9911796707
TMI Blog2008 (5) TMI 139X X X X Extracts X X X X X X X X Extracts X X X X ..... regular credit availed to the tune of Rs. 13,95,374/- was demanded. Penalties were also imposed totally amounting to Rs. 150 lakhs. The Order-in-Original was No. 9/97 dated 24/28-10-1997. The assessees approached CEGAT. The CEGAT, in its Final Order Nos. 1562 to 1577/2001 dated 9-10-2001, remanded the matter to the Original Authority with the following observations :- "7. We have carefully considered the matter. Without going into the merits and demerits of the case, we are of the view that the matter will have to go back for re-examination, in view of the observations made by the Supreme Court in the case referred to above, since the demand was raised from all the units, It was argued before us that group of persons manufactured the goods and Show Cause Notice was also issued to raise the demand from that group who manufactured the goods. But the impugned order confirms the demand against all units treating them as independent units like in the case of Agarwal Rubber Private Ltd. (supra). In the facts and circumstances, we are of the view that in line with that order, this matter requires to be reexamined in detail by the adjudicating authority as per the observations made by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he guidelines in F. No. 213/15/92-CX-6 dated 29-5-1992, issued by the Board under Section 37B of the Central Excise Act, 1944. The Board's guideline/clarification makes it abundantly clear that a unit with the father and one son of a family as partners is to be treated separately for the exemption limit from another unit with the father and another son as partners. A third unit with both the sons as partners will be yet another manufacturer for the purpose of the exemption. As already found, in the instant case, the owners of the subject nine units are different persons. Consequently, as clarified in the Board's Circular, each is an independent unit. In the light of Board's clarification in F. No. 213/15/92 CX-6 dated 29-5-92, issued under Section 37B of the Central Excise Act, 1944, each of the nine units is eligible for exemption independently under Notification No. 175/86. In the light of the ratio of Gajanan Fabrics Distributors and the Board's Circular, therefore, the charges fail. 97, Further, in view of my findings in the foregoing paras, all the charges initiated in all the Show Cause Notices involved in the Assistant Commissioner's Order (Original) Sl. Nos. 55/2001 dt. 31 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mited case, it has been clearly held that lifting of corporate veil to look into the real identity of the units which might appear on paper to be totally independent, identifiable and individual units, is permissible. As such it is not the identity created on paper, but the actual status of the units, which is to be identified for justifying clubbing of clearances of the various units. Common premises, common head office, common partners and sharing of common facilities may not by themselves, be factors enough to hold that the units involved are not independent units. But it is the cumulative effect of all these, which is to be seen coupled with other factors on record. (iii) In the present case, the cumulative effect is proved beyond doubt. The cumulative effect of all these factors and the presence of peculiar evidences in a particular case have to be considered for arriving at the mutuality of business interest between various units and the partners. (iv) As stated earlier, Commissioner of Central Excise, Mangalore has held that there is financial flow-back and financial accommodation as well as common management system. Yet the demands have been dropped since SCNs were issued ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tribunal's order. Taking up of other aspects for de novo adjudication would traverse beyond the scope of remand order. Merely because the issues were kept open, the same did not ipso facto grant any blanket authority or power to the Adjudicating Authority to examine all other factual aspects in detail. Therefore, the findings portion of the Adjudicating Authority to the effect that clearances can be clubbed as discussed in paras 61 to 94 of the impugned Order-in-Original dated 7-11-2003 would deserve to be rejected and ordered to be deleted as totally irrelevant. (iv) Revenue did not choose or opt to file any appeal against the final order dated 9-10-2001 passed by the Tribunal and hence, the same became clearly and categorically conclusive binding qua the parties involved. (v) Cross-examination of Shri Mascarenhas, the then Inspector was sought by the respondent. He was not made available on the ground that he has resigned from the Department. The Higher Officer, Shri P. Parashuram, Superintendent (CE) had also wriggled out of the cross-examination stating that the questions relating to financing, flow back of profits, etc. were actually within the knowledge of only the Inspecto ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o establish that there cannot be any other basis for considering clubbing of clearances of the said units for any reason whatsoever, in the light of the principles laid down in several judgments rendered in this regard and in particular by taking into account the clear and categorical principles laid down by the Hon'ble Supreme Court in the above referred case of Gajanan Fabrics thereto. (xi) The finding and conclusions arrived at in the impugned order dated 7-11-2003 to the effect that there is regular financial flow back, profit sharing, distribution of income and mutuality of interest throughout the period of demands made in the respective Show Cause Notices are totally baseless. It cannot be sustained at all for any reason whatsoever and in particular' for the alleged reasons and findings recorded in paragraphs 61 to 94. (xii) There is no iota of evidence to establish the crucial and vital aspect of flow back of profits inter se between the units involved and it is not established that even the profits made by each of the independent units are being shared in a particular ratio by all the partners or the proprietors involved therein. (xiii) The so called allegation of "group ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty of interest, throughout the entire period of the demand, thereby warranting clubbing of their clearances as held in the decisions cited above." The above conclusions and the observations of the Adjudicating Authority in Paras 95, 96 and 97 are shockingly inconsistent. Anybody reading the findings till Paragraph 94 would anticipate that the Adjudicating Authority would confirm the proposals in the show cause notice. However, in the subsequent Paras, there is a volte face. No doubt Revenue is justified in filing its appeal against the impugned order. 6.1 The above observations do not mean that we are allowing Revenue's appeal. We have to examine the findings of the Commissioner from Paragraph 61 to 82. In the above Paragraphs, the Commissioner has cited several instances where one unit pumped funds for financing another unit. The partners of the nine units are all family members, Therefore, mutual interest is not at all ruled out. In the normal course, there can be definitely mutual interest but sometimes there may be rivalry and bitter animosity between the different units of the same family. Both are possible. It so happens that in the present case, there is some sort of syner ..... X X X X Extracts X X X X X X X X Extracts X X X X
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