9911796707
TMI Blog2019 (5) TMI 366X X X X Extracts X X X X X X X X Extracts X X X X ..... eal dismissed - decided against Revenue. - Appeal No. E/57014/2013 -[DB] - FINAL ORDER NO. 60438 of 2019 - Dated:- 4-4-2019 - MR. ASHOK JINDAL, MEMBER (JUDICIAL) And MR. C.L. MAHAR, MEMBER (TECHNICAL) Mr. G.M. Sharma, Authorised Representative for the Appellant Mr. B.L. Narsimhan Ms. Krati Somani, Advocates for the Respondent ORDER PER ASHOK JINDAL: The Revenue is in appeal against the impugned order wherein benefit of exemption notification no. 50/2003-CE dated 10.06.2003 has been allowed to the respondent. 2. The facts of the case are that one M/s Super Music International (M/s SMI) was engaged in the manufacture of blank/recorded audio cassettes since 1999 and registered with the Central Excise department. They stopped their production in March, 2004 and surrendered their registration to the department on 17.06.2004. The respondent took the land and building from M/s SMI and started their manufacturing operation w.e.f. 01.05.2004. The respondent also purchased some of the machinery and plant from M/s SMI. In addition to the above, the respondent invested huge amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion under the notification. 5. Heard the parties and considered the submissions. 6. On careful consideration of the submissions, we find that it is a fact on record that M/s SMI has stopped their production and the registration was surrendered on 17.06.2004. It is also a fact on record that the respondent purchased the machinery from M/s SMI. Although 71% shares have been held by the proprietor of M/s SMI, that does not mean the proprietor of M/s SMI and the respondent are one and same thing. In fact, the respondent is a private limited company and a director and company are two separate legal entities; therefore, it cannot be said that the respondent is an extension of M/s SMI. Moreover, the respondent had applied to the Department of Industries and commencement of commercial production certificate has already been issued to them, which shows that the respondent is a new industrial unit and qualifies the conditions of the notification 50/2003-CE dt. 10.06.2003 to avail the benefit of exemption notification. 7. We have also gone through the impugned order. In the impugned order also, Ld. Commissioner has observed as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, illegal or improper. The proprietary concern and the company are two independent persons and unless it is proved that the purpose behind the transaction was to defeat the provisions of law or achieve an illegal purpose, the transaction has to be held valid. It has been assumed in the show cause notice that the proprietary concern and the Noticees are under the same management without putting on record any evidence to support the assumption. Further, the transactions between the proprietary concern and the Noticees have been sought to be negated without putting on record any evidence to show that the purpose behind the transactions was to defeat the provisions of law or achieve an illegal purpose. 4.6 It is not that the corporate veil of a company cannot be lifted under any circumstances. However, the circumstances must occur which should compel the courts to lift the corporate veil and identify the company with its members. The circumstances under which the corporate veil can be lifted have to be real and substantial. Sometimes such circumstances are prescribed by the law and sometimes the courts are compelled by the circumstances to lift the corporate veil. In t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... were existing as two legal and commercial entities much before notification no. 50/2003 dt. 10.06.2003 was published in the official Gazette. The two legal entities had been entering into commercial transactions even before the publication of the notification no. 50/2003. In such a scenario, it is illegal and importer to hold that the transactions entered between the two entities after the publication of the notification were not true commercial transactions and were subterfuge to take the benefit of exemption available under notification no. 50/2003. Evasion of tax is an offence punishable under law. Management of the affairs of a commercial or business enterprise in a manner which will lead to reduction in the incidence of taxes or avoidance of taxes is not evasion of tax and hence not punishable. The Noticees, as an independent entity, were entitled to take benefit of the exemption from payment of duty available under notification 50/2003 by adopting legal means. There is no evidence on record which shows that the Noticees had adopted any illegal mean to take the benefit under notification 50/2003. The transactions between the Noticees and M/s SMI were transaction between two in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , in the present proceedings the industrial unit was the same and merely control of the unit has changed from proprietorship to the company. Even the electricity connection of the existing unit continued to be used by the new manufacturing unit till July 2004. There is no other allegation regarding not fulfilment of any other condition of notification number 50/2003. From the allegation in the show cause notices it is clear that whether or not the Noticees were to be entitled for exemption under notification number 50/2003 was to depend upon whether a new industrial unit was established by the Noticees or they had only staffed availing exemption in respect of an existing unit. 4.11 The definition of term industrial unit or new industrial unit is neither given in notification number 50/2003 nor in any other provision of law governing the levy and collection of central excise duty. In absence of definition in the notification the term new industrial unit has to be understood as understood by a man of ordinary prudence dealing with the establishment of industrial units in the ordinary course of business. The condition under the notification number 50/2003 is that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Capital Investment Subsidy Scheme was notified. Under the scheme subsidy was to be granted to all industrial units in Growth Centre approved for Uttaranchal and Himachal Pradesh and also to the new industrial units or existing units, on the substantial expansion, in Growth Centre or Industrial Infrastructure Development Centre or Industrial Estate/Park/Export Promotion Zones and commercial estates set up by the state of Uttaranchal and Himachal Pradesh and new industrial units or existing units, on the substantial expansion in the specified thrust industries located inside these growth centres and other identified locations. The subsidy, thus, was available on establishing a new industrial unit or on substantial expansion of an existing unit. The Noticees had received subsidy of ₹ 30 lakhs (maximum admissible) under the said Central Capital Investment Subsidy Scheme . The Noticees claimed that they had received the said subsidy for establishing a new industrial unit. The term new industrial unit is defined under the said subsidy scheme. It is stated that new industrial unit means an industrial unit for the setting up of which effective steps were not taken prior to 7t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e quantities of new plant and machinery and had installed the new plant and machinery on the hired premises along with old plant and machinery including that purchased from M/s Super Music International. Paragraph 2.12 and 2.13 above give the details of plant and machinery purchased from M/s Super Music International, transferred from other units and new plant and machinery purchased from the manufacturers of such plant and machinery. As details are already available above they are not being reproduced here. The Noticees have also submitted the certificate issued by the chartered accountants about the value of the plant and machinery installed by the Noticees during various financial years. The Noticees have also enclosed photocopies of the invoices under which the new plant and machinery was purchased by them. Out of the total investment of over ₹ 25 crores on plant and machinery during 2004-2005 to 2007-2008, an investment of ₹ 9.98 crores was made in 2004-2005 alone. The value of the plant and machinery purchased from M/s Super Music International was only ₹ 1.29 crores. Thus, huge investment was made after 07/01/2003 to operationalize the unit. Other effective ..... X X X X Extracts X X X X X X X X Extracts X X X X
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