2013 (11) TMI 385

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....exemption under notification 1/93-CE and exemption had to be reckoned as if M/s ISC had manufactured and cleared the goods. The period of demand is 1993-94, 1994-95 and 1995-96 up to 11-03-96. The Show Cause Notice was issued on 08-07-1998. The demand confirmed is Rs.1,40,880/- along with interest and penalty. 2. The evidence relied upon by the Revenue are the following:- (i) M/s. ISC was a proprietorship concern of S. Kumarasamy and M/s. BMTwas a proprietorship concern of Smt. Meenakshi w/o S. Kumarasamy and the affairs of both the units were being managed by S. Kumarasamy because he was holding the power of attorney for BMT. (ii) The premises of the two buildings were adjacent separated by a common passage with the doors of each premises leading to the common passage. (iii) When the officers visited the premises on 13-03-96, in the portion occupied by ISC, manufacturing activities of punching, cutting and bending steel were undertaken to manufacture springs and textile machine spares. (iv) On that day, that is 13-03-96, in the premises belonging to BMT, the process of bending and hand tampering of coiled springs were beingcarried out; (v) In the common passage t....

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....nt agreement also. 6. On 15.4.1996, the officers visited the factory again. They found a newhand winding machinery which was not available on 13.3.1996 when the officers initially visited. In statement dated 11.9.96, ShriKumarasamy stated that the hand winding machine appearing on 15.4.1996 was available in some other portion of the building on 13-03-96 and he had forgotten to include this machinery on 13.3.1996. 7. Revenue also found transfer of money between the two units as under:- Year Amount given by ISC to BMT Amount given by BMT to ISC   84500.00 100000.00 1992 -93 70000.00 Nil 1993 -94 310000.00 40000.00 1994 -95 200000.00 30200.00 1995 -96 75000.00 235000.00 8. Revenue also noticed that the building maintenance charge for both the units was being met by M/s. ISC. 9. Thus M/s. ISC and M/s. BMT manufacture textile machinery spares and coiled springs. Their raw materials were basically steel/iron wire rods for coiled springs and steel sheets for making leaf springs and textile spares. From the facts, statements, mahazars and other records it appeared that neither M/s. ISC nor M/s. BMT had the entire machin....

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....ther a penalty of Rs.1,40,880/- was imposed on ISC under Section 11AC of the Central Excise Act,1944 and an amount of Rs.15,000/- was imposed on BMT under Rule 209 of the Central Excise Rules, 1944. Aggrieved by the order, the appellants filed appeals before the Commissioner (Appeals). At the time of deciding the appeal by the first appellate authority, ShriKumarasamy had passed away. Therefore, the first appellate authority confirmed the duty demand on the first appellant and penalty imposed on the second appellant. But the penalty imposed on the deceased proprietor of ISC was set aside. Aggrieved by the order of the Commissioner (Appeals), ISC and BMT have filed appeals before this Tribunal. The appeal for ISC has been filed by Shri K. Balamurugan, proprietor, who has succeeded ShriKumarasamy. 12. Arguing for the appellant, the learned counsel submits that there is no finding in the Order-in-Original that BMT was a dummy unit. He claimed that BMT had been in existence sinceMay 1982 and ISC had been in existence from August 1973 and in support of the claim the appellants had submitted, along with appeal papers, Registration issued by Commercial Tax Officer, Singanallur Circle. ....

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....batore Collectorate during June 1991 as evidenced by letter C. No. II/37/29/8/91 1A dated 12.6.1991 and again during May 1992 as evidenced by letter C.No. II/37/26/891A dated 1.5.1992. 15. Similarly, ISC had duly filed declaration under Notification No.111/78 C.E. dated 9.5.1978 every year and the following details were furnished:- Declarations filed for the year Serial No. allotted by Department Date of acknowledgement 1985 -86 16/85-86 9.1.1986 1986-87 17/87-88 5.9.1986 1987 -88 1/87-88 2.4.1987 1988-89   1/88-89 of Section II Assistant Commissioner's letter C. No. IV/16/149/88 Pol dated 3.11.1988 5.4.1988   1989 -90   15/89-89 II B Assistant Commissioner's letter C. No. IV/16/85/89 dated 23.6.89 11.4.1989   1990 -91   16.3.1990 1991 -92   15.4.1991 1992 -93 Sl. No. 35/92-93 9.6.1992 1993 -94 Sl. No. 44/93-94 29.9.1993 1994 -95 Sl. No. 6/94-95 2.5.1994 16. Ld Counsel further argues that the demandis on ISC and since the proprietor Shri. S Kumaraswamy is no more the demand cannot survive. He relies on the following decisions: (a) D. ....

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....ed lakhs in the preceding financial year. 19. The Ld. A. R. argues that in this case the splitting in factory is for real because either of the factories did not have complete machinery to produce final products. The splitting of the ownership also is clearly discernible because it is the same person doing activities in different names ?one in his own name and another in the name of his wife. He points out that in such situation the Tribunal held in the case of Quality Steel Industries Vs. CCE-1989 (43) ELT 775 that the clearances of the two units can be clubbed. This is case where the turnover exceeded the exempted limit and the appellants split the existing machineries into two lots. Any of the lotsof machineries was not sufficient to complete manufacturing process of final products which clearly demonstrates that the splitting is only for evading Central Excise duty. He argues that physically the two units may not be dummy because they have separate buildings. But as a factory producing springs and textile machineries boththese units do not have separate existence. Such existence cannot be achieved by taking registration under sales tax or submitting separate Income Tax retu....

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.... in this issue, only the unit of second appellant was a Central Excise assessee and the other unit remained outside the purview of Central Excise control. Therefore, I hold that mere submission of returns and declarations to the Department does not absolve the appellants from the allegation of suppression of facts from the Department regarding bifurcation of units for the purpose of suppressing the actual value of clearances. Further, I find from para 23 of the impugned order that the lower authority has made a detailed discussion to substantiate the allegation of suppression of material facts to avail the exemption wrongly. I find no valid reason advanced by the appellants in the grounds of appeal to disprove the findings of the lower authority. 22. The ld. A. R. pointed out that in the cases relied upon by the Advocate regarding proceeding against a proprietorship after the death of the proprietor, the notices were issued after the death of the proprietor. In this case the notice was issued before the death of the proprietor and adjudication also was completed and therefore the decisions are not applicable to the facts of the case. 23. We have considered submissions on both....