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TMI Blog2017 (10) TMI 833X X X X Extracts X X X X X X X X Extracts X X X X ..... h the units have invested in the share capital of M/s. Shetron Ltd. M/s. FFL has provided unsecured loan of ₹ 35 lakhs without any conditions - appeal dismissed - decided against appellant. - E/568, 569, 1138/2003-DB - Final Order No. 22346-22348 - Dated:- 25-9-2017 - Shri S. S. Garg, Judicial Member And Shri Ashok K. Arya, Technical Member Shri Lakshminarayana, Advocate For the Appellant Shri Naveen Kushalappa, Jt. Commissioner (AR) For the Respondent ORDER Per : S. S. Garg The details of three appeals are given below:- Appeal No. Period OIA No. Duty amount E/568/2003 April 1996 to December 2000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the companies belonged to the same Shetron Group of Companies, Bombay and each of the units had invested huge sum in the share capital of M/s. Shetron Ltd., Bombay as evidenced from the balance sheet. 2.2. As prima facie there appeared substantial evidence of mutuality of interest between the two companies and that two separate units were floated only to avail of the SSI exemption by the appellant unit, a show-cause notice dt. 21/05/2001 (covering the period from April 1996 to December 2000) was issued to the appellant proposing to deny the SSI exemption availed by them under Notification No.9/2000 as amended and consequently a demand of ₹ 18,25,880/- along with interest under Section 11AB, besides imposition of penalty under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... igible shareholding (share participation amounting to ₹ 3,10,400/-) of M/s. Shetron Ltd. whose share capital is around ₹ 6.4 crores and merely M/s. FFL too was member of the said group, it is not proper to hold that the two companies had a common management. He further submitted that both the companies are independent entities funded by their respective Directors and both having independent manufacturing facilities and that the personnel acted only as per the specific advices of the respective Directors and that both the units have separate infrastructure and separate excise registration. He also submitted that the appellant raised all the capital by itself and had only borrowed a sum of ₹ 35 lakhs from M/s. FFL and the un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vi. The orders placed on FSL were being executed by FFL. vii. There are instances when even though goods were invoiced by FSL, payment was made to FFL. viii. FSL and FFL were using common fax machine and common letter heads. ix. Both the units had invested in the share capital of M/s. Shetron Ltd. x. The electricity, telephone charges of one unit were paid by the other but adjusted later with no interest. xi. On several occasions, FFL had made payments to suppliers of raw materials in respect of FSL. xii. Unsecured loans were given to FSL by FFL during 1995-96, 1996-97, 1997-98 and 1998-99. xiii. During the year 1998-99, an amount of ₹ 2.92 lakhs was shown as profit for the year 1998-99 in respect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er the investigation, the appellants have come out with some evidence that M/s. FSL paid some amount for the services rendered by the personnel of M/s.FFL. As rightly concluded by the adjudicating authority, this appears to be an after thought. M/s. FFL have given unsecured loan to M/s.FSL almost every year with no interest. The amount is also not small. The financial flow-back is very clear and evident. This is not an isolated case of giving some loan to another unit on commercial consideration. In 1995-96, the loan given was about ₹ 32 lakhs and the turnover of M/s.FSL was ₹ 36 lakhs. In 1996-97, the loan was ₹ 41 lakhs and the turnover was ₹ 39 lakhs. In 1997-98, the loan was ₹ 39 lakhs and the turnover ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es of mutuality of interest. The telephone, electricity, central excise duty of M/s.FSL have been paid by M/s.FFL. Will M/s.FFL pay the bills of any other independent unit The appellants have not clarified this point. Why should M/s.FFL pay on behalf of M/s.FSL which according to them is an independent unit Is it charity There is no proper explanation from the appellants. 5.3. The learned AR also relied upon the decision of the Tribunal in the case of Apex Electrostatics Vs. CCE, Hyderabad-I [2015(330) ELT 701 (Tri. Bang.] wherein the Division Bench of the Tribunal has observed as under:- SSI Exemption - Denial of - Clubbing of clearances of two units exceeding prescribed limit in Notification No. 175/86-C.E. - Factories loca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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