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TMI Blog2018 (5) TMI 874X X X X Extracts X X X X X X X X Extracts X X X X ..... er for the sake of convenience. 2. Shree Bherav Diamond Tools Pvt. Ltd. alongwith four other manufacturing units and three trading units were issued show cause notices on 08/04/2015 and 07/05/2015 which were adjudicating by the Commissioner vide this common order. In the order he held the following : A. In respect of show cause notice No. V(82)Adj./UDR/83/2015/75-90 dated 08/04/2015 : (i) Determined and confirmed the demand of Cenvat Excise duty amounting to Rs. 2,91,28,460/- against Shree Bherav Diamond Tools Pvt. Ltd. and its related manufacturing firms namely (i) Shree Bherav Engineers (ii) Shree Bherav Diamond Impex, (iii) Shree Bherav Tools Corporation and (iv) Shree Bherav Amla Food Processors jointly. (ii) Imposed penalty on following trading firms under Rule 25 of Central Excise Rules 2002 readwith Section 11AC of Central Excise Act, 1944 : Sl. Name of the firm Amount of penalty (Rs.) 1. Swastik Entertprises 4,50,000/- 2. Shree Bherav Tools Industries 3,50,000/- 3. Shree Bherav Diamond Impex 50,000/- (iii) Imposed penalty of Rs. 25,00,000/- and Rs. 5,00,000/- on Shri Mahindra Bohra, Director and Smt. Sangeeta Bohra, Director under Rule 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll the manufacturing units, and also by taking the selling price of the trading units as assessable value in respect of the clearances made by the manufacturers through them. 6. The allegations are that four manufacturing units have been floated by Shri Mahendra Bohra to enjoy and remain with exemption limit for SSI units provided under Notification No. 8/2003-CE dated 01/03/2003. 7. Aggrieved by the impugned order, the present appeals have been filed. With the above backgrounds we have heard S/Shri Suhrid Bhatnagar and Arvind Birla, Advocates, learned Counsels for the appellants and Shri M.R. Sharma, learned DR for the Revenue. The arguments advanced on behalf of the appellants are summarized below :- (i) on the issue of clubbing it is submitted that all the manufacturing units were functional and having separate manufacturing facilities and separate identity and ownerships. All the manufacturing units are having separate Income Tax PAN and separate central excise registrations. Further, there is no mutuality of interest and separate manufacturing entities are discharging their duty liability in correct and lawful manner separately, therefore, there cannot be a situation for c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ven today implies that they are not dummy units and are being run independently. (vii) Therefore, it is submitted that the value of clearances of the five separate manufacturing units cannot be clubbed. As for valuation for sale thorugh trading firms, it is submitted that : (i) Valuation under Rule 9 of Central Excise Valuation (Determination of Price of Excisable Goods) Rules, 2000 is applicable, if whole or part of the excisable goods are sold by the assessee to or through a person who is related in the manner specified in any of the sub-clauses (ii), (iii) or (iv) of clause (b) of sub-section (3) of Section 4 of the Central Excise Act, 1944. The aforesaid sub-clauses (ii) and (iii) do not apply in the impugned matter as these sub- clauses deal with natural persons whereas Shree Bherav Diamond Tools Pvt. Ltd. is an artificial legal persons ; (ii) As far as sub-clause (iv) of Section 4 (3) (b) of the Act is concerned, it is submitted that two persons shall be deemed to be related if they are so associated that they have interest, directly or indirectly, in the business of each other. Therefore, there must be mutuality of interest between the manufacturing units and tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ith Shri Mahendra Bohra as well as Smt. Sangita Bohra, wife as the Directors. The other 4 manufacturing units are all proprietary concerns with Shri Mahendra Bohra, his sons or daughter or his wife were the proprietors. During investigation, the following facts have come on record :- (i) manufacturing facilities were installed in all the 5 manufacturing units. None of the manufacturing units can be stated to be in existence only on paper ; (ii) 4 of the manufacturing units (other than SBDTPL) are situated within the same compound which is encircled by a common boundary wall ; (iii) the office premises of all the 5 manufacturing units as well as the three trading units is common and is the residential address where Shri Mahendra Bohra alongwith his family members live ; (iv) 4 of the manufacturing units are engaged in the manufacture of identical products namely viz. middle column gang saw wire used in the diamond industry. Only SBAFP was engaged in the manufacture of a different product i.e. Amla Candy and churan based tablets. The entire output of all the manufacturing units are sold exclusively through the three trading units, from where they are sold at enhanced prices. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e sale price of the trading units as the assessable value is not justified. It is submitted that all the manufacturing as well as trading units have independent existence in the eyes of law in as much as each unit has separate registration under Income Tax, VAT and other Government agencies. The accounts are maintained separately. It is further argued that in the light of the Circular No. 6/92 issued by CBEC under Section 37B, different firms are to be treated as different manufacturers for the purpose of exemption limit and none of the manufacturing units are dummy units in as much as manufacturing facilities in each of the units are available. 12. The SSI exemption under Notification No. 8/2003-CE dated 01/03/2003 allows duty free clearance up to the aggregate value of clearances in a financial year of Rs. 150 lakhs, when a manufacturer clears the specified goods from one or more factories. The exemption shall apply to the aggregate value of the clearances from all the factories together. 13. The argument that each factory will be entitled to duty free clearance upto an aggregate value of Rs. 150 lakh is appealing in the light of CBEC Circular No. 6/92 which has clarified ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... SBDTPL only. Consequently, we uphold the findings of the Adjudicating Authority regarding clubbing of the value of clearances. 17. Next, we turn to the dispute on valuation. The goods manufactured and accounted under the 5 manufacturing units were entirely cleared through one or other of the three trading units. It has been argued that the trading units are not "related" with any of the manufacturing units in terms of Section 4 (3) (b) of the Central Excise Act, 1944. Consequently, it has been argued that the transaction value is to be accepted and there is no justification for adopting valuation under Rule 9 of the Central Excise Valuation Rules, 2000. 18. We have given careful and anxious consideration to the points urged before us. As discussed in above paragraphs, we are of the view that all the manufacturing as well as trading units had only nominal existence but effectively were not independent but related. Since Shri Mahendra Bohra is the one person who has total financial as well as management control of all the units, we are of the view that the transaction values at which the goods are shown as sold from the manufacturing units to the trading units has no sanctity. It ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rice by the three companies was Rs. 5 per unit. It is on record that accounts were kept by common staff and marketing was done under the supervision of a person who belongs to the same group of concerns. The amounts have been collected by an employee of MACL. The so-called Directors of the companies were undisputedly employees of MACL. Almost the entire financial resources were made by MACL. The financial position clearly shows that MACL had more than ordinary interest in the financial arrangements for companies. The statements of the employees/Directors show that the whole show was controlled, both on financial and management aspects by MACL. If these are not sufficient to show inter-dependence probably nothing better would show the same. The factors which have weighed with CEGAT like registration of three companies under the sales tax and income tax authorities have to be considered in the background of factual position noted above. When the corporate veil is lifted what comes into focus is only the shadow and not any substance about the existence of the three companies independently. The Circular No. 6/92, dated 29-5-1992 has no relevance because it related to Notification No. 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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