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TMI Blog2004 (1) TMI 534X X X X Extracts X X X X X X X X Extracts X X X X ..... rt) were initially a marketing company and traded in paints; that due to increase in sales a manufacturing unit was set up mainly for the manufacture of dry distempers and primers; that they subsequently started manufacturing paints; that they, being a marketing company, also purchase paints of various brands from manufacturers, who are availing the benefit of SSI exemption; that different show cause notices dated 2-11-1995 were issued to all the assessees after visit by the officers of the Directorate General of Anti Evasion on 18-10-94 the factory and the office premises of the assessees all over India and resuming the records and investigation; that the main allegations in show cause notices are : (a) SSI exemption should be denied by clubbing the clearances of Rajdoot with the clearances of other SSI units, (b) value for the purpose of assessment should be the price at which the goods were sold from the depot. 2.2 He, further, mentioned that in view of the detailed replies filed by all the assessees, the Commissioner, under the impugned orders, dropped the charges of clubbing of clearances; that, however, she has denied the benefit of SSI exemption on a new ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and has to be on the manufacturer of the paints and since Rajdoot was not the manufacturer of the paints sold by other units, the eligibility or otherwise of the benefit of SSI Notification is to be based only on the value of the clearance of a manufacturer; that the Notification grants the benefit of SSI exemption based on the value of the clearances of the goods manufactured; that Notification does not refer to the sale of the traded goods; that, therefore, looking into the sale of the traded goods for determining the eligibility or otherwise is incorrect and the order is liable to be set aside. 4.1 Regarding the aspect of valuation, the learned Advocate submitted that the goods manufactured by them are sold at the factory gate as well as from depots and the price charged by them for the clearances made at the factory gate has not been disputed by the Revenue and in fact it has been accepted as there is no demand on the sales made at the factory gate; that thus when the price at the factory is accepted as the normal price, the depot price is not relevant; that the quantum of sale at the factory gate has no relevance for adoption of price or the rejection of the same; that, more ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e turnover of Rajdoot Paints as a manufacturer and trader exceeded SSI exemption limit, U.K. Paints are ineligible for the exemption. He submitted that the brand name Rajdoot is owned and registered in the name of U.K. Paints which is evident from the Certificate dated 6-1-1966 granted by Trade Marks Registry; that they never used the brand name New Rajdoot and as such the eligibility or otherwise of Rajdoot Paints has no bearing on the eligibility of U.K. Paints; that in any case, even if the brand name belongs to Rajdoot Paints, they would be eligible for the benefit of SSI exemption as Rajdoot Paint is eligible for the exemption. He, further, submitted that as regards valuation, the Commissioner has held that the undervaluation aspect is based upon the concept of related person; that the concept of related person was not an allegation in the show cause notice; that the Commissioner has also ignored the value available at the factory gate and adopted the selling price of the paints from depots; that the price charged to Rajdoot Paints was equal to the price charged to the other customers at the factory gate; that the entire demand is time-barred in view of the fact that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rs or their monograms like U.K. Paints, Yak Paints, etc., were not mentioned at all on any of the containers; that the material to be printed on the metal containers was on the basis of instructions and orders received from Rajdoot Paints; that it is thus apparent that the products of all units other than Rajdoot Paints were being sold in the open market as the products of Rajdoot Paints and accordingly their eligibility (Rajdoot Paints) to avail SSI exemption had been rightly determined in terms of their total turn-over; that as the total turn-over exceeded Rs. 3 crores in the relevant financial year, they were not eligible for the benefit of SSI exemption Notification; that, consequently, products of assessees Nos. 2 to 8 would be clearly ineligible for the SSI exemption as their products were sold in the market bearing the brand name and monogram of Rajdoot Paints who were not eligible for the SSI exemption. He relied upon the decision in U.K. Machine Tools Pvt. Ltd. v. C.C.E., 1999 (114) E.L.T. 1009 (T) wherein the Tribunal has held that common procurement of raw materials, centralised payments to employees, common storage facilities, common operation of bank accounts and other ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Revenue has only filed five appeals and no appeals have been filed against the Orders-in-Original passed in respect of U.K. Paints, Rajdoot Paints and Yak Paints (P) Ltd.; that the traded items cannot be taken together for the purpose of determining the eligibility to SSI Notification; that as duty demand has been confirmed against the individual assessee, the ratio of the decision in Gajanan Fabrics Distributors v. C.C.E., Pune, 1997 (92) E.L.T. 451 (S.C.) would apply. 12.1 We have considered the submissions of both the sides. One of the main allegations levelled in the show cause notices is that all the units are one and the same and have been bifurcated under different names and nomenclature for the purpose of defrauding Central Excise duty. The adjudicating authority has passed different Adjudication Orders in respect of individual assessee and has confirmed the demand of duty individually. The assessees have contended that the Commissioner has held in different Adjudication Orders that each unit is a manufacturer in its own right. We observe that no finding has been recorded by the Commissioner to the effect in any of the impugned orders that all the units are one and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... para 4 of Notification No. 1/93-C.E.) would be attracted and as the other units No. 2 to 8 were selling the goods manufactured by them in the metal containers bearing the brand name of Rajdoot Paints who are not eligible for the grant of exemption under Notification No. 175/86 or 1/93-C.E. they are also not eligible for the benefit of SSI exemption. We do not find the reasoning of the Commissioner acceptable. Para 3 of Notification No. 175/86-C.E. as well as 1/93-C.E. reads as under : Nothing contained in this Notification shall apply if the aggregate value of clearances of all excisable goods for home consumption - (a) by a manufacturer, from one or more factories, or (b) from any factory, by one or more manufacturers, had exceeded rupees two hundred lakh in the preceding financial year. 13.2 Explanation I to Explanation IX of the Notification 175/86-C.E. explain the expression value and aggregate value of clearances . Nowhere any Explanation provides that in computing the aggregate value of clearances, value of goods traded by a manufacturer would be taken into account for the purpose of Notification. Once it is not the case of the Revenue that unit Nos. 2 to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns that there would be duty liability on all units except Rajdoot Paints and Herman Paints, if the benefit of SSI Notification is allowed to them. 14. Coming to the aspect of valuation, we observe that the adjudicating authority has adopted the depot sale price as most of the production of Rajdoot Paints was being stock transferred to their godowns from where the goods were taken to their depot for sale to the dealers and the sales at factory gate were to some individuals and Government officials which cannot be considered to be sale to independent buyers since they were very small in quantity. On the other hand, the learned Advocate has contended that the quantum of sale at factory gate was not negligible as it was 44.30% in 1990-91, 63.25% in 1991-92, 21.82% in 1992-93 and 11.50% in 1993-94. There is nothing brought on record by both the sides as whom these sales were made to at the factory gate. Moreover, it has been contended, on behalf of other units, that show cause notice did not propose to hold them and Rajdoot Paints as related persons under Section 4(4)(c) of the Central Excise Act and as such the impugned orders are beyond the scope of show cause notices. We are, there ..... X X X X Extracts X X X X X X X X Extracts X X X X
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