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TMI Blog2017 (11) TMI 706X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon’ble Supreme Court held that two factories located within the same premises, owned by same owner, common boundaries and common balance sheet, but having separate staff, separate management, separate passage, separate entrance with separate central excise registration and producing different end products, cannot be treated as one and the same factory and, hence, are two factories separately eligible to exemption. In present case we do not find any factor to club the units such as common procurement of raw materials or common stock of raw material. Neither there is any inter-dependence in manufacturing operations, common use of machinery or free flow of finance between two units. Thus in absence of such factors we do not find any reason to club the clearances of the Appellant Units. The value of clearances of independent and separate units and that too of limited companies cannot be clubbed only for the reason that the units belong to same family, controlled by same family members or use of certain common amenities or interest free loans when both have separate set ups. It is pertinent to note that the persons/share holders of the company are different from company which is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lding in both concern is held by family members of Shri B.N. Khurana. There has been interest free loans/transfer of funds from one concern to another for saving from penalty interest or to meet the short term fund requirement and to save the transferee concern from crossing the overdraft limit. The common employees were maintaining the affairs of purchase/ sales and accounts from office at one place. Shri B.N. Khurana was looking after overall affairs of both the companies. Reliance was also placed upon statement of Executive Director Shri A.R. Kashalkar wherein he had stated that sometime it so happened that the purchase order was placed by one of the two companies and the delivery of the material was made to the other company which has not placed the purchase order. The supplier raised bill based on the purchase order and they made the payment accordingly. Reliance was placed upon his statement that he was shown letter of M/s NCPL bearing Ref. No. ARK/NCPL-SMPL/1521 dt 23.01.2004, addressed to M/s Spriax Marshal Pvt Ltd, Pune and another letter of NCPL bearing Ref. No. ARK/NCPL-RLC/1569 dated 14.2.2004 wherein the supplier was directed by him to deliver the material to M/s NEPL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Nos. 8/2000 and 9/2000 both dated 1/3/2000 are available if the value of excisable goods for home consumption by a manufacturer does not exceed ₹ 300 lac in a year. The combined value of clearances of both the companies have exceeded the said amount, which makes them ineligible to avail SSI exemption during the years 2003-04, 2004-05 and 2005-06. The SCN treated both the factories as belonging to one single manufacturer for the purpose of levying and collection of central excise duty. It was also proposed to demand duty from M/s NEPL by invoking extended period of limitation and to impose penalty under Rule 25 of Central Excise Rule 2002, Rule 173Q or Rule 209A of the erstwhile Central Excise Rules, 1944 and Section 11-AC of the Act. It was also proposed to impose penalty upon Shri B.N. Khurana on the ground that he prudently intended to claim concessions under SSI exemption notification with the sole intention of evading payment of duty. They were also issued Show Cause Notice No. V-Adj(Misc)30-97/05 dt. 02.09.2005 proposing demand of ₹ 8,94,593/- from M/s NCPL along with interest and penalty and also proposing penalty upon M/s NEPL and Shri B.N. Khurana. 4. Both th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ing their own independent setup. NCPL was located at Marol in Mumbai whereas NEPL was located at Mahape, Navi Mumbai and the distance between both the units is more than 25 kms and were falling under different Commissionerates. None of them is dummy as independent existence of both the units was admitted and recognized by issuing separate SCNs to both the units. Both the units are having independent manufacturing set up including plant machinery, workmen, staff members etc. They have their own independent electric connections, telephones and are registered separately with Income-tax, Sales-tax, Bombay Municipal Corporation, Directorate of Industries, Pollution Control Board, Central Excise Dept. etc. M/s NEPL are having their own independent plot leased-out from MIDC and is an ISO 9001 registered company, which shows that both the companies are independent and separate entities and are not dummy or facade. Hence, the question of clubbing the value of clearances of said units does not arise at all and, in consequence thereof, denial of SSI exemption separately to both the units is illegal. He also relied upon the trade Notice No. 42/92 dt 24.9.1992 issued by Bombay-I, Collectorate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 689 (Tribunal) That the allegation that both the companies are financed by one other by way of interest-free loans and that too for a few days cannot be a ground for clubbing the value of clearances of both the companies. He relied upon the following judgments :- (i) ARIHANT ARTS Vs. CCE, MUMBAI - 2004 (173) E.L.T. 194 (Tri. - Mumbai) (ii) SUPER STAR VS. CCE, , CALICUT - 2002 ( 148) E.L.T. 854 (Tri. - Bang.) (iii) YA ALIF LAM INDUSTRIES Vs. CCE, PUNE - 1999 (113) E.L.T. 1033 (Tribunal) - (iv) PADMA PACKAGES (P) LTD. Vs. CCE, COIMBATORE - 1997 (90) E.L.T. 175 (Tribunal) (v) ALPHA TOYO LTD. Vs.- CCE, NEW DELHI - 1994 (71) E.L.T. 689 (Tribunal) 6. That the allegation that the products manufactured by both the companies are identical and marketing of the same is done through common marketing net-work, cannot be a ground for clubbing the value of clearances of both the companies. He relied upon the following judgments :- i) PRIMLAKS WAFFLES P. LTD. Vs. CCE PUNE - 2000 (118) E.L.T. 221 (Tribunal) ii) PADMA PACKAGES (P) LTD. Vs. CCE, COIMBATORE - 1997 (90) E.L.T. 175 (Tribunal) iii) RENU TANDON Vs. UNION OF INDIA - 1993 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tch of material against purchase order. Invoice Nos. NCPL/IPL/205 NCPL/IPL/206 both dt. 27.02.2004 of NCPL for supply of AHU to M/s India Polyfibers in which Humidifier of M/s Spirax Marshall was used. In case of supply of goods by M/s Reitz India Ltd. he relied upon letter dt. 25.11.2003 of NCPL to M/s Reitz soliciting their quotation for centrifugal fans required for M/s Reliance Project, letter dt. 27.11.2003 of M/s Reitz to M/s NCPL offering prices for centrifugal fans, Purchase order No. NCPL/ 1363 dt. 06.12.2003 of NCPL on M/s Reitz for the fans and cheque No. 683552 dt. 06.12.2003 for ₹ 75,000/- being advance payment, Letter dt. 13.01.2004 of M/s Reitz to NCPL enclosing proforma invoice and requesting balance payment to enable dispatch of centrifugal fans, Letter dt. 06.02.2004 of NCPL to M/s Reitz expressing displeasure in delay dispatch of fans, Letter dt. 16.02.2004 of M/s Reitz to M/s NCPL informing dispatch of material against the purchase order, Delivery challan No. 257 dt. 15.02.2004 of M/s Turbovent Ind. Pvt. Ltd to M/s NCPL, Delivery challan cum invoice No. 239 dt. 15.02.2004 of M/s Turbovent Industries addressed to M/s NCPL, Consignment Note No. 47534 dt. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely under various laws. He submitted that the demand raised by the adjudicating authority is illegal as both the units have been filing classification lists, declarations specifically spelling out each and every item manufactured by them. Modvat declarations under Rule 57G (1) were filed giving details of the final product manufactured. All statutory records and accounts were maintained, periodical returns were filed by M/s NCPL. The said factory was visited by the Officers from Range / Division regularly. The central excise records were corroborated by the Audit parties and no objections were raised. He submitted that as every information / details about the production, clearance were within the knowledge of the Department, there was no suppression of fact or mis-statement and , hence, extended period cannot be invoked. He relied upon the judgments in case of the following :- (i) PUSHPAM PHARMACEUTICALS Vs. CCE, BOMBAY - 1995 (78) ELT 401 (SC) (ii) COSMIC DYE CHEMICAL Vs. CCE, MUMBAI - 1994 ELT 721(SC) (iii) TAMIL NADU HOUSING BOARD Vs. CCE, MADRAS - 1994 ELT 9 (SC) (iv) CHEMPAR DRUGS LINIMENTS - 1989 (40) ELT 276 (SC) Without prejudice he subm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r-all authority. Accounts, purchase, sales, marketing of both the units were looked after by common staff from the common office under the supervision of Shri B.N. Khurana. The infrastructures like computer, telephones, furniture etc. were used commonly. The employees admitted that they worked for both the units as well as other concerns owned by Shri B.N. Khurana. The products manufactured by the companies are identical and there are common raw material suppliers, common buyers. That in certain cases, the modvatable inputs were received by M/s NEPL , but the credit was availed by Ms NCPL, which shows that both the companies are treated as one. Further, that the interest free loans / transfers were made from one company to another to take care of deficiency in over-draft of either companies. 8. We find that it is an undisputed fact that both the units are private limited companies registered with the Registrar of Companies having separate factory premises, machineries, workers etc. Even their products are different. M/s NCPL is engaged in manufacture of Air handling Unit or Air conditioning System and M/s NEPL were manufacturing Centrifugual fans. Also, both the companies are re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arshall we find from the documents that though the goods were delivered to the premises of M/s NEPL, but the same were collected by NCPL. Even the purchase order issued to M/s Spirax Marshall to M/s NCPL shows that the goods, i.e. the humidified system for use in air-handling units, to be supplied to M/s India Polyfibres. The consignment note also shows the consignee as M/s NCPL. The invoice dt 27.2.2004 issued by M/s NCPL has also been produced along with letter dt 2.6.2004 to M/s India Polyfibers informing that the Humidifier for AHU was purchased from M/s Spirax Marshall. Similarly, the documents, as mentioned in the submission of Appellant have been produced in case of goods purchased from M/s Reitz India Ltd. It is also found that, whereas M/s NCPL were manufacturing air conditioning system / air handling units, M/s NEPL were manufacturing centrifugal fans of lower capacity. Thus, the products manufactured by M/s NCPL and NEPL were also different and it should not be said that the goods ordered by M/s NCPL, but consigned to M/s NEPL which would have been used by M/s NEPL. In such facts we do not find any reason to club the clearances of both the units. We find that in case of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies cannot be clubbed only for the reason that the units belong to same family, controlled by same family members or use of certain common amenities or interest free loans when both have separate set ups. It is pertinent to note that the persons/share holders of the company are different from company which is an artificial legal person. Hence even same family members are looking after affairs of two companies, both companies have independent legal entities. This ratio and analogy has been constantly upheld by the Tribunal and Hon ble Courts in case of M/s Panetrical Engineering - 2005 (186) ELT A-133 (SC); Spick-N-Span Steel Wools Pvt Ltd - 2011 (274) ELT 568 (T); S.C. Patel - 2011 (264) ELT 414 (T) ; Sushil Chemicals - 2008 (230) ELT 117 (T) ; Rollatainers Ltd - 2004 (170) ELT 257 (SC) ; Superior Products - 2008 (230) ELT 3 (SC); Servo Packaging Pvt Ltd - 2007 (210) ELT 355 (T); Shree Nirmal Spinners - 2014 (300) ELT 469 (T), Kores India Ltd 2015-TIOL-2678-CESTAT-DEL; Krishna Engineering Works - 2016-TIOL-1139-CESTAT-HYD. 11. Thus looking to the above aspects compounded with the fact that both the companies are private limited companies and having independent legal exis ..... X X X X Extracts X X X X X X X X Extracts X X X X
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