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TMI Blog2003 (9) TMI 679X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. He has also confiscated 16 Nos. of Wet Grinders seized from M/s. Wash House equipments and 4 Nos. from M/s. Swathi Equipments under Rule 173Q of the CER, 1944 with option to redeem the same on payment of fine of Rs. 1000/- each. He has also confiscated 69 Wet Grinders seized from M/s. Dynamic Marketing Agencies, who are not in appeal before us, under Rule 173Q with option to redeem the same on payment of fine of Rs. 25,000/- besides imposing penalty of Rs. 1000/- on them under Rule 209A of the CER. 2. Brief facts of the case are that on the basis of intelligence, officers of the Headquarters, Preventive, Coimbatore along with other officers conducted searches at the factory premises as well as residential premises of the appellants herein and also at the premises of one M/s. Mani Equipment, M/s. Multi Commercial Traders and M/s. Dynamic Marketing Agencies. Searches were also conducted at the units of M/s. Dheen Sons, Pune who were having dealings with the above appellants. All the above appellants are engaged in the manufacture of wet grinders. M/s. Wash House Equipments Ltd. (M/s. WHE for short) also manufacture washing machines. All the above units have SSI certificates an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... document or proof evidencing payment of Central Excise duty for 69 wet grinders and hence the same were subsequently seized on 5-5-92. Officers conducted investigations with suppliers of raw materials at Coimbatore, and recovered documents for the supplies made to M/s. JPI and the other units. Statements were also recorded from Shri P. Natarajan, proprietor of M/s. JPI on three occasions. Statements were also recorded from various other persons such as partners of other appellants herein and also employees of Traders who were alleged to have purchased wet grinders from the appellants. In the above background show cause notice was issued to all the appellants herein and also to various dealers in wet grinders and the show cause notice culminated in the order of adjudication passed by the Commissioner as noted above. Aggrieved by the said order, the appellants have filed these appeals. 3. Shri P.S. Raman, learned Counsel appeared for all the appellants and the appeals were finally heard on 15-7-2003 and the order was reserved. After the hearing was over, Shri Rajaram, R. Advocate of the M/s. Raman Associates, vide his letter received by the Registry on 23 July, 2003 submitted copi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her appellants, that cannot be reason to hold that the other units were dummy units. He has pleaded that P. Natarajan has only lent a helping hand to their family members in running the affairs of the company and the other units are owned by his family members and the law does not prohibit that family members cannot undertake and run the same type of activity. He has further pleaded that there was no financial flow back among the various units. Further, there is neither any allegation in the show cause notice nor in the finding reached by the lower authority that the said Natarajan was the person getting financial flow back from the profits etc. nor has he enjoyed the fruits of the other units. He vehemently argued that when the units are in fact in existence, how can it be concluded that they are dummy unit? The learned Counsel has also invited our attention to the following case laws in support of his plea for setting aside the order :- (1) 1995 (78) E.L.T. 556 in the case of Santha Industrials v. CCE. (2) 1993 (66) E.L.T. 375 (Raj) in the case of Renu Tandon v. UOI reported in 1993 (66) E.L.T. 375. (3) 1987 (32) E.L.T. 279 (Mad.) in the case of Alco Industries ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect from 1-3-86, electric mechanical appliances with self contained electric motor are classifiable under Chapter Heading 8509 and since Wet grinders as in the instant case undisputedly have self contained electric motors, their classification under 8509 is correct, as held by the lower authority in para 64.0 of the impugned order. She has invited our attention to the order of the Tribunal in the case of Industrial Supplies Services v. CCE, Jaipur reported in 2001 (128) E.L.T. 175 wherein in similar case, the plea of separate registration under different taxation statutes was rejected when there was no evidence of independent purchase of raw material or sale of manufactured goods, etc. It was also held therein that proof of flow back of money from dummy unit to principal unit not required when dummy character proven by overwhelming evidence as money transaction would not be transparent and out of reach of department and impossible to prove. Further, in the instant case, there was proof of financial flow back between the units as admitted by P. Natarajan, Proprietor of M/s JPI. She has further pleaded that longer period of limitation for demand of duty has been correctly invoked a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the other unit. He has clearly admitted in his statement given on the next day (8-4-92) that they utilize money from one unit s account to other unit s account; that adjustment of such cash transactions were being done as per the advice received from their auditors, and that he was looking after the production and sales from all the units and that wet grinders manufactured were sold from the respective company s bills and that the sales were made either directly or through the branches of these units situated at various places in Bangalore, Mysore, Secunderabad, Trichur (Kerala). He has also stated that he was not receiving any salary for his services, since all the units belonged to his family members. He has further stated that though raw materials were purchased in the respective unit s account, they were not stocked with the respective units. He has also clearly admitted that all the units were manufacturing wet grinders with the brand name of JP of Jothiprabha Industries. In his further statement dated 21-4-92 he had also stated that they were also affixing the brand name of Herculese , which belonged to M/s. Multi Commercial Traders who are traders. They had also sent we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pportunities to all the units that show cause notice has been issued to all of them and merely because show cause notice has been issued to all the units, it does not mean that they should also be penalised. Based on extensive investigation carried out by the Department which spread to various other places outside the State of Tamil Nadu also, and based on the material evidence collected, a conclusion was reached that all the other units have been created as dummy units for the purpose of availing the benefit of Notification, 175/86, as amended. Once it was found that the other units are dummy units, the question of demand of duty from dummy unit and imposition of penalty on them does not arise. Therefore, this plea of the appellants has no force and is rejected. Further, in the grounds of appeal filed by the other appellants herein who have been found to be dummy units, there is no substantial counter by them except generally saying that their units are independent units. We note that in the case of Industrial Supplies Services v. CCE, Jaipur, reported in 2001 (128) E.L.T. 175, the Tribunal has held that plea of separate registration, under different taxation Statutes has to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with effect from 1-3-86, electro mechanical appliances with self contained electric motor are classifiable under Chapter Heading 8509 and inasmuch as wet grinders involved in the present case have self contained electric motors, they are rightly classifiable under Heading 8509, as held by the Department. The appellants have pressed into service the judgment of the Hon ble High Court of Judicature of Madras in the matter of Alco Industries v. CCE, reported in 1987 (32) E.L.T. 279 wherein it was held that domestic electrical appliances not having built-in motor for instant operation not covered under item 33C of the CETA. It was also held therein that Wet grinder without motor or with external motor connected with V belt is not covered under item 33C ibid. In that case the Hon ble High Court was concerned with excisability of Wet grinder when electric motor was not in-built and motor was fitted at the time of sale. This case law is therefore, distinguishable and does not help the appellants. 11. As regards the next question whether longer period of limitation has been correctly invoked in this case, the fact of superintendence, direction and control of all the units by P. Nataraja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dit and (ii) cum-duty price, we leave open the aspect with regard to imposition of penalty also, to be decided by the adjudicating authority in the de novo proceedings, alter adjudging the amount of duty liability. 15. The other appellants herein such as M/s. Wash House Equipments, M/s. Prema Industries, M/s. Swathi Equipments have come in appeal against the impugned order on the ground that they are independent manufacturers and the findings arrived at by the Collector that they are dummy units created by P. Natarajan of M/s. Jothiprabha Industries is not correct and excepting this plea, there is no serious challenge to the impugned order. No penalty or fine has been imposed on M/s. Prema Industries who are one of the appellants herein. The other two appellants, viz. M/s. Wash House equipments and M/s. Swathi Equipments have been imposed fine of Rs. 1,000/- each in lieu of confiscation of wet grinders. However, from the EA-3 form filed by these two appellants, it is seen that though they have been imposed fine as noted above, the entry against serial No. 8A of the EA-3 form , what is mentioned is not relevant . No duty has been demanded nor any penalty imposed on them, as we ha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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