper. 16. In the case of PGO Processors v. Additional Commissioner, 2000 (116) E.L.T. 32 (Raj.), which is heavily relied upon by the learned Counsel for the appellants, the issue involved was whether the Department could refuse to allow the petitioner before the Court to clear the goods as independent processor of fabrics under Notification No. 36/98, dated 10-12-98. The contention of the petitioner was that they are covered by Notification issued by the Central Government in exercise of the power conferred on it by Section 3A of the Act and therefore, they are liable to pay duty in terms of above notifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Central Excise reported in 1999 (114) E.L.T. 1009, the Tribunal held that units floated by proprietor of main unit with its employees shown as Directors, common procurement of raw materials, centralised payment to employees, common operation of bank accounts and other financial arrangements between the units clearly establish financial interdependence and therefore, the value of clearances of all units was required to be clubbed for the purpose of determining the eligibility of the main unit to SSI notification benefit. The facts of the appellants before us are very similar to the facts of the U.K. Machine Tools case. 20. In the light of the above discussion and following the U.K. Machine Tools case, we hold that the clearances of four SSI units are required to be clubbed with the clearance of appellant No. 1. Upon such clubbing, the clearance value exceeds the ceiling limit prescribed in the SSI notification and hence the benefit of concessional rate of duty under the SSI notification is not available and differential duty is payable by appellant No. 1. 21. Valuation : There is no dispute that staple pins manufactured in the four SSI units were transferred to M/s. Kores, OPD ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h their principal M/s. Kores India Ltd. Noticee No. 5 under Rule 9(2) of Central Excise Rules, 1944 read with proviso to Section 11A(1) of Central Excise Act, 1944 being duty short-paid on the goods manufactured and cleared by them. An amount of Rs. 15,00,000/- already paid by noticee is appropriated against above recovery. Balance amount noticee shall pay forthwith. (ii) An amount of Rs. 23,06,961/- is confirmed for recovery from M/s. Neha Stationery Pvt. Ltd., Pithampur. Noticee No. 2 along with their principal M/s. Kores India Ltd. Noticee No. 5 under Rule 9(2) of the Central Excise Rules, 1944 read with proviso to Section 11A(1) of the Central Excise Act, 1944 being Central Excise duty short paid on the goods manufactured and cleared by them. An amount of Rs. 15,00,000/- already deposited by noticee is appropriated against above recovery. Balance amount noticee shall pay forthwith. (iii) An amount of Rs. 29,24,105/- is confirmed for recovery from M/s. Nandini Stationery Pvt. Ltd., Pithampur. Noticee No. 3 along with their principal M/s. Kores India Ltd. Noticee No. 5 under Rule 9(2) of the Central Excise Rules, 1944 read with proviso to Section 11A(1) of the Central Excise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ral part of M/s. Kores India Ltd. He has held the duty demand to be payable by appellant No. 1 by treating it as the principal. 24. Viewed in this context, it appears to us that the confirmation of different amounts to duty from each of the four SSI units along with their principal M/s. Kores India Ltd. does not vitiate the demand. We hold that the duty demand is sustainable against appellant No. 1. 25. Time-bar : The finding on the applicability of the extended period of limitation is contained in Para 73.1 of the impugned order wherein the Commissioner has held that suppression of material facts namely administrative and financial control, by appellant No. 1 over the four SSI units, operation of bank accounts of the four SSI units through the employees of appellant No. 1, mutuality of interest between appellant Nos. 1 and 4 SSI units, and projection/declaration of the four units as independent units justifies the invocation of the proviso to Section 11A(1). The contention of the appellants Counsel that issue of show cause notice in 1994 and 1995 to M/s. Nandini Stationery Pvt. Ltd. and M/s. Mars Stationery Pvt. Ltd., clearly shows that the Department had knowledge of all mat ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
