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TMI Blog1998 (10) TMI 553X X X X Extracts X X X X X X X X Extracts X X X X ..... n Fireworks Industries are engaged in the manufacture of Black Serpent Eggs (a variety of fireworks), it was noticed that another unit by name M/s. Dawn Amorces Industries are also found to be manufacturing Dot Caps. While the first two units are availing SSI exemption under Notification No. 175/86, M/s. Dawn Amorces Industries are availing full exemption from duty vide Notification No. 167/86-CE dated 1.3.1986, as amended. It was found all the three units were located adjacently and are situated in the one and the same campus. On gathering intelligence department, even these units are artificially fragmented to wrongly avail concession under Notification No. 175/86-CE dated 1.3.1986, the Officers of Headquarters Preventive Unit, Madurai visited the said three units between 16.7.1990 and 19.7.1990 conducted a thorough study covering various aspects of manufacture of goods, accounting, management, day-today affairs of the said units. At the time of their visit, S/Shri A.S.N. Sridhar. A. Vijayakumar and A. Vijayasankar, Partners of DFF and DFI units were present. Since M/s. Dawn Amorces Industries manufacture only paper/dot caps, which are fully exempted from duty, the Officers looke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther units except for the first one M/s. Dawn Fireworks Factory and hence, proceedings were unsustainable. The Commissioner on examination rejected their pleas and confirmed the allegations made in the show cause notice. He held that the independent existence of M/s. DFI is only on paper and it had to depend on M/s. DFF including its financial, management and labour activities etc., including day to day transactions involving payments. He noticed that separate grant of licence and registration in Income-tax, Sales-tax and SSI certificate do not make the units independent in so far as manufacture of excisable goods are concerned. As all the units belonged to Dawn group of industries and exclusively banking was done in State Bank of India, that was sufficient to hold that the clearances of all the three units are required to be clubbed. Therefore, he proceeded to confirm the duty and also imposed penalties. He has also held that the contention raised with regard to classification of 'serpent eggs' under heading 3604.90 attracting nil duty is not acceptable and therefore, held that 'serpent eggs' manufactured by DFF were required to be considered as dutiable goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and hence notice issued to the partners was non est in law and in this regard, it relied on the judgment of Madras High Court rendered in the case of Additional Collector v. Kathiresan Pillai as reported in 1989 (42) ELT 189. The Tribunal clearly held that the firm is a separate legal entity from its partners for the purposes of Central Excise Act, irrespective of the treatment of the firm and partners under General law and relied on the above cited Madras High Court judgment and several other cases. The counsel further submitted that the appellants had contended that the serpent eggs manufactured by M/s. Dawn Fireworks Industries, the second firm, falls for the purpose of classification under heading 3604.90 of the Central Excise Tariff, as Pyrotechnic articles for amusement other than fireworks carrying nil rate of duty. This view has been upheld in the case of Taj Fireworks Industries v. CCE as reported in 1995 (76) ELT 180 : 1995 (57) ECR 555 (T). He submits that in view of this legal position of serpent eggs manufactured by the three units, Dawn Fireworks Industries being not excisable, therefore, the question of clubbing of its clearances for imposing duty does not arise. H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stence and carrying out transactions admittedly there was business transactions and the Bench referred them as groups of Dawn Industries. This fact itself is not sufficient to hold that the second unit namely DFI is a dummy unit. The aspect pertaining to non-existence of unit but only on paper has been gone into in great detail in the case of Alpha Toyo Ltd. (cited supra) wherein it has been clearly held that dummy unit has to only remain on paper and such an existence has been created for the purposes of tax evasion. In this case particularly, there is an existence of unit and the department was required to have shown the financial flow back and sharing of profits and for that they ought to have issued show cause notice to the other unit, which has not been done in the present case and in view of the judgment rendered by the Tribunal in the case of Ogesh Industries and in the case of Hindustan Foam Industry, the contention of the appellants that non-issue of show cause notice has vitiated the proceedings, is required to be upheld and on this ground alone, the appellants ore entitled to succeed. The other ground is that the item serpent eggs manufactured by M/s. Dawn Fireworks Indu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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