2016 (11) TMI 12

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.... discharging central excise duty properly on goods manufactured and cleared by them, the Department conducted certain investigation in November 2005 and thereafter the investigation concluded in the issue of show cause notice dated 15.11.2006 to demand central excise duty from the main respondent amounting to Rs. 10,27,738/- and to impose penalties on the main respondent as well as M/s Manjeet Engineers. The original authority held that the main respondent have paid central excise duty properly on the excisable goods manufactured and cleared by them during year 2002-03 to 2003-04. The main allegation in the proceedings was that the clearance from the factories of M/s Shiv Mechanical Works and M/s Manjeet Engineers should be treated together....

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....etracted. As such, it is plea of the Department that the statements being voluntary admitted the working of these units and also clandestine removals. The original authority is correct in upholding the demand and imposing penalties. It was contended that first appellate authority has erroneously set aside the original order. 3. We have perused the appeal records and grounds of appeal carefully. Admittedly, the whole case of the Department depends on the statement of Shri Gian Singh who indicated that clearance from M/s Shiv Mechanical Works was to the tune of Rs. 1.2 crores and Rs. 1.28 crores (approx.) during the period in question. These amounts were added to the real turnover as shown in the records and duty has been demanded. No effort....

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....he units. He has recorded the following findings I find that similar observations have been made by various Hon ble Tribunals by following the judgments of the Hon ble Apex Court and it has been held that units cannot be clubbed together and the two units cannot be treated as one unit merely because various factors such as related partners, common use of machines, labour , employees etc. unless there is a clear and specific evidence that there is mutuality of business interest between the two units and that both have interest in the business of each other or they have common funding and financial flow back. In the present case also, I find that no such evidence indicating mutuality of interest in each other s business and financial flow ba....

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....g and financial arrangements from various independent sources, independent loans from various banks, separate machinery, labourers, employees, purchase of raw material and sale of goods, separate licences from various statutory authorities and have been filing separate returns with the said authorities. I find that these facts are contrary to the allegations of department that M/s Shiv Mechanical Works and M/s Manjeet Engineers were one and the same unit and were jointly manufacturing extruders by way of undertaking some processes at one unit and rest at the other unit. I find that mere absence of some machinery meant for a particular operation does not lead to the inference that one unit is a dummy of other another unit form whom said oper....