2011 (3) TMI 1292 - HC - Central Excise

High Court Upholds Tribunal Decision on Clubbing Clearances; No Legal Questions Found

The High Court affirmed the Tribunal's decision to club clearances under a single show cause notice for two related entities, one being a fictitious unit. ... No separate show cause notice regarding clubbing of clearances - Misdeclaration - invoking the extended period of limitation - Held that:- When both the units are functioning separately, the question of issuing one show cause notice to both the units does not arise. As regards this issue no question of law could arise since it is admittedly a question of fact and both the appellate authorities had concurred with the said finding. As regards plea of limitation too, the Tribunal had correctly come to a conclusion that having regard to the fact which establishes evasion of duty, extended period would apply to the appellant - no substantial question of law arise for consideration in this appeal. Issues:1. Whether separate show cause notice regarding clubbing of clearances is requiredRs.2. Whether the Tribunal invoked the extended period of limitation without establishing fraud, collusion, or willful misstatementRs.3. Whether the Tribunal provided valid reasons for dismissing the appealRs.Analysis:1. The appellant, a proprietor of Sri Lakshmi Industries, appealed against a single show cause notice clubbing both Sri Lakshmi Industries and Sri Ganga Engineering, owned by the appellant's wife. The Tribunal confirmed the findings, stating that Sri Ganga Engineering was a fictitious unit, justifying the clubbing of clearances under one notice. The Tribunal relied on a Supreme Court decision, allowing clubbing when one firm is a dummy of the other. The Tribunal rejected the appeal based on admitted facts, including statements by the proprietors of both units.2. The Tribunal also addressed the issue of limitation, rejecting the appellant's claim that the penalty imposed was unjustified. The Tribunal held that the extended period of limitation was warranted due to the facts of the case, establishing evasion of duty. The appellant argued against the delayed issuance of the show cause notice, but the Tribunal found the penalty justified based on the circumstances.3. The High Court analyzed both issues and concluded that no substantial questions of law arose in the appeal. The Court affirmed the Tribunal's findings on the clubbing of clearances and the application of the extended period of limitation. Since the issues were primarily factual and both appellate authorities had concurred with the findings, the Court dismissed the appeal, stating that no substantial questions of law required consideration. The Court also dismissed the associated miscellaneous petition.