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TMI Blog2024 (1) TMI 934X X X X Extracts X X X X X X X X Extracts X X X X ..... un), Shri Varun Aggarwal, Proprietor M/s Varun Corporation, Shri Prashant Aggarwal, Proprietor of M/s Nishoo Arts, Shri Rakesh Aggarwal, Proprietor of M/s Global Integrated Technology against Order in Original No. SUR-EXCUS-001-COM-054-14-15 Dt. 28.10.2014 passed by Commissioner of Central Excise - Surat-I. M/s Varun is engaged in manufacturing of printed duplex boxes classifiable under chapter 48 of the CETA, 1985. The brief facts of the case are that pursuant to investigation against M/s Varun on the ground that they have created dummy units in order to keep the total value of clearances below the SSI exemption and not paying duty on their clearances, the officers visited and carried out search operations at the following premises: i. Factory premises of M/s Varun situated at Plot No. 24, Sai Leela Industrial Estate, Udhna, Surat ii. Factory premises of M/s Nishoo Arts iii. Factory premises of M/s Global Integrated Technology 1.1 During search at factory premises, it was revealed that records/documents pertaining to aforesaid all the three firms were found lying in a common room in the premises of M/s Varun B Corporation. There was no marker or any other dist ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g products from related firms M/s. Varun B Corporation, M/s. Nishoo Arts, M/s. Global Integrated Technology. f. Payments for job charges were made by M/s. Varun B Corporation, M/s. Nishoo Arts, and M/s. Global Integrated to unidentified job workers, lacking details. Records were allegedly destroyed, indicating potential fabrication of job charges in the audit report. g. M/s. Varun B Corporation, M/s. Nishoo Arts, and M/s. Global Integrated lacked independent manufacturing capability, sharing machinery without payment. Interdependence was evident, and no payment was made for shared facilities. h. All four firms were proprietorships, related as per Income Tax Act. Owners were family members, indicating close ties. i. M/s. Varun B Corporation made no payment to related firms during 2009-10 and 2010-11, based on Section 40A(2)(b) declarations in the audit report. j. M/s. Nishoo Arts also made no payment to related firms during 2009- 10 2010-11, as per Section 40A(2)(b) declarations. k. M/s. Global Integrated Technology made payments for rent and electricity to M/s. Varun B Corporation but none to M/s. Nishoo Arts and M/s. Bela Textiles, indicatin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... la Textiles affirmed purchasing Printed Duplex Boxes (Top, Bottom Tray) from these entities. Buyers stated that they were approached by Shri Varun Aggarwal, Shri Prashant Aggarwal, or Shri Rakesh Aggarwal for selling printed Duplex boxes. Orders were placed telephonically, and payments were made through payee cheques as instructed by the respective individuals. No orders specified manufacturing locations. 1.4 In the show cause notice it is evident that three factories, including M/s. Varun B Corporation, showed the manufacturing of Duplex Boxes, but they utilized each other's facilities. Considering M/s. Varun B Corporation as the manufacturer, the clearance value of the other two factories needs to be added for calculating the total aggregate clearance value. None of the factories fulfilled the conditions to avail SSI benefit under Notification No. 8/2003-CE, requiring them to pay Central Excise duty from the first clearance during 2009-10 and 2010-11. The aggregate value of clearance by M/s. Varun B Corporation during 2009-10 exceeded Rs. 400 Lakhs, crossing the threshold limit for exemption during 2010-11. SSI benefit won't be available separately to each factory, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22 plots are on other side of the road. The Common boundary wall for all 40 plots and submitted the copy of layout plan. c. That as per Panchnama dt. 13.4.2011, M/s Varun Corporation had three punching machines installed, M/s Nishu Arts had Six punching machine installed and M/s Global Integrated Technology had one punching machine installed. All the units were independent for manufacturing duplex boxes. d. That it is the well settled law that non-payment of Interest on borrowing fund cannot be made basis for Clubbing. Further, Loan taken or given through Account payee cheque only. In this regard he relied upon the judgements of:- CCE Ahmedabad Vs S.C Patel -2011 (264) E.L.T 414 (Tri. Ahmd.) M/s COIMBATORE ENGINEERING WORKS Versus COMMISSIONER OF C. EX., COIMBATORE 2009 (239) ELT 366 (Tri. Chennai) e. That four Colour printing Machine can do the work of two-colour printing machine also. Thus, the Allegation is baseless f. That Global Integrated Technology has got printing done from M/s Varun B Corporation and M/s Nishoo Arts on job-work basis. Punching Machine installed at Global Integrated Technology premises is paper cutting machine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hant Agarwal respectively for Varun Corporation Nishoo Arts. As stated in Panchnama dt. 13.04.2011 that, there were two power meters of GEB in plot no. 23 24 and a sub-meter for margin plot from the power meter of plot no. 23. (i.e.23A) p. That filing of declaration for SSI exemption is a procedural requirement. SSI exemption cannot be denied whether or not such declaration is given. In this regard he relied upon the following judgements:- Lokhandwala Construction Ind. V/s CCE- 1997(92) ELT 703 (CEGAT) K.S Mills V/s CCE 1998 (98) ELT 619 (CEGAT) q. That Three Search warrants were issued but only one Panchnama was done. Thus, from day one, the intention of the investigating officers was very clear to club the clearance of all the three units. It is not understood, if it was so to make out case of clubbing then why there should be a marathon of 3 years. r. That nowhere it can be established that there was mutual flow back of funds amongst the units, control of both financial management aspect by the same set of persons. There is no point to conclusion that these firms interlinked in their operation and management. In fact, all the thre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ufactured finished goods i.e. Duplex Box by utilizing plant and machineries pertaining to and installed in respective firms without any consideration for utilizing such facilities of each other for manufacturing of finished goods and they were interdependent for production of finished goods i.e. Duplex Box [Top, Bottom Tray]. We find on perusal of the documents submitted and plan layout of the factories, the firms are situated at adjacent plots and not in one common premises. On the basis of layout, it is noted that units have separate entry and separate demarcation. In fact, in Sr. No. 136/2 of Sai Leela Industrial Estate, there are in all 40 plots, 22 plots are on other side of the road. Further, On perusal of Panchnama dated 13.04.2011 we find that M/s Varun had three punching machines installed, M/s Nishu Arts had Six punching machine installed and M/s Global Integrated Technology had one punching machine installed. We find that merely because rent was not given, it is not sufficient to disprove that the units were not independent. It is not the fact that the punching machines installed at the premises of M/s Varun B Corporation was also used by M/s Gobal Intergated Technolog ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t M/s Varun B Corporation. On perusal of the Audited Financial Statements of M/s Global Integrated Technology, we find that job-work expenses have been booked by them in the F.Y 2009-10 F.Y 2010-11. This means that Global Integrated Technology has got printing done on job-work basis. M/s Global Integrated Technology that have submitted that they have got the job-work done from M/s Varun and M/s Nishoo Arts. We further find on perusal of the Balance Sheet of M/s Global Integrated Technology that they have installed paper-cutting machine which undertakes the work of punching machine. Further, we find that there is no evidence to the fact that M/s Varun has installed any of its machines in Nishoo Arts or Global Integrated Technology premises. 4.4 In the Order in Original it is stated that on paper, the factory premises of M/s Global Integrated Technology was situated at Survey No 136/2, Plot No-24, Sai Leela Industrial Estate, Old Petrol Pump, Udhna, Surat and was physically situated at additional margin of Plot No 23, Sai Leela Industrial Estate, B/h Old Petrol Pump, Udhna, Surat which is owned by Shri Prashant Aggrawal Prop. of M/s Nishoo Arts and identified as Plot No 23/A. Ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ated Technology on 20.03.2014. This itself is self-contradictory. 4.9 We find that nowhere it can be established that there was mutual flow back of funds amongst the units, control of both financial management aspect by the same set of persons. We find that all the units are totally independent with no interdependence, no financial flow back, no mutuality of interest between firm, flow back of profit. There is no supporting evidence for common finance and common management and there is no finding that M/s Varun has floated, financed and incorporated the SSI units. Also, there is no evidence that Varun Corporation is investing money in SSI unit. We place reliance on the following judgements: i. In the case of Balsara Hygiene Products Ltd. V/s Commissioner of C. Ex., Vapi - 2012 (10) TMI 454 - CESTAT, Ahmedabad , wherein it is held that:- 11. We find that the adjudicating authority has held against the assessee that there is a management control or there being grant of interest free loan of the three units are to be considered as one unit and duty demand can be raised against them. These findings of the adjudicating authority are incorrect as in the following case la ..... X X X X Extracts X X X X X X X X Extracts X X X X
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