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of <h1>Tribunal emphasizes fair process: show cause before imposing penalties</h1> <h3>M/s. Garg Industries And Shri B.M. Garg, Proprietor Versus CCE, Noida</h3> The Tribunal set aside the duty demand and penalties imposed on the appellant unit for availing the SSI exemption, emphasizing the necessity of issuing ... Denial of SSI Exemption - Imposition of penalty - Clubbing of clearances - SCN was not issued to all the parties - Held that:- Units of M/s. Jai Hardware Pvt. Ltd., M/s.Door Devices Manufacturing Company, M/s. Deepak Hinges Pvt. Ltd., M/s.Monika Steels Pvt. Ltd. M/s.D.D. Hardware Pvt. Ltd. and M/s. D.P. Garg Exports Ltd. are the existing firms/companies having factories at different locations. Therefore, if the clearances of these units are sought to be clubbed with the clearances of the appellant unit, it was necessary to issue the show cause notices to these firms so as to enable them to put up their defene and without hearing the units, whose clearances are sought to be clubbed with the clearances of the appellant company, a unilateral decision cannot be taken that all the units are owned and controlled by one person only. For clubbing the different units for the purpose of SSI exemption, the only requirement is that the units should be owned by one person and for this purpose, it is absolutely necessary that if the clearances of a unit A are sought be clubbed with the clearances of the units, B, C and D and these units are owned by different persons, show cause notices must be issued to B, C and D, whose clearances are sought to be clubbed with the clearances of Unit A. We are supported in this view by the judgement of Calcutta High Court in the case of Diamond Scaffolding Company reported in [2011 (7) TMI 854 - CALCUTTA HIGH COURT] and the judgements of the Tribunal in the cases of Copier Force India Ltd. reported in [2008 (7) TMI 163 - CESTAT, CHENNAI], K. R. Balachandra reported in [2002 (8) TMI 197 - CEGAT, CHENNAI], Poly Resins reported in [2003 (8) TMI 132 - CESTAT, CHENNAI]; CCE, Bombay Vs. Supreme Electrical Appliances reported in [2001 (3) TMI 369 - CEGAT, NEW DELHI] and SKN Gas Appliances reported in [2000 (5) TMI 95 - CEGAT, COURT NO. II, NEW DELHI]. - Decided in favour of assessee. Issues: Clubbing of clearances for determining eligibility for SSI exemption, non-issuance of show cause notices to other manufacturing unitsClubbing of Clearances for SSI Exemption:The case involved the appellant unit availing the SSI exemption notification, with the Department alleging that the manufacturing turnover was split among several other units owned by the same individual. The Addl. Commissioner confirmed duty demand against the appellant unit and imposed penalties. The Commissioner (Appeals) upheld this decision, leading to the current appeal. The appellant argued that no show cause notices were issued to the other units, citing relevant judgments to support their stance. The Departmental Representative defended the order, claiming non-issuance of notices was not fatal. The Tribunal noted that all units were engaged in manufacturing similar goods but emphasized the necessity of issuing show cause notices to units whose clearances were to be clubbed. The Tribunal rejected the Department's argument, citing the importance of allowing the units to present their defense before clubbing clearances. The judgment referenced various legal precedents supporting the requirement of issuing show cause notices in such cases. Consequently, the impugned order was set aside, and the appeals were allowed.Non-Issuance of Show Cause Notices to Other Manufacturing Units:The central issue revolved around the non-issuance of show cause notices to the six manufacturing units whose clearances were sought to be clubbed with the appellant unit for determining SSI exemption eligibility. The appellant contended that this omission was a fatal flaw in the proceedings, supported by relevant case laws. The Departmental Representative argued that the non-issuance of notices was not detrimental to the case, citing a Tribunal judgment. However, the Tribunal differentiated the present case from the referenced judgment, emphasizing the necessity of issuing show cause notices to units with existing factories before clubbing clearances. Legal precedents, including judgments from the Calcutta High Court and various Tribunal cases, supported the Tribunal's view. Consequently, the impugned order was deemed unsustainable, set aside, and the appeals were allowed, highlighting the importance of due process and fair hearings in such matters.
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