TaxTMI 
TaxTMI 
1999 (4) TMI 358
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....d units in lieu of confiscation. Penalties of Rs. 25,000/- each on (1) Shri R.K. Chopra, Director of M/s. Troika Processes Pvt. Ltd., and proprietor of M/s. Process Plant (India), (2) Shri R.S. Jhaveri, Director of M/s. Troika Processes Pvt. Ltd., (3) Shri Arvind R. Chopra, partner of M/s. Industrial Products and M/s. Neelam Industries, (4) Shri O.P. Agarwal, Director of M/s. Troika Processes Pvt. Ltd., (5) Shri P.G. Bhandari, Director of M/s. Troika Processes Pvt. Ltd., (6) Shri Ravindra Agarwal, Partner of M/s. Neelam Industries and (7) Shri S.G. Bhandari, Partner of M/s. Neelam Industries were also imposed under Rule 209A of the Central Excise Rules, 1944. The present appeals challenge the said order. The issue relates to clubbing of clearances of the various units and eligibility to benefits of exemption Notifications 85/85 and 175/86-C.E. 2. By Show Cause Notice dated 5-10-1990, M/s. Troika and the other three units were charged with clearance of excisable goods viz., machinery having specific function for vegetable oil refining plant, hydrogenation plant etc., by wrongly claiming the benefits of exemption Notification number 85/85 and Notification No. 175/86 on the pr....
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....tance like working capital was provided by M/s. Troika free of charge/interest to the three units and lumpsum amounts were also provided as working capital which were subsequently adjusted against products manufactured and supplied by the three units to M/s. Troika Processes Pvt. Ltd. He also found that the prices of products supplied by the three units were fixed by M/s. Troika Processes Pvt. Ltd., taking into consideration the cost of raw material and other over-heads which indicated that the other three units do not have any independent pricing system on the lines of transactions between units dealing on a principal to principal basis. He further found that the three units were exclusively manufacturing products for M/s. Troika and they were dependent on Troika in respect of procurement of raw materials, technical know-how, design, specifications, working capital, supervision over production and quality control, sale of products etc. The Collector also observed that the products sold to M/s. Troika by the three units were subsequently sold by Troika at much higher price, the profit accrued out of such transactions is shared by the very same persons i.e., Directors of M/s. Troika....
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....pertinent to point out that the three units had been in existence even before the issue of Notification Nos. 85/85 and 175/86. The Department itself had not disputed the fact that the three units had separate premises, separate Income Tax and Sales Tax registrations, separate Labour Unions and separate financial arrangements. He referred to the Annexures to the appeal which showed that the turnover of the three units did not constitute more than 20% of the turnover of M/s. Troika. In other words, the purchases from the three units by Troika constituted only 10 to 20% of Troika's total purchases. Apart from the said grounds which showed that there was no basis for alleging commonality of interest between Troika and the other three units financially or otherwise, ld. Counsel submitted that duty demand was also barred by limitation. He submitted that right from 1986, the Excise Authorities were aware that the three units were fabricating equipment and parts for M/s. Troika. As regards the duty demand made on the three units other than M/s. Troika, ld. Counsel submitted that neither the show cause notice nor the Order-in-Original had made any allegation against the said appellants that....
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....e procuring their raw materials without reference to Troika. On the aspect of financial assistance, ld. Counsel submitted that though it was on record that certain lumpsum amounts were paid by Troika to the three appellant units, these were adjusted against the products manufactured and supplied by them to Troika. The socalled financial assistance was not more than advances paid for the products viz., parts, equipments manufactured by the three independent units on job work basis for Troika. Ld. Counsel submitted that the findings given in Paragraph 7 of the impugned order was not maintainable in law since the profit earned by a Private Limited Company or a partnership firm cannot be shared by an individual or by the relatives or Directors of the Private Limited Company. Summing up the arguments, ld. Counsel submitted that the impugned order is liable to be set aside both on questions of fact as well as on questions of law. He therefore prayed for the setting aside of the impugned order and for allowing all the 11 appeals including that of the various individuals on whom penalties had been imposed under Rule 209A. 5.  Shri K. Shiv Kumar, ld. JDR submitted that the statement....
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....tements given by the concerned individuals called for no interference and therefore the same may be upheld and all the 11 appeals may be rejected. 6.  We have considered the rival submissions and have perused the records. On the question of limitation raised by the ld. Counsel for the appellants, we find that the show cause notice had alleged that M/s. Troika and the three other units had by wilful mis-statement and suppression of facts with intention to evade Central Excise duty wrongly availed of exemption Notification No. 56/84, dated 10-3-1984 and Notification No. 175/86, dated 1-3-1986 as amended during the period 1985-86 to 1989-90. The Show Cause Notice was issued on 5-10-1990. Ld. Counsel had in this connection submitted that the allegation of wilful mis-statement and suppression of facts had no basis. He had submitted that it was on record that M/s. Troika was established in the year 1973 whereas M/s. Process Plant (India) was formed in the year 1966. Likewise M/s. Industrial Products and M/s. Neelam Industries were formed in 1981 and 1984. Ld. Counsel had submitted that in a case where all the concerned units were established prior to 1985, the allegation that one....