2017 (7) TMI 789 - AT - Central Excise

Tribunal upholds duty confirmation & penalties for duty evasion based on shared resources & financial transactions.

The Tribunal upheld the duty confirmation and penalties, finding the department's evidence sufficient to establish the existence of dummy units for duty ... SSI exemption - clubbing of clearances - The allegation is that the appellant unit is the main unit and Sri R.D. Pandian who is proprietor is controlling all the other three units which were floated by Sri R.D. Pandian in the name of his wife and other family members - Held that: - The fact that all the three units are situated at one place which is separated by passages; that all the four units belong to the same family members; that account of one unit is seen reflected in the account of another unit; that the raw materials are used in common or being diverted to the other unit; the use of machineries commonly by all the four units as well as the workers in all the four units being the same; the conclusion reached by the adjudicating authority, in our view is right and proper - the department has been able to sufficiently establish that there existed flow back of funds and mutuality of interest among four units - appeal dismissed - decided against appellant. Issues:1. Clubbing of clearances of multiple units for excise duty evasion.Analysis:The judgment revolves around the clubbing of clearances of different units to determine excise duty liability. The case involved four units, with the main appellant accused of evading duty by using dummy units. The officers gathered evidence through statements, stock verification, and records to establish that the appellant was the sole manufacturer of excisable goods, while the other units were created to evade duty. The original authority confirmed a demand of Rs. 5,56,154.80 on the appellant, along with penalties. The matter was remanded to the adjudicating authority, who upheld the demand and penalties. The appellant challenged this decision, leading to the current appeal.The appellant argued that subsequent proceedings dropped against them show the lack of substance in the allegations. They contended that shared electricity, machinery, and employees do not prove dummy units. Ledger accounts were presented to refute cash flow allegations. The department's basis for clubbing clearances was the units' common ownership and shared resources. However, the appellant highlighted separate registrations, bank accounts, and lack of cash flow evidence as reasons to dismiss the demand.The respondent reiterated the findings, emphasizing shared resources, financial transactions, and management control by the appellant. The adjudicating authority noted shared raw material accounts, electricity bill payments, and inter-unit transactions, indicating mutual interest and fund flow. The respondent argued that these factors justified the duty confirmation and penalties imposed.The Tribunal considered the evidence presented by both sides. It noted the shared resources, financial transactions, and control exerted by the appellant over the other units. The findings indicated a strong inference of dummy units used for duty evasion. The Tribunal upheld the impugned order, dismissing the appeal based on the established mutuality of interest and fund flow among the units.In conclusion, the Tribunal upheld the duty confirmation and penalties, finding the department's evidence sufficient to establish the existence of dummy units for duty evasion. The decision highlighted shared resources, financial transactions, and control as key factors in determining the liability. The appeal was dismissed, affirming the original authority's findings.