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TMI Blog2017 (4) TMI 95X X X X Extracts X X X X X X X X Extracts X X X X ..... the clearances of respondent 1, 2, 4 and 5 needs to be clubbed and duty demanded on respondent No.1 and the exemption notification of small scale industries claimed by respondent No. 2, 4 and 5 needs to be rejected. Department issued four show-cause notices for demand of duty from respondent No.1 after clubbing of the clearances of respondent No.1, 2, 4 and 5. The above show-cause notices were also seeking to impose penalties on respondent No.3, 6, 7 and 8, and also sought to deny the benefit of notification No. 8/2003 dated 01.03.2003 as amended. All the respondents filed detailed reply along with various annexure challenging the allegations on merits. It was the case of the respondents before the adjudicating authority that respondents 1, 2, 4 and 5 are independent units, they are procuring their own raw materials, working separately having separate plant & machinery, registered with various Government departments like Sales Tax, Income Tax, Service Tax, Property and Professional Tax. The adjudicating authority after following due process of law dropped the proceedings initiated by the said show- cause notices. Revenue is aggrieved by the said order. 3. Learned D.R. takes the be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gards the issue of clubbing of clearances of units is concerned, the Hon'ble Apex Court in the case of Supreme Washers (P) Ltd. - 2003 (151) ELT 14 (S.C.) has laid down that mutuality of interest is proved when there is common management of the Companies/Firm under one person. In the case in hand Shri Ramesh Saboo is controlling all the activities of the unit/firm and rest of the proprietors/partners such as wife/son/daughter-in-law; there is common procurement of raw material, as per the Apex Court, in the instant case raw material was procured by all the respondent-units from M/s. R.R. Sales who is also related to respondent No.1; there is common use of machinery this one is also satisfy in the case in hand, the basic infrastructure for manufacture of corrugated boxes was available only with respondent No.1; there is common marketing arrangement - as per the Apex Court this needs to be satisfied, in the case in hand corrugated boxes is the common commodity shown to be manufactured by all the respondent-units. The buyers are also common parties hence there is common marketing arrangement. He relies upon the following decisions:- (a) Alpha Toyo Ltd. - 1994 (71) ELT 689 (Tri.) ( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctions with respondent No.3 who is a trading unit and in respect of financial transactions, necessary interests were paid as per TDS certificate which is recorded by the adjudicating authority; that despite recording various statements from all the proprietors/partners of other units and respondent No.1 there is nothing on record which comes out that Shri Ramesh Saboo, respondent No.1 has accepted that other 3 manufacturing units are dummy units and there is no inculpatory statements; that there is a difference between the capital investment made by respondent No.1 and other respondents despite the turnover is the same, this allegation is totally incorrect as during some financial year capital investments were made lesser turn over than other units with meager capital investment and the depreciation on the capital goods was done only in their independent units and in the hands of respondent No.1. He would rely upon the decision of the Tribunal in the case of Unity Industries - 2006 (193) ELT 314 for this proposition that clubbing of clearances cannot be permitted if the units has separate SSI/Central Excise registration, separate balance sheet and located geographically apart. It i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ctual findings from paragraphs 95 to 100 which are summarized as under:- (a) The allegation in the show-cause notice that the proprietors of respondent No.1, 2, 3, 4 and 5 are staying in the same residential premises and they are close relatives is not determinative of the issue for clubbing of clearances. We find that is correct and to come to such a conclusion the adjudicating authority has considered the Notification 8/2003 in detail and recorded that the said notification nowhere deals with the concept of related persons and definition of related person and is suitable only in determination of the valuation aspect under Section 4 of Central Excise Act, 1944 where concept of related person attains significant importance. (b) He also recorded that the respondent No.1, 2, 4 and 5 are independent legal entity and manufacturers in their own in form of their own concern. He has also recorded factual finding that respondent No.3 is a dealer having independent and separable legal entity. We agree with the findings recorded by the adjudicating authority that a separable firm is an independent legal identity and cannot be compared with family and each member of the family has option ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ome to such a conclusion, adjudicating authority in paragraph 137 has recorded as under:- "137. Noticee No.1 to 8, in support of their contention, in reply to SCN annexed copies of audited accounts which were subject to statutory audit and income tax and other supporting documents to show that:- (a) Units are geographically apart, having their own funding and financial arrangement; (b) They hold separate SSI registration and are assessed to income tax, sales tax and central excise separately. (c) They are purchasing raw material independently and are also selling their goods to various purchasers independently. (d) They are maintaining books of accounts separately for purchase and sale of finished goods. (e) They are obtaining separate loans and credits from various banks; (f) They have filed separate returns regularly to the department. (g) They are periodically visited by central excise range staff. (h) They are subjected to tax audit under Section 44 of the Income Tax Act and reports are being submitted to Income Tax Department regularly certified by Chartered Accountant. (i) They are holding separate licences under the Factories Act. (j) They have their ow ..... X X X X Extracts X X X X X X X X Extracts X X X X
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