1995 (7) TMI 217 - AT - Central Excise

Tribunal remands case for re-evaluation, retains appellants' Bank Guarantee. Appeals allowed for comprehensive evidence review.

The Tribunal remanded the case back to the original authorities for re-adjudication, retaining the Bank Guarantee provided by the appellants. The appeals ... Value of clearances - Clubbing of Issues Involved:1. Alleged evasion of central excise duties by M/s. Dayal Laminates Pvt. Ltd. and M/s. Rubber Products.2. Clubbing of clearances of M/s. Dayal Laminates Pvt. Ltd. and M/s. Rubber Products.3. Eligibility for SSI exemption under Notification No. 175/86.4. Financial interest and control between M/s. Dayal Laminates Pvt. Ltd. and M/s. Rubber Products.5. Use of common facilities and brand names.6. Suppression of production and clandestine removal of goods.7. Imposition of penalties and confiscation of properties.Detailed Analysis:1. Alleged Evasion of Central Excise Duties:The Collector of Central Excise confirmed a duty demand of Rs. 20,09,487/- + 7,363.65 under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A of Central Excises and Salt Act, 1944. A penalty of Rs. 2,00,000/- each was imposed on both appellants. The proceedings against the duty demand on 92 pieces of decorative laminated sheets were dropped.2. Clubbing of Clearances:The main contention was whether M/s. Dayal Laminates and M/s. Rubber Products should be considered as a single entity for excise purposes. The Learned Collector found that M/s. Rubber Products was essentially a front for M/s. Dayal Laminates, thus justifying the clubbing of clearances. The appellants argued that they are separate entities with different businesses and there was no justifiable ground for clubbing them together.3. Eligibility for SSI Exemption:It was argued that M/s. Rubber Products wrongly availed the benefit of Notification No. 175/86 in collusion with M/s. Dayal Laminates by fraud, wilful mis-statement, and suppression of facts. The Collector concluded that the benefit of the Notification was not available as the goods were affixed with a brand name of another person who is not eligible for exemption.4. Financial Interest and Control:The investigation revealed that M/s. Rubber Products was controlled financially by M/s. Dayal Laminates. Despite the dissolution of the partnership, the financial stakes of the partners continued. The Collector found that there was a definite financial flowback between the units, indicating that M/s. Rubber Products was not independent but controlled by M/s. Dayal Laminates.5. Use of Common Facilities and Brand Names:The investigation showed that both units shared common facilities like power connection, generator, staffing, and used the brand name 'Dayal.' This commonality was used to argue that M/s. Rubber Products was essentially a part of M/s. Dayal Laminates.6. Suppression of Production and Clandestine Removal:The Collector found that M/s. Rubber Products had suppressed real production and removed goods without paying duty. Discrepancies in the seized documents and statements from employees indicated clandestine removals and suppression of facts.7. Imposition of Penalties and Confiscation:The Collector imposed penalties under various rules and proposed the confiscation of land, building, plant, machinery, and materials. The appellants contested these penalties, arguing that the units were separate and the penalties were unjustified.Conclusion:The Tribunal found that the evidence presented by the appellants required detailed factual verification. The matter was remanded back to the original authorities for re-adjudication, directing that the Bank Guarantee furnished by the appellants should be retained till final adjudication to safeguard Revenue's interest. The appeals were allowed by remand, emphasizing the need for a thorough reappreciation of evidence to determine the independence of the units.