9911796707
TMI Blog2018 (2) TMI 1014X X X X Extracts X X X X X X X X Extracts X X X X ..... and Girija Jayshankar, director of these units under Rule 209A of erstwhile Central Excise Rules and Rule 26 of Central Excise Rules 2001/ Rule 26 of Central Excise Rules 2002. 1. At the outset, ld. Counsel for the appellant submits that Mrs. P.S. Rajishankar has expired and copy of her death certificate has been produced in court. He argued that in view of decision of Tribunal in the case of Shivkripa Ispat Pvt. Ltd. - 2010 (262) ELT 477 the appeal in case of Mrs. P.S. Rajishankar abates. 2. Ld. Counsel argued that it has been held in the impugned order that the four companies are dummy company. They are a facade created for circumventing the small scale notifications and therefore the aggregate value of clearance of all four companies were clubbed and demand was raised from Silicon Carbide Grinding Mills Pvt. Ltd. (SCGM for short) being the oldest company manufacturing excisable goods. 2.1 Ld. Counsel further argued that all four entities were incorporated independently on different times and he submitted the following chart regarding history of each of these entities:- Silicone Carbide Grinding Mills Pvt. Ltd [i.e. Silicon] Lignin Research Center [i.e. LRC] Sweta Electric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2(Tri.Mum) ]& iii) C.C.E Vs. Shiva Exim Enterprises [2005 (185)ELT 169 (Tri.-Del.)] He argued that the three companies were registered as private company with the Registrar of Companies under the provision of Companies Act, 1956. All four units have different factory plots, manufacturing premises with separate storage plant and facility and with independent work force and power and infrastructure for the products manufactured by them. All four units are duly registered with various authorities as can be seen from the table below. Name of Appellant Silicone Carbide Grinding Mills Pvt. Ltd [i.e. Silicon] Lignin Research Center [i.e. LRC] Sweta Electric (P) Ltd [i.e. Sweta] Indostaits (Pvt.) Ltd. [i.e. Indostraits] A) Nature of concern Pvt. Ltd.Co. Partnership Pvt. Ltd.Co. Pvt. Ltd.Co. B) Factory Address Plot No. W-11, MIDC, TTC, Pawne Village, Dist.Thane. Plot No.D/9-4, Kukshet Village, MIDC Indl. Area, TTC, Turbhe, Dist. Thane. Plot No.D/9-3, Kukshet Village, MIDC, TTC, Turbhe, Dist. Thane. Plot No.5, B-29 to 33, Cuncolim Indl. Estate, Cuncolim, Salceta, Goa. C) C.Ex. Range; Division & Commissionerate Range-VIII, Divn. -Belapur-I, Comm.- Mumbai-III Range-VIII, D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d that Indostraits and Sweta are geographically also located at different places than SCGM. The only transaction between SCGM and two companies (namely Sweta and Indostraits) is movement of inputs/ processed goods for the purpose of job work, duly covered under challan issued under Rule 57F(4) of Central Excise Rules 1944. He pointed that the inputs which were sent for job work under rule 57F(4) were sent under proper intimation and job work charges have been duly paid. He argued that the same cannot be a ground for clubbing the clearances, or to treat these two as dummy units. He further argued that most of the movement is from SCGM to Sweta and from SCGM to Indostraits, and therefore if at all, SCGM should be referred to as dummy unit and not vice versa, since manufacturing activity on job work basis has been done by Sweta and Indostraits. He pointed that most of the transactions identified in the notice are in relation to SCGM and LRC only. He argued that the said transactions cannot be used to hold that Sweta and Indostraits are dummy units. 3.4 He argued that most of the activities of all the units are handled by Shri S.V. Jayshankar and the companies are owned by close famil ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the same breath it is alleged that Indostrait and Sweta are charging less job work charges from LRC and Indostrait, are self contradictory. 3.8 He further argued that three out of the four units were located within the jurisdiction of same Range, same Division and same Commissionerate under excise. He pointed that the registration form illustrates that the factory address along with office address and name of other group companies and name of common director were provided at the time of registration. He further argued that the classification list under 173B was filed by all units were accepted by revenue. 3.9 He further argued that without any seizure, all the goods manufactured and cleared by them during the five year period have been confiscated and redemption fine has been imposed. He argued that without seizure of goods no confiscation can be made and no redemption fine can be imposed. 4 Ld. AR appearing on behalf of the revenue argues that the impugned show-cause notice and impugned order brings out the following from the facts of the case:- i) Common control of management under one person/closely held family. ii) Free flow of finance/financial interlinking/financial ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nkar - 3100 Girijay Jaysankar-2100 P.S.Rajisankar - 4800 Director Director Director Self Wife Mother M/s. Sweta Elect. P. Ltd. Authorised shares -250000 Issued & Paid up shares 35000 S.V.Jaysankar - 100 Girija Jaysankar - 100 P.S.Rajisankar - 100 M/s. Indostraits P. Ltd. - 34700 Director Director Director Self Wife Mother M/s. Lignin Research Centre (Partnership firm) S.V.Jaysankar - 50% P.S.Rajisankar - 50% Managing Partner Partner partnre Self Mother e further argued that SCGM and LRC were paying commission @ 2% of total sales and 3% of the value of job charges to Indostraits. He argued that it amounted to sharing of profits. 4.4 He further argued that there was a mutuality of interest between these units and he cited following as evidence of the same :- i) Rs. 6900/- M/s. Silicon paid on behalf of M/s. LRC to James Fernandes a garage mechanic. ii) Rs. 15,000/- M/s. Silicon paid for deposit in PLA of M/s. LRC. iii) Rs. 27054.11 M/s. Silicon paid on behalf of M/s. LRC towards citi bank bills of Shri S.V.Jaysankar iv) Rs. 200000/- Advance paid by M/s. Silicon to M/s. LRC to clear Koppers Bills. v) Rs. 15436/- M/s. Silicon paid to Sejpal Plas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to any other factory except to the group concerns (on few occasions material was sent to M/s. Vimax). When the material sent by one group concern to another for conversion on job work basis, all the material required for conversion are not sent together but are sent in piecemeal. The materials of group concern received on job work basis are not stored separately and also the finished product manufactured out of the same is not stored separately but they are stored in a common storage tank. Further there are instances of transfer of material from one group concern to another through job work challans by mentioning "raw material returned un processed". However, such return takes place after a long gap of time. He argued that on going through the case records, it can be seen that it is not possible that the same material is returned as the storage tank is common. 4.6 He argued that whenever there is shortage of raw material to the one unit, materials are transferred from one unit to other unit without the cover of any invoice/challan/document. Shri T.K.Maji, Shri S.K. Shrivastav and Shri Satish Jaysankar have in their statements confirmed that the management has given s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rial to the employees relate to movement of raw material from LRC and SCGM and vice versa. The evidence relating to Sweta and Indostraits in almost negligible. 5.1 In so far as clubbing of clearance of Sweta and Indostraits is concerned, the evidence is limited to common share holding, alleged depressed job charges, payment of commission and warehousing charges and some stray cases of payment made by SCGM on behalf of Indostraits. The total amount of payment made by SCGM towards salary of Jagdish Kale on behalf of Indostraits is meagre and cannot be considered as relevant factor for clubbing the clearances. Some evidence regarding movement of material from LRC to SCGM and vice versa and between Sweta and LRC has been pointed out. The movement of material is very insignificant and total 5 transactions in the period of two years have been identified. These can be treated as exception and not the rule. Another piece of evidence used in respect of Sweta is that they were charging very low job charges from LRC and SCGM. Satish Jain in his statement stated that the job work charges were excluding the profit margin. Ld. Counsel has clarified that in respect of the job work, the costing o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... LRC to M/s. Silicon : Rs.2,30,483.04- 1998-99 02. Temporary advance given by M/s. LRC to M/s. Silicon: Rs.2,52,360.39- 03. Temporary advance given by M/s. Silicon to M/s. LRC: Rs.6,07,225.00- 1998-99 1999-2000 01. Excess Debit in Silicon's creditor a/c. Transferred to Debtor's A/c. Rs.23,84,933.00 02. Temporary advance given from M/s. LRC to M/s. Silicon: Rs.4,87,910.28- 1999-00 03. Temporary advance given by M/s. Silicon to M/s. LRC: Rs.7,03,404.41 2000-01 04. Temporary advance given by M/s. LRC to M/s. Silicon: Rs.5,22,360.39 - 1999-00 05. Temporary advance given by M/s. Silicon to M/s. LRC: Rs.6,68,954.00 2000-01 01. Temporary advance given by M/s. LRC to M/s. Silicon : Rs.3,59,766.00- 2000-01 02. Temporary advance given from M/s. Silicon to M/s. LRC: Rs.3,81,233.00- 2001-02 03. Temporary advance given from M/s. Silicon to M/s. LRC : Rs.2,55,000.00- 04. Excess Credit in Silicon's debtor a/c transferred to M/s. LRC's creditors A/c.: Rs.9,60,467.00(00-01) 2001-02 01. Temporary advance given by M/s. LRC to M/s. Silicon: Rs.10,50,085.26- 2001-02 02. Temporary advance given b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llows: "4. We have heard both sides. It is submitted by learned Counsel for the appellants that the findings of the Commissioner are not enough to sustain the Department's allegation of mutuality of interest between the two firms. We have also heard learned DR on this aspect. The Commissioner found mutuality of interest between the two manufacturing units on the basis of the fact that one of them lent a loan without claim of interest to the other. The fact found is that "Bright Gems" gave a loan free of interest to "Expo Gems". However, there is no finding that "Expo Gems" did likewise earlier or later. That one unit lent loan without interest to the other would not ipso facto give rise to mutuality of interest between the units. Common partners or common employees are also not conclusive criteria for such mutuality. Thus mutuality of interest has not been established in the impugned order. The Commissioner himself has acknowledged that commonality of partners between the two firms is not enough for clubbing of their clearances. As we have already noted, the two firms were in existence from 1980 and 1985, with separate SSI registration, separate Central Excise licence/registratio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the export order. The facts mentioned in defence have not been challenged by the revenue as false or incorrect. 5.6 It has also been pointed out by revenue that whenever there is shortage of raw material to the one unit, materials are transferred to it from the other unit without the cover of any invoice/challan/document. Shri T.K.Maji, Shri S.K.Shrivastav and Shri Satish Jaysankar have in their statements confirmed that the management has given standing instruction to all the concerned/production staff and key personnel that in any emergency shortage of material to execute the dispatches as planned LRC may get material from Silicon or vice versa. However the following instances of actual transfer have been identified 2000-01 03. Material transferred by Lignin to M/s. Silicon on loan basis : Rs.3,54,198/- 04. Material transferred by Silicon to Lignin on loan basis: Rs.1,43,905/- 2001-02 02. Material transferred to Silicon by Lignin : Rs.1,00,253/- 2001-02 03. Material given on loan basis to Sweta by Lignin: Rs.1,27,489/- 04. Material given to Sweta on loan basis by Lignin: Rs.90,500/- During a period of two years only three instances of transfer of material fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ltd [i.e. Silicon] Lignin Research Center [i.e. LRC] Sweta Electric (P) Ltd [i.e. Sweta] Indostaits (Pvt.) Ltd. [i.e. Indostraits] A) Nature of concern Pvt. Ltd.Co. Partnership Pvt. Ltd.Co. Pvt. Ltd.Co. B) Factory Address Plot No. W-11, MIDC, TTC, Pawne Village, Dist.Thane. Plot No.D/9-4, Kukshet Village, MIDC Indl. Area, TTC, Turbhe, Dist. Thane. Plot No.D/9-3, Kukshet Village, MIDC, TTC, Turbhe, Dist. Thane. Plot No.5, B-29 to 33, Cuncolim Indl. Estate, Cuncolim, Salceta, Goa. C) C.Ex. Range; Division & Commissionerate Range-VIII, Divn. -Belapur-I, Comm.- Mumbai-III Range-VIII, Divn. -Belapur-I, Comm.- Mumbai-III Range-VIII, Divn. -Belapur-I, Comm.- Mumbai-III Range-Quepem, Divn. -Panjim, Comm.- Goa D) Registration No. (Registrar of company) 11-022195 NA 11-072720 11-140150 E) Factory License No. Thane-319-9/80A 2666 34179/6 Dt 26.09.89 Thane-2(m)(i)/ 24299 NA F) SSI Regn No. 11 24 02269 Dt22.07.83 11 24 81478 PMT SSI Dt 25.06.91 11 24 85862 Dt19.07.2002 300206702 G)Old Central Excise L4 RVI/NES-S/85 04/R-VII/Ch-38/89 NA NA H) Central excise Regn. No AACCS2623N XM 001 AABFL 0326K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 2 and 3; that travelling expenses of appellants no. 4 were borne by firm, appellants no. 1 and his telephone bills were also paid by that firm, (appellants no. 1). But from the record, we find that all these firms were established in different years. The firm, appellants no. 1, started production in the year 1985 and firm, appellants no. 2, in November, 1990, while the firm, appellants no. 3, in July, 1996. The appellants no. 1 is a proprietorship concern of appellant no. 4, while the other two firms are partnership concerns in which, appellant no. 4 is one of the partners. All the firms have got separate independent Central Excise Registration, DIC Registration, Sales Tax Registration and Income-tax Registration. 7. There is no tangible evidence on the record to prove the financial flow back from one firm to another which is most essential for clubbing the clearances of the units. In this context, reference may be made to the case of Indian Metal Indus. v. CCE, Bhuvaneshwar, 1999 (108) E.L.T. 593 (T), wherein it has been so ruled. Similarly, in the case of CCE, Rajkot v. Amar Plast Indus., 2000 (115) E.L.T. 482 (T), it has been held that use of common premises, telephone, com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... common identity of the two or any flowback. Thus the clearances of the four appellants cannot be clubbed for the purpose of small scale exemption. The impugned order therefore fails on merits. 5.10 The appellants have argued that they had declared the existence of other firms in their declaration before the excise authorities. Moreover three of the four units were in the same range, division and commissionerate of Central Excise. They have argued that revenue was fully aware of their ownership pattern. They argued that the units were audited also and they had filed the declarations under erstwhile rule 173B also. It has also been argued that balance sheets were given during the audit. From the proceedings it is apparent that no specific item of information has been identified that the appellants have suppressed. The charge has failed on merits too. Moreover at the material time there was Circular No. 6/92, dated 29-5-1992 issued from F. No. 213/15/1992-CX. 6 which clarified as follows: "In exercise of the powers conferred under Section 37-B of the Central Excise Act, 1944, for the purpose of ensuring uniformity of levy of duties of excise the Central Board of Excise & Customs h ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
