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of <h1>Tribunal confirms duty payment, denies exemption on sham arrangement to avoid taxes.</h1> <h3>BALAMURGAN & BALAMURLI Versus CCE., MADRAS</h3> The Tribunal upheld the decisions of the lower authorities, confirming that the appellants were liable to pay the duty as demanded. The denial of the ... Value of clearances Issues Involved:1. Liability to pay duty as demanded by the Asstt. Collector.2. Denial of the benefit of exemption under Notifications Nos. 71/78 & 80/80.Summary:Issue 1: Liability to Pay DutyThe appellants, M/s. Balamurgan Industries and M/s. Balamurii Industries, were issued show cause notices for allegedly manufacturing and clearing electric motors without proper declaration, thereby exceeding the exemption limit of Rs. 5 lakhs under Notification No. 71/78. The Asstt. Collector rejected their claims of being separate entities and demanded duty based on twelve factors, including shared premises, machinery, and lack of separate records. The Collector (Appeals) upheld this decision, emphasizing that the lease of premises from Balamurgan to Balamurii deprived them of the exemption benefit.Issue 2: Denial of Exemption BenefitThe appellants contended that they were separate partnership firms entitled to separate exemptions. However, the Asstt. Collector and Collector (Appeals) found that the two entities were essentially one unit, created to circumvent the exemption limit. The Tribunal noted that Balamurii lacked the necessary tools for production and shared significant resources with Balamurgan, indicating a sham arrangement. The Tribunal dismissed the appeals, concluding that the creation of Balamurii was a subterfuge to avoid paying the legitimate tax.Conclusion:The Tribunal upheld the decisions of the lower authorities, rejecting the appeals and confirming that the appellants were liable to pay the duty as demanded. The denial of the benefit of exemption under Notifications Nos. 71/78 & 80/80 was deemed correct, as the creation of Balamurii was found to be a facade intended to evade tax obligations.
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