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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 ..... il 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 Sud and this firm is functioning since 1989. There is another unit-M/s. Satish Industries, which is proprietary concern of Shri Satish Sud and which also claims to be manufacturing the turpentine oil etc without the aid of power. The factory of M/s.Satish Industries is claimed to be functioning from a portion of the area of the factory of M/s. Sud Pines. On 6.7.2000, the factory premises of the respondent were visited by the jurisdictional central excise officers and in course of inspection of the premises, it was found that in the area marked for M/s. Satish Industries, there is a crude Bhatti made of bricks & mort ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed, 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 recorded wherein he stated that while the Alpha terpineol content of the Turpentine oil produced in the unit of M/s. Satish Industries can be 3 to 4%, the same cannot be in the region of 20% to 42 % and Turpentine oil with Alpha Terpineol content from 20% to 42% can be produced only in the unit of M/s.Sud Pines. 1.3 In view of the above facts, the officers were of the view that M/s. Satish Industries is a non-functional unit but still substantial production of pine oil in the name of this unit is being shown, which had actually been manufactured by the respondent and that this has been done by the responden ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ineol 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 between 20% to 42% Alpha Terpineol, that as per the statement of Shri K.L. Dhar, Ex-Scientist, CSIR, manufacture of Pine Oil with Terpineol content of 20 to 42% was not possible without the aid of power, that the workers on the pay roll of M/s. Satish Industries were actually working in the unit of respondent, that as has been admitted by Shri Rajesh Arora, Production Manager and Shri J.M. Malhotra, Manager of the respondent, water supply to M/s. Satish Industries was from the respondent s factory, that while the respondent unit is a partnership firm with Shri Satish Sud and Neena Sud, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 clubbing the clearances of M/s. Satish Industries with the clearances of the respondent unit and charging duty on that basis and that in view of this, proceedings had been rightly dropped by the Commissioner against the respondent. 9. We have carefully considered the submissions from both the sides and perused the records. The respondents are a partnership concern with Shri Satish Sud and his wife, Smt. Neena Sud as partners and M/s. Satish Industries is a proprietary concern of Shri Satish Sood. The allegation against the respondent is that during the period of dispute, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 of M/s. Satish Industries were actually working in the factory of the respondent. All these evidences clearly indicate that M/s. Satish Industries did not have any independent existence but was only a part of the respondent firm, and the production and sale of Pine Oil shown in the name of M/s. Satish Industries was actually the production and sale of the respondent. 10. In view of the above discussion, we are of the view that the impugned order dropping the proceedings against the respondent is not sustainable. The same is set aside. The duty demand against th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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