AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 99
X X X X Extracts X X X X
X X X X Extracts X X X X
....ation, it was found that both the units were controlled by one, Shri. D.V. Khanna. Therefore, Adjudicating Authority clubbed the clearances of both the units on the ground that both the units belong to one family and denied the benefit of SSI exemption notification on the ground that clearance of previous financial year exceeds the limit of clearance provided under SSI exemption notification. During the course of search, private records were recovered and it was alleged that on the basis of these private records, goods were cleared without payment of duty. The show cause notice was issued to deny of SSI exemption notification to both the units and clubbing the clearance of both the units in the name of M/s. Nova Industries Pvt. Ltd and to demand duty on the basis of private records recovered from the residence of employees to allege that goods had been cleared clandestinely without payment of duty. Therefore, duty is demandable along with interest and penalty on all the appellants were also proposed. The show cause notice was adjudicated, benefit of exemption notification was denied. Clearances of both the units were clubbed with the clearance of Nova. The charge of clandestine rem....
X X X X Extracts X X X X
X X X X Extracts X X X X
....nt for manufacturing the goods, (i) separate work force, (j) separate electricity connection, (k) no unconscionable financial flow back between them, (l) no profit sharing and (m) no control of DSA by appellant. 5. Only a few stray instances of interest free loans does not establish that there was a mutuality of interest and these loans were invariably been paid up. Therefore, they were not reflected in the audit balance sheet. Merely, some of the Directors of two companies are common or related to each other, it is no ground of clubbing to support these contentions relied on the decision of CCE Vs. Sharad Industries reported in 2013 (294) ELT 561 (T), Ennar Cements Pvt. Ltd Vs. CCE reported in 2013 (292) ELT 245 (T), Bullows India Pvt. Ltd. Vs. CCE, reported in 2012 (284) ELT 584 (T), Summerking Electricals Pvt. Ltd. Vs. CCE reported in 2004 (176) ELT 302 (Trib-Delhi), D.M. Gears Pvt. Ltd. Vs. CCE reported in 2002 (141) ELT 514 (T), Superior Products Vs. CCE reported in 2002 (144) ELT 187 (T), Sri Nataraja Industries Vs. CCE reported in 2005 (187) ELT 45 (Trib.Chennai), Unity Industries Vs. CCE 2006 (193) ELT 314, Shree Krishna Minerals Vs. CE reported in 2005 (190) ELT 2....
X X X X Extracts X X X X
X X X X Extracts X X X X
....stries Ltd. Vs. CCE reported in 2001 (134) ELT 691 (T), Punjab Fibres Ltd. Vs. CCE reported in 2002 (141) ELT 819 (Trib), Sri Jayajothi & Co. Ltd. Vs. CCE reported in 2002 (141) ELT 676 (Trib.), M/s. Meenambal Fire Works Vs. CCE reported in 2002 (49) RLT 832 (T) and Super Pipes Pvt. Ltd. Vs. CCE reported in 2002 RLT 23 (T). 8. He further submits that there is no corroborative evidence to allege that the appellant has manufactured clandestinely and remove the goods to support his contention. He relied on the following decisions: Arya Fibres Pvt. Ltd. Vs. CC Ahmedabad-II reported in 2014 (311) ELT 529 (Tri-Ahmd.) 2. CCE Vs. Renny Steel Castings (P) Ltd. reported in 2013 (288) ELT 45 (P&H) 3. Kuber Tobacco Products Ltd. Vs. CCE reported in 2013 (290) ELT 545 (Trib.), 4. Suntrek Aluminium P. Ltd. Vs. CCE reported in 2013 (288) ELT 500 (Guj.) 5. Shree Nathiji Industries Vs. CCE reported in 2011 (267) ELT 241 (Tribunal) 6. Resha Wires Pvt. Ltd. Vs. CCE reported in 2006 (202) ELT 332 (Tribunal) 7. Vishwa Traders Pvt. Ltd. Vs. CCE reported in 2012 (278) ELT 362 (Tribunal) which was upheld by the Hon ble High Court reported in 2013 (287) ELT 243 (H.C.) an....
X X X X Extracts X X X X
X X X X Extracts X X X X
....LT 650 (T) to say that onus to prove the reliability of account books disowned by manufacturer lies on the department and department has failed to discharge their onus as the submission of Shri Suresh Anand was not tested by way of cross-examination. Therefore, the statement cannot be relied upon as there is a doubt of truth and veracity of the statement. Some documents were received from the premises of Shri Harbans Lal but no enquiry has been made from Shri Harbans Lal and the cross-examination of suppliers, dealers, employees of the appellant, establish that appellant has not manufactured and removed goods clandestinely. None of the transporters was produced for cross-examination. Therefore, the statement of transporters cannot be relied upon. He further submits that on the basis of search carried out by the Central Excise Department on 28/10/1999, the proceedings were initiated by the Income-tax Department wherein the CIT (appeals) arrived at the conclusion that the cash found in the premises of the appellant was fully accounted for and also held that there were no unaccounted sales by the appellant. Against the said order, the CIT filed an appeal before the ITAT and the Hon bl....
X X X X Extracts X X X X
X X X X Extracts X X X X
.....57 per cent and remaining 11.44 per cent was with Shri D.V. Khanna. Therefore, as both the units were controlled and maintained by Shri D.V. Khanna, the clearance of both the units is required to be clubbed, accordingly, appellants are not entitled for SSI exemption. He also submits that the statement of Shri Suresh Anand, Shri Rahul Khanna corroborates the fact that the salary of marketing staff was drawn either from DSA or from NOVA and they were looking after marketing of both the companies. Shri Rohit Sehgal was looking after the marketing of Jammu & Kashmir, Pathankot, Jalhandar and Phagwara of both the units who was shown as employee of NOVA. He submits that not only the ownership of both the units were same but there was a common staff, same common advertisement, maintenance of common records of clandestine operations at the residence of their employees. Therefore, both the units under cover of two limited companies were colourable device adopted to defraud to the Revenue to obtain SSI exemptions. 12. On the charge of clandestine removal, he submits that the parallel invoices handwritten/ typed slips were recovered from the residential premises of Shri Suresh Anand, Shri....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... D.V. Khanna. He further submits that parallel invoices for discharge of sanitary goods by these units to different buyers is undeniable in as much as the evidence of receipts of goods and pieces of dispatched goods by the concerned buyers have been duly confirmed in their statement and also by documentary evidence such as payment particulars and reflection thereof in the recipients account. The pre-authentication of parallel invoices by Shri D.V. Khanna and Shri Rahul Khanna and Shril Sunil Sharma admitted and so also the availability of loose as well as bound book invoices. The fictitious banks accounts were used for receipt and withdrawal of sales proceeds of clandestinely removed goods. Therefore, the charge of clandestine removal has been proved against the appellants. Moreover, the Adjudicating Authority has passed the impugned order after following the principle of natural justice. Therefore, the appeals are to be dismissed. 13. Heard both the sides and considered submissions in detail. 14. We find that in this case demands have been confirmed against the appellants on two accounts: (a) by clubbing the sales of M/s. DSA in the account of M/s. NOVA and (b) Goods h....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he clearance of other unit. 17. We find that this issues has come before the Tribunal in various cases whereas in the case of Bullows India Pvt. Ltd. Vs. CCE, reported in 2012 (284) ELT 584 (T) (supra) wherein this Tribunal has observed as under: We find that in the present case the issue is whether the appellants are entitled for the benefit of Notification 175/86-C.E. and subsequently Notification 1/93-C.E., therefore, the ratio of the above decision of the Hon ble Gujarat High Court is fully applicable on the facts of the present case. The Hon ble High Court held that the Revenue has to establish that there was mutuality of interest or financial flowback of the funds and in such cases the clearances of the holding and subsidiary private limited companies can be clubbed. In the present case we find that even in the show cause notice there were no such allegations. In the show cause notice the only allegation is that the holding company has share capital in the subsidiary company. There is no evidence regarding financial flowback on record. In these circumstances and respectfully following the decision of the Hon ble Gujarat High Court, the impugned order is set aside and th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....in the absence of any financial flow back. 19. We further, analysis the decision of Ennar Cements Pvt. Ltd Vs. CCE reported in 2013 (292) ELT 245 (T) (Supra) wherein this Tribunal has observed as under: We have gone through the records of the case carefully. The appellants are two Private Limited Companies. They have separate existence. The investigation reveals that the clearances of one unit were done with the other and vice versa in order to remain with the exempted limit and thereby evading payment of Central Excise duty. If that is the case, the investigation ought to have decided the real clearances of each unit and demanded the duty accordingly in respect of each unit. However, in the present case, the duty has been demanded collectively from both the units. If the Department feels that out of the two units, one unit is dummy, then the dummy unit should have been identified. In that case, the value of the clearance of dummy unit could have been clubbed with the clearance of the real unit and duty demanded. This has not been done. The learned Commissioner in the impugned order has given the following findings:- "70 (ii) Whether each unit is entitled to a separate ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....emption-Clubbing of clearances Two units situated at same premises, manufacturing similar product, having some common management, office and labour and common electric connection One unit owned by father-in-law and the other by daughter-in-law and work of both units looked after by her husband- In absence of evidence of common finding and financial flow back, two units not treatable as one and their clearances not clubbable Notification No. 175/86-C.E. dated 1-3-1986. 22. In the case of Vivomed Labs. (P) Ltd. Vs. Collector of C. Ex. reported in 1991 (53) ELT 152 (Tribunal) Exemption to SSI Units Clubbing of clearances Units registered separately under Income-tax Act, Sales Tax having separate Central Excise Licenses and also financed through separate application for loan from financial institutions Shareholders in all the firms not the same group of persons-Tie up with Medly Pharmaceuticals for marketing purposes explained inasmuch as the services rendered being paid for in terms of agreement between them Clubbing of clearances of units not justified in absence of conclusive evidence of financ....