TaxTMI 
TaxTMI 
1995 (7) TMI 217
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....ve laminates falling under sub-heading No. 4410.90 and 4823.90 of Central Excise Tariff Act, 1985 and M/s. Rubber Products, manufacturer of rubber foam sheets and plywood falling under Heading 4008 and 4408.30 of Central Excise Tariff Act, 1985 (5 of 1986), have been indulging in evasion of duties of excise by way of suppression of productions and clandestine removal as well as by indulging in under valuation of the excisable goods manufactured and cleared by them. Therefore, simultaneous raids were conducted on 9-3-1991 and 10-3-1991 at various premises by the preventive officers of Central Excise Hqrs., Indore. 3. The searches resulted in the recovery of a number of incriminating documents. Officers came across, in the premises of M/s. Dayal Laminates, 35 paper surfaced hardboard sheets, not accounted in RG 1 and noticed a shortage of 92 decorative laminated sheets. The paper surfaced hardboard sheets were subsequently related to the party as being an exempted item. 4. M/s. Dayal Laminates are said to be a medium scale unit, controlled by Shri Sahebdas Satsangi, paying duty on decorative laminated sheets and routing their sales through M/s. Kapoor Enterprises and M/s.....
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....ction, but used the own available to the latter. Though a generator was installed in the premises by them, expenditure on fuel was incurred by M/s. Dayal Laminates. (iii) Power connection, generator, steam plant, security and store for raw materials are the same for both the units. (iv) A number of workers are common. (v) Considerable items of expenditure, recorded in the documents of M/s. Rubber Products recovered from the premises of M/s. Dayal Laminates or Shri Sahebdas Satsangi, have been admitted by him to be concerning M/s. Dayal Laminates. (vi) Shri R.N. Kapoor of M/s. Dayal Laminates could not explain clearly any of the items, in the records. (vii) Though Shri R.N. Kapoor owning M/s. Rubber Products admittedly resides in different premises, the records pertaining to his unit were recovered from the bedroom in Shri Sahebdas Satsangi house and Dayal Laminates' premises. (viii) There were considerable entries in the seized documents on financial transactions, between the two units, which were inconsistent with Shri Sahebdas' contention that Shri Kapoor's financial conditions were not sound. (ix) Statement given by Shri Kapoor, indicate....
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....d `Radhaswamy', they were using insignia `Dayal' and `Rs' on their registers and products. This appeared to be incorrect as the name was meant to connect the product with the owner of the brand name. Subsequently also the word `DR Sheets' meaning `Dayal Rubber Sheets' were used by them. 11. Para 7 of Notification No. 175/86, envisages that the benefit of Notification was not available when the specified goods were affixed with a brand name of another person who is not eligible for exemption under the Notification. In view of the above it appeared that the benefit would not be available to goods produced by M/s. Rubber Products, a unit floated with the purpose of circumventing the conditions of Notification. 12. The products manufactured by M/s. Rubber Products are Rubber Foam Sheets, cavity sheets, Scooter Seats, pillows and cushions. They are thus moulded, vulcanised products but at the same time they are not ready for use and need working on. They would therefore, merit classification under sub-heading 4008.11 of Central Excise Tariff Act attracting effective duty of 60% ad valorem. 13. In view of the above, it appeared that : (a) M/s. Rubber Products had ....
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....ibunal and Higher Courts to plead that commonality of use of telephones, premises, employees by itself is no ground to conclude that both the units are one and the same. 16. The Learned Collector granted them a personal hearing and after careful consideration of the pleas rejected their contentions and upheld the charges made out in the show cause notice except in respect of clandestine removal of 92 decorative laminated sheets found short vis-a-vis RG 1 Account. The Learned Collector has held that although the dissolution of the partnership controlling M/s. Rubber Products which took place in 1984 preceding the Notification in question, the facts, brought out in the records that the dissolution of the partnership did not at all formally end the relationship among the partners. Shri R.N. Kapoor became the proprietor of Rubber Products in its new form, S/Shri Sahebdas Satsanghi and Gurucharan Das Satsanghi, erstwhile partners, continued to keep their financial stakes in the unit, by retaining their capital. The statement of Shri Sahebdas Satsanghi dated 6-9-1991 was also taken into consideration to come to this conclusion. The statement was that the amount was deposited in the....
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....tor has also relied on the common use of brand name `Dayal Foam' and `Dayal Foams Deluxe' on the goods cleared by M/s. Dayal Agencies. The Learned Collector has come to the conclusion that M/s. Rubber Products, the proprietary unit owned by Shri R.N. Kapoor is nothing but a front company for M/s. Dayal Laminates owned by S/Shri Sahebdas Satsanghi and Gurucharandas Satsanghi, who retained their controlling financial interest in the original partnership, long after its dissolution and this arrangement they converted it to their advantage of the said Notification. The Learned Collector has merely indicated that he has perused citations on the subject and the same were clearly distinguishable. However, he has not given reasons as to how these rulings are distinguishable from the facts of the present case. 18. We have heard the Learned Advocate, Shri V. Sridharan for the Appellants and the Learned DR, Shri J.P. Singh for the Revenue. 19. The Learned Advocate very strongly putforth his submissions and submitted that in Dayal Laminates the extent of share was only to the extent of 75% in which 51% was upheld by Shri Sahebdas Satsanghi and Gurucharan while 51% of the shares in ....
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.... is totally unsupportive of any facts on record. He submitted that there existed common staff, premises and series of common workers were (sic) but they had been paid by the respective units. He submitted that the accounts books clearly reflected about the payments towards these accounts, sales, lands and interest payments, but yet the Collector had come to a wrong understanding about the interest payments not having been reflected in the account books. He submitted that merely because there was a common use of the name "Dayal" which was only to indicate about the brotherhood of a religious sect, it did indicate common use of trade name of the products and hence this finding is also incorrect. He submitted that there was no clandestine removal and the Learned Collector had checked wrong entries and also had referred to an invoices of a different variety and such incorrect checking and wrong verification had led to this conclusion. He submitted that if the records had been properly scrutinised and the entries crossed checked, then such a conclusion would not have arisen. He submitted that the party had submitted all the invoices and stock registers showing correct entries. The same ....
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.... agent. The transcations clearly showed the financial interest of Dayal Laminates and Rubber Products, and this arrangement had been alone to evade duty. In this context, he referred to the statement of Shri Ashok Sihare (page 320), statement of Shri Kishan Pise (page 293), and statement of Shri Sunil Chawda (page 325) of the paper book along with the statement of Shri Sahebdas Satsanghi. The Learned DR strongly relied on the following ratios wherein the Tribunal had found mutuality of interest for the purpose of clubbing the units : (i)  Shri Gajanan Fabrics Distributors v. Collector of Central Excise [1992 (43) ECR 172] (ii)  Unique Resin Industries v. Collector of Central Excise [1992 (68) E.L.T. 230] (iii)  String Haven v. Collector of Central Excise [1994 (72) E.L.T. 934] (iv)  Gaman Far Chems Ltd. v. Collector of C. Excise [1994 (71) E.L.T. 59] 21. The Learned Advocate replying to the arguments of the Learned DR submitted that the statements made by these persons only indicated about commonality of use of premises and employees but it did not indicate any hold, control and management by Dayal Laminates at all. He submitted that the Dayal Laminate....
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....clearances of the companies. The facts in the present case are totally different in as much as that it is seen that Shri Sahebdas Satsanghi and Shri Gurucharan Satsanghi were also partners in Rubber Products and after dissolution, they have not taken their share and had retained their interest in the proprietary concern. Both of them had continued to perform their duties in the Rubber Products by ignoring its affairs and besides being director of Dayal Laminates, wherein were the sole persons to control and manage the interest of the Dayal Laminates. Therefore, it has to be appreciated as to whether the dissolution of firm was a genuine one. So long as the dissolved partners have not settled their accounts and their interest had apparently continued besides their business involvement, then a link is established. This aspect of the matter is required to be addressed by the Learned Collector in the light of evidence brought out by the investigating agencies. In case of String Haven (supra), such a situation did arise and it had noticed that members of same family had manipulated to creating three different firms to manufacture goods from the same premises. After appreciation of the e....