2004 (4) TMI 203 - AT - Central Excise

Tribunal Upholds Separate Clearance for Independent Manufacturers

The Tribunal ruled in favor of M/s. Tapsya Steels (P) Ltd. and M/s. Doaba Rolling Mills Ltd., holding that the value of clearance of one company should ... SSI Exemption - Value of clearances - Clubbing of Issues:- Whether the value of clearance of one company is to be clubbed with another company for small scale exemption.Analysis:The appeals filed by M/s. Tapsya Steels (P) Ltd. and M/s. Doaba Rolling Mills Ltd. revolve around the issue of whether the value of clearance of M/s. Tapsya Steels Pvt. Ltd. should be combined with the value of clearance of M/s. Doaba Rolling Mills Ltd., leading to the denial of small scale exemption to M/s. Tapsya Steels Pvt. Ltd. The appellant argued that both companies are separate entities with individual registrations and should be treated as independent manufacturers, citing relevant trade notices and circulars. Reference was made to a circular issued by the Central Board of Excise & Customs emphasizing that limited companies are distinct entities entitled to separate exemption limits. Legal precedents, including a Tribunal decision and a Supreme Court judgment, were cited to support the argument that clearances of separate limited companies cannot be clubbed together for assessment purposes.The Departmental Representative countered the argument by highlighting the absence of segregation between the two units, common infrastructural facilities, and shared office space, suggesting that the companies operate as a single unit in practice. Reference was made to a previous decision where clearances of units with common operational aspects were clubbed together for exemption purposes. The Departmental Representative emphasized the interconnected nature of the units based on shared resources and operational similarities.Upon considering the submissions from both sides, the Tribunal referred to a Circular by the Central Board of Excise & Customs clarifying that limited companies are distinct entities entitled to separate exemption limits. Citing a previous Tribunal decision and a Supreme Court judgment, the Tribunal held that the clearances of both units cannot be combined as they are private limited companies, in line with the Circular's provisions. Additionally, the Tribunal noted the absence of financial flow back evidence and referred to a Rajasthan High Court ruling emphasizing the need for clear evidence of mutual business interest and financial interdependence to club clearances of multiple units. Consequently, the impugned order was set aside, and both appeals were allowed, affirming the separate treatment of the companies for exemption purposes.