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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 ..... against M/s NCPL and equivalent penalty imposed under Section 11AC. Also penalty of Rs. 5,00,000/- was imposed upon Shri B.N. Khurana. 2. The brief facts of the case are that M/s NEPL is a Pvt. Ltd company registered with Central Excise and is engaged in manufacture of Air Handling Units and its parts at Plot No. 407A, TTC Industrial Area, MIDC, Mahape since year 1998. M/s NCLP is also engaged in manufacture of Centrifugal fans and Air Handling Units at 1/3, Steelmade Industrial Estate, Marol Maroshi Road, Andheri (E), Mumbai since year 1998. 3. The Appellants, on the basis of investigations and recording of statements, were issued show cause notice No.V/C.Ex/PI/Bel/12-65/2004 dt. 02.09.2005 alleging that the majority of share holding 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 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inancial interest, free loans/advances, financial assistance etc. among the units of the group. Both the units have got themselves registered with the Central Excise Dept. as separate assesses only with the intention to evade the payment of Cenvat duty by wrongly availing the benefit of Small Scale exemption. Both the units are engaged in the manufacturing of common goods and different names of the units were kept to camouflage their motive to evade central excise duty. The two units are fagade and on papers appeared different, separate and independent. However, the clearance of the said two companies/concerns/units is attributable to a single manufacturer. The SSI exemption notifications issued from time to time, viz. Notification 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 Rs. 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 c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uality, valuation, pricing of the products, marketing, future planning / growth concern of both the companies are being taken care by Shri B.N. Khurana. Accordingly, the demands, as proposed in the Show Cause Notices, were confirmed and penalty was imposed, as above. Hence the present appeals. 5. Shri M.H. Patil, Ld. Counsel appearing for the Appellants submits that both the companies are private limited companies having separate legal entities. M/s NCPL were making payment of central excise duty as and when they crossed the SSI exemption limit and after 1/4/2004 M/s NCPL were paying normal duty. The value of clearances of NCPL and NEPL cannot be clubbed as both are independent and separate private limited companies having 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 me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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) SURFACE GRAPHICS PVT. LTD. Vs. CCE, MUMBAI-III - 2000 (119) E.L.T. 622 (Tribunal) (iv) PADMA PACKAGES (P) LTD.Vs. CCE, COIMBATORE -1997 (90) E.L.T. 175 (Tribunal) (v) RENU TANDON Vs. UOI - 1993 (66) E.L.T. 375 (Raj.) (vi) CARDCURE ENGINEERING CO. Vs. CCE, COIMBATORE - 1996 ) E.L.T. 351 (Tribunal) (vii) CCE Vs. NITON INDUSTRIES - 2001 (138) E.L.T. 651 (Tri. - Del.) (viii) PIMPRI GASES Vs. COLLECTOR OF CENTRAL EXCISE - 1990 (49) E.L.T. 474 (Tribunal) (ix) ALPHA TOYO LTD. Vs. CCE, NEW DELHI - 1994 (71) E.L.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 P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied to M/s India Polyfibers and letter dt. 23.01.2004 from NCPL addressed to M/s Spirax Marshall requesting to dispatch material to premises of M/s NEPL and that M/s NCPL would collect the material from premises of NEPL. Post dated cheque No. 686087 issued by M/s NCPL in favour of M/s Spirax Marshall. Central Excise Invoice No. 11145005152 dt. 18.02.2004 of M/s Spirax Marshall showing consignee as M/s NCPL. Consignment Note No. 3621 dt. 19.02.2004 of M/s Savera Tempo Service showing consignee as M/s NCPL. Letter dt. 21.02.2004 of M/s Spirax Marshall addressed to M/s NCPL informing dispatch 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 Rs. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Chennai) vii) RENU TANDON Vs. UNION OF INDIA - 1993 ) E.L.T. 375 (Raj.) viii) PRABHAT DYES & CHEMICALS Vs. CCE - 1992 (62) E.L.T. 469 (Tribunal) ix) PADMA PACKAGES (P) LTD. Vs CCE, COIMBATORE - 1997 (90) E.L.T. 175 (Tribunal) x) CARDCURE ENGINEERING CO. Vs. CCE COIMBATORE - 1996 (86) E.L.T. 351 (Tribunal) xi) RANG UDYOG Vs. CCE, AHMEDABAD - 1996 (83) E.L.T. 648 (Tribunal) He submitted that both the units are private limited companies having their independent and separate manufacturing set up and are registered separately 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Shri S.V. Nair, Ld. Assistant Commissioner (A.R.) appearing for the revenue supports the impugned orders and submitted that the facts of the case show that the entities are not separate and hence the impugned orders are legal. 7. Heard both the sides. We have carefully considered the rival submissions and perused the records. We find that the proposal to club the units are based upon allegations that both the companies were owned by family members of Shri B.N. Khurana and Shri B.N. Khurana was the over-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 / ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds and documents showing that in case of both such purchases i.e from M/s Spirax Marshall and Reitz India Ltd, the documents clearly show that the goods were delivered to the respective unit who consumed the goods and even the payments were made by the receipient consignee. In such circumstances only on the basis of statement of Shri Kashalkar and in view of documents we hold that the allegation of the revenue is not sustainable and cannot be a ground to club the clearances. In case of M/s Spirax Marshall 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t be clubbed. 10. 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 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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