TaxTMI 
TaxTMI 
2016 (7) TMI 892
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..... The respondent, M/S Vizag Poly Packaging Industries (VPPI) are manufacturers of HDPE/PP woven bags/sacks and is availing concessional rate of duty under SSI exemption. It is an unregistered partnership firm established in 1995, and consists of two partners viz: Shri Pradip Kumar Nahata and his younger brother Dilip Kumar Nahata. M/s Sri Andhra Poly Packs (APP) are also manufacturers of HDPE/PP woven bags/sacks and are availing SSI exemption. It is a sole proprietorship concern started in 2000 with Ms Ritu Nahata wife of Shri Pradip Kumar Nahata, as it's sole proprietor. 3. On intelligence gathered about evasion of duty, officers of department visited the factory of respondent on 26.08.2004. During verification of records they found s....
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....en strongly contended that there was sufficient evidence that M/s Andhra Poly Pack was dummy unit of respondent. She argued that on verification of records it was revealed that the two units have mutuality of interest in business and are inter-related to each other. Both the units were managed by Shri Pradip Kumar Nahata of respondent unit and are using common facilities like office, staff, telephone, computer, weighing scale, stationary etc., without any quid pro quo. Further, these two units were engaged in clandestine clearances, by clearing goods without raising invoices. The computer system of respondent unit contained the accounts of M/s Andhra Poly Pack protected by pass-words. That it is clear that sales were diverted to M/s Andhra ....
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....ssue is of clubbing of a partnership firm and a proprietary firm in which the partners and the proprietor are blood relations. I find that the Courts and the Tribunal have set aside the orders on clubbing mainly on the ground that the department has failed to prove that a unit whose clearances are proposed to be clubbed, is a dummy unit which includes factors like controlling the activity of the unit (dummy) in terms of profit sharing, management control, decision making, and acts of such nature. Common use of machinery is taken as a relevant factor if it was proved that one unit did not have sufficient machinery to manufacture the goods on its own and it was using the machineries of the other unit and accounting for the production in its a....