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TMI Blog2016 (5) TMI 780X X X X Extracts X X X X X X X X Extracts X X X X ..... een denied by the revenue. This confirmation of demand against the Appellant itself recognizes their independent existence and thus the demand made by holding the same to be part of M/s NTB international is illegal and not sustainable. While remanding the earlier show cause notice the Tribunal had directed the adjudicating authority to examine the basis of clubbing for an earlier period. However the adjudicating authority without examining the basis of clearances again confirmed the demand which shows that no fresh enquiries were made to determine as to how the Appellant is connected with M/s NTB and whether the facts show the mutuality of interest between the two. Since the demand was confirmed without examining the actual facts which can lead to clubbing of Appellant with M/s NTB international, we hold that on account of this count also, the demand is not sustainable. As the Appellant is a partnership firm and M/s NTB international is a Private Ltd. Company and therefore they cannot be clubbed. The adjudicating authority has not considered any of these aspects and confirmed the demand against the Appellant firm by clubbing it with M/s NTB International which is illegal. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sales of M/s Polybelt and M/s NTB are common. The statements of employees and related persons of M/s Polybelt and M/s NTB were recorded. The show cause notice alleged that the units are single entity and the value of clearances are required to be clubbed for the purpose of charging excise duty under Notification No. 175/86 CE dt 01.03.86 as amended from time to time. It was also proposed to classify the Transmission belt under chapter sub heading No. 4010.90, 4210.90 and 5901.00 of the Central Excise Tariff Act as per the composition of said product and to levy appropriate duty. 2.1 The show cause notice was adjudicated vide Order-in-Original No. 16/99 Commr.VI dt. 10.06.99 wherein the demands were confirmed and penalties were imposed. M/s. Polybelt Technologies, M/s. NTB International and M/s. Transcon filed appeal before the CEGAT, Mumbai. The Tribunal vide Order dt. 30.06.2000, remanded the matter to the Commissioner for de novo adjudication. In de novo proceedings the Commissioner vide Order-in-Original No. 38/2001 Commr. M-VI dt. 31.12.2001 confirmed the demand and imposed penalties. Against the said order dt. 31.12.2001 the parties filed appeal No. E/1325-30/02 before C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icity of proceedings before him and his Assistant Commissioner. The Appellant shall be allowed a reasonable opportunity of being heard before passing a fresh order. 2.2 The Commissioner vide Order-in-Original No. 14/KKS/2005-2006 dt. 30.11.2005 in fresh proceedings denovo adjudicated the show cause notices alongwith two more show cause notices dt. 24.11.2003 and dt. 06.01.2005 involving duty of ₹ 10,28,065/- and ₹ 6,20,115/- respectively. The Commissioner relied upon the previous investigation conducted against M/s Polybelt and M/s NTB. He relied upon the order dt. 01.09.2004 in Appeal No. E/1325-1330/02 of CESTAT and held that the assessee in those appeals themselves have accepted and/or conceded on the point of clubbing. He further held that the objection of party regarding non issue of show cause notice to M/s NTB International is purely technical as the show cause notice discuss the issue of clubbing with NTB International and refers to previous show cause notice wherein the decision has now reached finality before CESTAT themselves. That he finds that the circumstances under which their clubbing together has been admitted before CESTAT still exists and the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that in the present appeals without specifying the quantum of turnover of M/s NTB International the demand has been made and thus the show cause notices are vague. That in subsequent period there was no transfer of funds, but still considering the earlier transfer of funds as basis to show mutuality of interest, demand was confirmed against Appellant. That the Tribunal in its order dt. 01.09.2004 considered the two legal and factual issue i.e (i) No show cause notice has been issued in the impugned periods to M/s NTB International Pvt. Ltd though small scale exemption is sought to be denied to M/s Polybelt Technologies India by clubbing their clearances (ii) clubbing cannot be done for a subsequent period on the basis of relevant factors existing for such clubbing for an earlier period. On this points Tribunal had remanded the matter to the Commissioner by setting aside order no. 38/2001. 3.2 That in remanded matters as well as in appeals of subsequent period, the adjudicating authority has committed error by holding M/s Polybelt Technologies India a partnership concern as subsidiary of M/s NTB International which is a private Ltd. company. The partnership firm which is independ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to NTB or that NTB is selling its goods to Appellant, then both have independent existence. That under such factual matrix the demand of duty from Appellant is illegal. He relies upon the judgment of Bentex Ind. Vs. CCE, New Delhi 2003 (151) E.L.T. 695 (Tri. - Del.), Plasto Containers (India) P. Ltd. Vs. CCE, Nagpur 2011 (268) E.L.T. 509 (Tri. - Mumbai), CCE, Ludhiana Vs. Jagatjit Agro Industries 2014 (309) E.L.T. 301 (Tri. - Del.), Jifcon Tools Pvt. Ltd. Vs. CCE, Aurangabad 2007 (208) E.L.T. 345 (Tri. - Mumbai), Highland Dye Works Pvt. Ld. Vs. CCE, Surat 2000 (121) E.L.T. 502 (Tribunal). 3.3 On the issue of classification he submits that though the classification list of their predecessor company M/s Transcon International has been approved by the department in terms of Rule 173B of Central Excise Rules, 1944,therefore classification resorted by them is correct. That even the Tribunal accepted their contention in case of M/s Transcon and set aside the demands for the extended period in its order No. M/422//WZB/MUM/C-II/EB dt. 20.12.2005. 4. On the other hand, Shri V.K. Singh, Ld. Special Counsel appearing on behalf of the Revenue reiterates the findings of the impugned orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the demand should not have been proposed against M/s. Polybelt as in the eyes of the revenue the Appellant has got no independent existence. We thus find that the impugned orders suffers from serious infirmity on this count. Once the independent existence of a concern is denied and is held to be dummy concern, in that case the duty could not have been demanded from Appellant M/s Polybelt Technologies India which is illegal. In the case of M/s Gajanan Distributors Vs. CCE Pune 1992 (57) ELT 451 (SC), the Honble Supreme Court has held that when the demand is confirmed against each of the unit whose clearance is sought to be clubbed, the revenue explicitly recognizes the independent entities of such unit. In the instant appeals, in the remand proceedings the demand has again been confirmed against the Appellant M/s Polybelt whose independent existence has been denied by the revenue. This confirmation of demand against the Appellant itself recognizes their independent existence and thus the demand made by holding the same to be part of M/s NTB international is illegal and not sustainable. We agree with the judgments relied upon by the Appellant in case of M/s Highland Dye Works Pvt. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ain and it requires to be set aside only on this count. Regarding the reversal of the notional higher credit by the appellant as per the impugned order in clause (2) it depends upon the finding of the Collector/Commissioner (Appeals) that the duty liability falls on Highland Bombay which is the parent unit of the appellants, as per the case of the department. In view of our above observations and findings we are of the view that the demand made against the Appellant M/s Polybelt is not sustainable. 7. We further find that while remanding the earlier show cause notice the Tribunal had directed the adjudicating authority to examine the basis of clubbing for an earlier period. However the adjudicating authority without examining the basis of clearances again confirmed the demand which shows that no fresh enquiries were made to determine as to how the Appellant is connected with M/s NTB and whether the facts show the mutuality of interest between the two. Since the demand was confirmed without examining the actual facts which can lead to clubbing of Appellant with M/s NTB international, we hold that on account of this count also, the demand is not sustainable. In case of M/s Jif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was held that: 5. The bare perusal of the impugned order shows that the learned Commissioner has clubbed the clearances of both the companies named above, broadly on the grounds; that both were working in the same building, had a shared staff and machinery, the Managing Director of one company was proprietor of another, the brand names being used by both the companies were also similar with little variation, the advance income-tax of the Director of the Company, appellants no. 1, was paid by the Director of the other company, they had common telephone facilites, even the raw material was also purchased by them under same documents, payment in respect of one unit was being received by another, inward register was common, there was transfer of labour from one unit to another, as well as on some other grounds detailed in the order itself. But, in our view, all these facts, circumstances and grounds were inconclusive and insufficient in the eyes of law for clubbing the clearance of both the companies. The duty has been demanded in the show cause notice from both the companies and same had been even confirmed by the Commissioner through the impugned order against both of them. This ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... result in clubbing of the clearances of both the units. Similarly, in the case of Karnataka Gears (P) Ltd., Concord Steel Works Ltd. v. CCE, Bangalore, 1999 (110) E.L.T. 529 (Tribunal) = 1998 (29) RLT 543 (T), it has been held by the Tribunal that just because two limited companies were interested in the business of each other, their clearances could not be clubbed, holding one to be dummy of another. 9. Similarly, in the case of Applied Research Engg. (P) Ltd, v. CCE, Pune, 1997 (89) E.L.T. 494 (Tribunal), it has been observed that clubbing of a limited company with a partnership firm, although having some common factors, is not permissible. The use of same premises/shed, common management, common office, some common labour, common goods, had been also held to be insufficient for clubbing the clearances of two units, by the Rajasthan High Court in the case of Renu Tandon v. U.O.I., 1993 (66) E.L.T. 375 (Raj). 10. From the record, we find that both the companies stand duly registered with the State and Central Excise Authorities as well as Sales Tax Department independently. They have got their separate registration numbers for the purposes of labour, industrial law, pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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