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TMI Blog2011 (7) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... ne, Longifolene, Carene, Double Distilled Tupentine Oil, Pine Tar, Dipentine, etc. chargeable to central excise duty under Heading No.38.05 of the Central Excise Tariff. The period involved in this case is from 1997-1998 to 2000-2001. Heading No.38.05 of the Central Excise Tariff during the period of dispute covered gum, wood or sulphate turpentine and other turpenic oils produced by the distillation or other treatment of coniferous woods; crude dipentene; sulphite turpentine and other crude paracymene, pine oil containing alphaterpineol as the main constituent. One sub-heading 3805.11 of this heading is turpentine oil in or in relation to manufacture of which any process is ordinarily carried on the with the aid of power and the same is chargeable to duty. But the rate of duty for turpentine oil manufactured without the aid of power , covered by sub-heading 3805.19 is nil. Other products of Heading No.38.05 are covered under sub-heading No.3805.90 where the tariff rate of duty is 16%. The respondent were availing the benefit of SSI exemption during the period of dispute. The respondent s unit is a partnership firm whose partners are Shri Satish Chander Sud and his wife, Mrs. Neena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ry of the respondent, invoice books for 1999-2000 and 2001-2002 (upto 5.7.2000) were recovered. The invoices showed the sale of pine oil by M/s. Satish Industries while it appeared that the Pine Oil could not be manufactured without the aid of power and the facility of manufacture of pine oil is only available with the respondent, M/s. Sud Pines. Inquiry was made with the customers mentioned in those invoices, who confirmed having purchased the product called pine oil under the invoices issued by M/s. Satish Industries and from them, the laboratory test reports regarding the product purchased by them were also obtained, which showed TT Alcohol content of the product between 20% to 42%. 1.2 Inquiry was made with Shri Satish Sud, who produced a certificate issued by Dr. K.L. Dhar, Ex-Scientist (G), CSIR, Regional Research Laboratory, Jammu, certifying that after visit to M/s. Satish Industries and seeing the plant and machinery installed therein, he is of the view that the manufacturing process is without the aid of power and that the product manufactured does not contain Alpha Terpineol more than 3 to 4%. Subsequently, inquiry was made with Dr. K.L. Dhar and his statement was re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppeal has been filed by the Commissioner, Central Excise, Jalandhar in pursuance of the above mentioned order dated 28.10.2004 passed by the Board. 6. Heard both the sides. 7. Shri I. Beg, Ld. Departmental Representative, assailed the impugned order by reiterating the grounds of appeal in the Revenue s appeal and pleaded that the machinery installed in the unit of M/s. Satish Industries consisted only of a wood fired Bhatti with condenser which could be used for simple distillation and condensing operations, that with this equipment, the pine oils containing 20% to 42% terpineol oil could not be manufactured, that for manufacture of pine oil /double distilled turpine oil, circulation of cold water is required in the condenser which was not possible in the unit of M/s. Satish Industries, that at the time of officer s visit to the unit, the condition of the distillation machinery installed in M/s. Satish Industries clearly indicated that it was non-functional for a long time, which clearly indicated that no manufacturing activity was going on, that the test certificates supplied by the customers of pine oil sold by M/s.Satish Industries, indicated that the same contained betw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Satish Industries, the product sold by them has been mentioned as pine oil, it was not pine oil but was double distilled terpentine oil, which could be manufactured without the aid of power, that Pine Oil as per the ISI specification must have at-least 70% terpineol oil, that there is no evidence of financial flow back, which is a must for clubbing the clearances of their unit with the clearances of M/s. Satish Industries, that just because of a few common employees and the proprietor of M/s. Satish Industries being partner of the respondent unit, it could not be concluded that M/s. Satish Industries was a unit owned by the respondent or a dummy unit of the respondent, that there is no evidence that the profit earned by M/s. Satish Industries was flowing back to the respondent unit or that the respondent unit was fully controlling all the activities of M/s. Satish Industries, that when M/s. Satish Industries is an independent unit and the goods being sold by this unit were double distilled terpentine oil, which could be manufactured by this unit without the aid of power and which being manufactured without the aid of power were not chargeable to any duty, there is no question of cl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atish Industries, which is crude distillation equipment, is not capable of manufacturing pine oil or turpentine oil with 20% to 42% terpineol and the same could be manufactured only in the plant of the respondent. When the goods which are claimed to have been manufactured by M/s. Satish Industries, could not be manufactured there and the condition of the plant at the time of officer s visit to the factory and the other evidences suggest that the same was not functioning, we are of the view that the goods which are claimed to have been manufactured by M/s. Satish Industries have not been manufactured by them but manufactured by the respondent. 9. From the statement of Shri Rajesh Arora, Production Manager of the Respondent firm, that water supply to M/s. Satish Industries was coming from the respondent factory and circulation of cold water in condenser is necessary for distillation, it is clear that production in M/s. Satish Industries was dependent upon pumping of water from the respondent s factory. M/s. Satish Industries were not paying anything to the respondent for water supply. Besides this, the statement of Shri Rajesh Arora also discloses that the workers, on the payroll ..... X X X X Extracts X X X X X X X X Extracts X X X X
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