TaxTMI 
TaxTMI 
2002 (12) TMI 381
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.... short) is also a partnership firm having following partners, engaged in the manufacture of the said Biscuits : - Shri Bijaya Kumar Sahu, S/o Shri Indramani Sahu Shri Suryamani Sahu, W/o Shri Indramani Sahu Smt. Snehalata Sahu, W/o Shri Rajendra Kumar Sahu Smt. Bharati Sahu, W/o Shri Narayan Ch. Sahu (c) Appellant - M/s. Hindustan Confectionery, Aparna Nagar, Cuttack (hereinafter referred to as Hindustan in short) is a proprietorship firm, the proprietor being Shri Rabindra Kumar Sahu, S/o Shri Indramani Sahu and is engaged in the manufacture of Chocolates falling under Chapter 18 of the Cental Excise Tariff Act, 1985. 2. Based on an intelligence that these firms are under the common command and control of the family of Shri Indramani Sahu and have been created separately only to irregularly avail of the exemption/concessional rates of duty applicable to small-scale manufacturers under Notification No. 175/86-C.E., dated 1-3-86 as amended from time to time; and there is a large scale suppression of production and removal thereof by the said firms, the officers of the DG(AE) in association with the officers of Collectorate (now Commissionerate) of Central....
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....-12-90, but the facts of which was suppressed by them as elaborated at Para 9 of the statement of facts. (iii) Goods valued at Rs. 1,56,597.25 and Rs. 50,342.42 seized on 5-12-90 from the premises of Maniraj shall not be confiscated under rule 173Q ibid. (iv) Macborn shall not be required to pay Central Excise duty amounting to Rs. 4,69,551.81 under Rule 9(2) of Central Excise Rules, 1944 read with Section 11A on which is leviable the quantities of goods removed by them clandestinely during 1988-90 to 1990-91 (up to 4-12-90) as detailed in Annex. C-1 to the show cause notice and elaborated in Para 7 read with para 5 of the statement of facts enclosed to the show cause notice. (v) Macborn shall not be required to pay an amount of Rs. 66,868.23 leviable on the commission to the distributors which should have been included in the assessable value under Section 4 of the Central Excise Act, 1944 read with Valuation Rules, 1975, and the facts of which was suppressed by them as discussed in Para 9 of the statement of facts enclosed to the show cause notice. (vi) Goods valued at Rs. 87,935.43 seized from the premises of Macborn shall not be confiscated under....
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....on given to the distributors. 1.4 I order confiscation of goods valued at Rs. 1,56,597.25 found loaded into the Delivery Vans and goods valued at Rs. 50,342.42 which were the unaccounted for goods, under Rules 52A and 173Q ibid. However, I find that the above seized goods totally valued at Rs. 2,06,939.97, were released provisionally to Shri Indramani Sahu, partner of M/s. Maniraj Industries on their request dated 6-12-1990, on execution of a B-11 Bond of a face value of Rs. 2,10,000.00 with cash security of Rs. 55,000.00. Since, the goods are not available for confiscation, I order appropriation of an amount of Rs. 21,729.00 (Rs. Twenty-one thousand seven hundred twenty-nine only) (BED Rs. 20,694.00 + SED Rs. 1,035.00) towards Central Excise duty and Rs. 33,271.00 (Rs. Thirty-three thousand two hundred seventy-one only) towards fine in lieu of confiscation of the goods, in terms of the B-11 bond executed by them. 1.5 I confirm demand of Central Excise duty of Rs. 4,58,022.00 (Rs. Four lakhs fifty-eight thousand twenty-two only) (BED Rs. 4,36,211.00 + SED Rs. 21,811) on M/s. Macborn Industries in respect of goods removed clandestinely during the period 1988-89 to 19....
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....duty demands made on Maniraj, Macborn and the constitution of the firms including M/s. Hindustan has come to the conclusions that the charges contained in Para 10.3 of the Show Cause Notice as regards four delivery vans registered in the name of Shri Indramani Sahu of Maniraj and its common use and in absence of corroboration of not defraying the expenses thereto by Macborn, similarly the absence of an agreement between Maniraj and Macborn, would be conclusive to find that Shri Indramani Sahu was managing these units, as one combined concern. He has further come to a finding that nature and scope of the job to be undertaken by Maniraj was, what is in general trade commercial parlance understood as 'marketing', since the four distributors of Maniraj's products were the distributors of Macborn product and the payment of 4% commission agreed to Maniraj as a result of delivery van use was erratic and all products of Macborn were sold by Maniraj would lead to a conclusion that Shri Indramani Sahu of Maniraj Industries was in full control and command of the financial affairs relating to all the three units. In Para 2.12 of the order impugned before us he finds that financial transactions....
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....cborn and Hindustan had relied upon large number of judicial decisions to claim that in the circumstances of their case, the aggregate value of clearances by these units do not merit clubbing, however, he holds that the ratio of those judgments were found to be totally inapplicable to the facts and circumstances of the case before him without discussions how. For the same reasons, he did not rely upon the Commissioner's Trade Notice No. 47/GL-37/92, dated 20-7-92 or and Order-in-Original No. 61(19) C.E.-92-DC-12/97, dated 28-10-97 passed by the Deputy Commissioner (now Joint Commissioner, Central Excise) where the issue regarding clubbing of these three very units were to be and decided in their favour. He gives no reasons why the Public Notice issued by him is not being followed by him. He found that that order of the Deputy Commissioner does not justify non-existence of a case for clubbing of the three units and found as follows : "I find that the order to justify non-existence of a case for clubbing of the three units was, inter alia, found to be based on the following findings of the Deputy Commissioner. 3.7.1 There was no evidence on record that Macborn had enjoyed ....
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....f M/s. Macborn and M/s. Hindustan need to be clubbed with that of M/s. Maniraj Industries. 4.1 In fine, it is established that in spite of the smoke screen created by way of separate legal existence of Maniraj/Macborn/Hindustan, by way of registering each of these as separate entities under the Partnership Act, obtaining separate licences for each under Central Excise Laws, separate registration for each with District Industries Center, separate status of each as assessees under Income-tax Act, Sales Tax Act, Factories Act, etc., it is established that Maniraj, Macborn and Hindustan have mutuality of interest in the business of each other and also the transactions between them are eminently characterized by extra commercial considerations. Thus, their transactions are not on a 'principal to principal' basis and therefore this is a case where the aggregate value of clearances of the excisable goods manufactured by all the three units are required to be clubbed together. For the periods 1988-89, 1989-90 and 1990-91 Macborn, Maniraj and Hindustan are not eligible for availing concessional rates of duty under Notification No. 175/86, dated 1-3-86 as amended because the aggregat....
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....self and will be entitled to a separate exemption limit. (ii) As mentioned above, if there are two firms with only some of the partners in common, each firm is entitled to separate exemption limit and hence the question of distributing the exemption does not arise. If one firm or one individual owns several factories, the manufacturer being only one entity there is no question of distributing the exemption. (iii) If there are more than one mill under the control of one manufacturer, there is no question of choosing any "mill" for the purposes of exemption. The Central Excise department is concerned with a manufacturer which may be an individual; a firm, a limited company etc." These instructions and orders were based on the following advice of the Ministry of Law, Justice and Company Affairs (enclosed to the Section 37B order) : - "......The question whether different partnerships having common partners are treatable as separate manufacturers or the same manufacturer, would be a question of fact in each case to be determined on the basis of such factors among other, like composition of the partnership, existence of the factory, licence, nature of goods manufactured....