2009 (5) TMI 243

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....rred to as MFE) and M/s. Engineering Plastics Incorporation (hereinafter referred to as EPI) are to be clubbed with that of M/s. Modern Engineering Plastics Pvt. Ltd., (hereinafter referred to as MEPP) and confirming a duty demand of Rs. 6,84,128/- against MEPP on the ground that it had exceeded the ceiling limit of clearance value and hence not eligible to the benefit of SSI exemption under Notification No. 1/93-CE dated 28-2-1993, and imposing a penalty of equal amount on the appellants under Section 11AC of the Central Excise Act, 1944 and Rule 173Q of the Central Excise Rules, 1944. 2. The case of the department is that MFE had floated a shadow unit in the name of EPI during 1993-94 and manufactured FRP/PVC products in the factory du....

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.... the lower authorities. EPI also had not purchased cutting machine, oven, winding machine and welding torches which were the machinery absolutely necessary for the manufacture of FRP/PVC tanks, vessels, pipes and fittings etc. as brought out from the process of manufacture as furnished by MEPP as under:- "Process of manufacture of FRP tanks, vessels and pipelines: (i) The required raw materials for fabrication of FRP Tanks, vessels and pipelines were Bisphenol resin, wasothalic polyester resin and vinyl ester resin. The other raw materials were surface mat, chopped stranded mat (CSM), woven rovings, rovings etc. (ii) The polyester resins were being supplied by M/s. Bakelite Hylam Limited and the mat materials such as surface mat, c....

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....being clubbed with its clearance value. The appellants have also not seriously challenged the finding of mutuality of interest and financial flow back. The evidence on record also establishes that bills for purchase of materials by one unit have been settled by another unit. All these points to the inescapable conclusion that MFE and EPI were only facades companies floated by MEPP, to gain undue benefit under the SSI exemption notification. 5. We are also in agreement with the finding that MEPP was guilty of suppression. The argument that they were under the bona fide belief that the other two units were independent units merits rejection, as they have not been able to explain the basis of such belief. The plea that RT-12 returns were be....