TaxTMI 
TaxTMI 
2005 (11) TMI 14
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.... Studioline for undervaluation. The adjudicating authority in the impugned order held that all the three units have mutuality of interest in the business of each other. He held that M/s. Tessaract was not an independent manufacturer of furniture and did not trade in the manufactured items of manufacturers except from M/s. Studioline and M/s. Dovetail. The details of the impugned Order are as follows:- Sl. No Name of the party Amount of duty Amount of penalty Period 1. M/s. Studioline Interior Rs. 64,66,383/- Rs. 64,66,383/- - 2. S. Sunder, Director M/s. SISPL - Rs. 5,00,000/- - 3. M/s. Dovetail Furniture Rs. 32,88,629/- Rs. 23,76,767/- Rs. 56,65,396/- 1999-2000 to 2003-2004 4. M/s Tesseract Design Rs. 13,65,294/- Rs. 13,65,294/- 10/2001 to 3/2002 Duties have been demanded invoking proviso to sub-section (1) of Section 11A of the CE Act, 1944. Mandatory pe....
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.... exemptions. Even though the show cause notice relied on 26 documents, the Commissioner in his order relied only on 4 documents. (4) The learned Commissioner has neither brought on record any evidence to prove that the units were dummy nor have given a finding that they are dummy units. (5) Since the Commissioner has not given a finding that the units are dummy, the clearances cannot be clubbed for denying SSI benefit. (6) According to Board Circular No. 6/92, dated 29-5-92, clearances of Limited Companies and partnership firms cannot be clubbed. (7) The Commissioner having issued notices and confirmed the demands separately on each of the entities erred in law and on facts in holding that the values of these clearances are to be clubbed. (8) The Commissioner erroneously erred that the three units are related persons as per Section 4(4)(c) of the Act as it existed prior to amendment in July, 2000 and under Section 4(3)(b) of the Act as amended from July, 2000. The finding that there is mutuality of interest in the business of each other is not borne out by facts. (9) Invocation of Rule 9 of the Central Excise (Valuation) Rules 2000/Rule 6(c) of Central Excis....
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.... has its own premises and is registered with Central Excise and Sales Tax Authorities. The adjudicating authority himself mentions in his order that the three units are distinct legal entities. There is no finding that the units are dummies controlled by one person or group. In the absence of such a finding it is very difficult to sustain the clubbing of the clearances of the three units to deny them the benefit of SSI exemption. Mere presence of common Directors/partners can not be reason for clubbing the clearances in terms of the following decisions: (1) Polyprinters v. CCE - 2002 (139) E.L.T. 295 (2) Rang Ltd Udyog v. CCE - 1996 (83) E.L.T. 648 (3) Jagjivandas & Co. v. CCE - 1985 (19) E.L.T. 441 (LB) In terms of Board Circular 6/92, dated 25-5-92, the clearances of Limited Companies and partnership cannot be clubbed. 7. As regards the issue of related persons, it has to be proved that the parties have interest directly or indirectly in the business of each other in terms of the decision of the Hon'ble Supreme Court in the Attic Industries case reported in 1985 (17) E.L.T. 323, wherein it has been held that "Mutuality of interest means that both the Companies mutu....
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....dioline, it was submitted that the use of collateral by group entities is a common business feature. Further, it was submitted that full interest due on fixed deposit had been paid to M/s. Tesseract Design. The interest payable to bank on the loan has been paid by M/s. Studioline. The CESTAT in the case of M/s. Cardcure Engg. Co. v. CCE, 1996 (86) E.L.T. 351, has held that occasional financial accommodation cannot lead to a conclusion that the entities involved acted as a single financial entity. Referring to the transaction of Rs. 2,13,000/-, it was submitted that M/s. Indian Rayons by mistake sent the cheque in the name of M/s. Tesseract Design instead of M/s. Studioline. Since the cheque was in the name of M/s. Tesseract, it was deposited in the bank account of M/s. Tesseract. The amount was transferred on the same day to M/s. Studioline. A mistake committed by the customer cannot be relied on to state that the entities are operating as single financial entities. It was further submitted that M/s. Studioline have not only sold to M/s. Tessearct Design but also to customers like TVS Ltd., ECITI Entertainment, NCBS, Chrusti School, Vinod etc., M/s. Studioline's sales to M/s. Tesse....