2002 (12) TMI 381 - AT - Central Excise

Tribunal overturns Commissioner's order on clearances, remits for re-determination. Penalties and confiscations set aside for reconsideration.

The Tribunal set aside the Commissioner's order on clubbing of clearances, finding it not in accordance with the binding order under Section 37B. The ... Value of clearances - Clubbing of Issues Involved:1. Clubbing of clearances of three firms for exemption/concessional rates under Notification No. 175/86-C.E.2. Alleged clandestine removal of goods and suppression of production.3. Non-inclusion of commission to distributors in the assessable value.4. Confiscation of goods and cash.5. Imposition of penalties and confiscation of properties.Issue-wise Detailed Analysis:1. Clubbing of Clearances:The central issue was whether the clearances of three firms-Maniraj Industries, Macborn Industries, and Hindustan Confectionery-should be clubbed together for the purpose of availing exemption under Notification No. 175/86-C.E. The Commissioner concluded that these firms were under the common control of Shri Indramani Sahu and his family, operating as a single entity to avail the exemption by artificially splitting their clearances. It was found that there was mutuality of financial interests, common ownership, and unified command and control over personnel, leading to the conclusion that the firms were not operating on a principal-to-principal basis. However, the Tribunal noted that there was an order under Section 37B of the Central Excise Act, which clarified that different firms with different partners should be treated as separate manufacturers for the purpose of exemption. The Tribunal found that the Commissioner's order of clubbing was not in accordance with this binding order and thus set aside the clubbing of clearances.2. Alleged Clandestine Removal of Goods:The Commissioner confirmed the demand for duty on goods allegedly removed clandestinely by Maniraj and Macborn. However, the Tribunal pointed out an inconsistency in the Commissioner's findings. If the firms were considered a single entity for clubbing purposes, then separate demands for clandestine removals by individual units would be contradictory. The Tribunal referenced the Supreme Court decision in Gajanan Fabrics Distributors, stating that a unit either exists or does not exist. Therefore, the Tribunal set aside the order and remitted the matter back for re-determination of the liability for clandestine clearances, if any, by any unit.3. Non-inclusion of Commission to Distributors:The Commissioner initially demanded duty from Maniraj and Macborn for not including the commission given to distributors in the assessable value. However, this demand was dropped by the Commissioner. The Tribunal did not find it necessary to address this issue further as the demand had already been dropped.4. Confiscation of Goods and Cash:The Commissioner ordered the confiscation of goods seized from Maniraj and Macborn, which were released provisionally on bond. The Tribunal set aside the orders of confiscation and penalties, noting that these issues would be re-determined in the remand proceedings regarding clandestine clearances.5. Imposition of Penalties and Confiscation of Properties:The Commissioner imposed penalties on Maniraj, Macborn, and Hindustan under various rules of the Central Excise Rules, 1944. The Tribunal set aside these penalties and the order of confiscation of properties, leaving these issues open to be re-determined in the remand proceedings.Conclusion:The Tribunal set aside the Commissioner's order on clubbing of clearances, finding it not in accordance with the binding order under Section 37B. The matter of clandestine clearances was remitted back for re-determination, and the penalties and confiscations were also set aside, to be reconsidered in the remand proceedings. The appeals were disposed of in these terms.