2013 (12) TMI 112 - AT - Central Excise

Appellate Court Affirms Dismissal of Revenue's Appeal on Clubbing Clearances for Options

The appellate court upheld the decision to dismiss the Revenue's appeal regarding the clubbing of clearances for granting options under specific ... SSI Exemption - Clubbing of value of clearances under Notification No.9/2001 – Held that:- There was absence of investment by the Karta therein on behalf of the HUF - There was no investment of the fund by Mohali Chandigarh for day-today carrying on the business by two Mohali units except that there was sharing of infrastructure and using of common utilities as well as availing service of manpower - There is nothing on record to show that late Shri Avdesh Garg was controller of these two Mohali units making the proprietors thereof as well as partner of M/s Suchita Steels, Mohali dummy - Nothing is on record to show that late Avdesh Garg was the financial controller as well as beneficiary of the three units - In absence of inextricable link between Avdesh Garg showing his vested interest in Mohali units, so also no pecuniary interest of Chandigarh unit in two Mohali units was proved - the adjudication cannot be approved – Decided against Revenue. Issues:Clubbing of clearances for granting option under specific notifications for the financial years 1998-1999 to 2001-2002.Analysis:The Revenue appealed against the appellate order that set aside the adjudication, which concluded that the clearances of three units were to be clubbed for granting an option under certain notifications. The Adjudicating Authority found that the three units were controlled by a specific individual. However, the Commissioner (Appeals) noted that there was no financial flowback between the units and no evidence of control by the individual over all three units.The Adjudicating Authority observed that a company formed by the individual was supplying raw material to one of the units at market price, but without evidence of financial or managerial control. The Commissioner (Appeals) confirmed that there was no financial flowback between the units and no proof of control by the individual over the Mohali units.The Revenue argued that due to common infrastructure, utilities, and manpower in the Mohali units, the adjudication was correctly done. However, the respondents contended that all three units were distinct entities, including the raw material supply company, and there was no control by the individual.After reviewing the records, it was found that there was no investment by the individual's HUF in the Mohali units, and no evidence of financial control or benefit by the individual over the three units. The absence of a clear link between the individual and the Mohali units, as well as the lack of pecuniary interest between the Chandigarh unit and the Mohali units, led to the dismissal of the Revenue's appeal. The appellate order was upheld, emphasizing the absence of control and financial connections between the units.In conclusion, the judgment maintained the appellate order, dismissing the Revenue's appeal due to the lack of evidence showing control, financial ties, or common interests between the units as required for clubbing of clearances under the specific notifications.