AI Drafter 
TaxTMI 
TaxTMI 
2017 (3) TMI 413
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....availing the benefit of SSI exemption wrongly and the proceedings were initiated against the respondents. The adjudicating authority held that the respondent No.1 and M/s.A.S. Processors are being controlled by Shri Arvinder Pal Singh, Dierctor and his wife Smt.Sarbajit Kaur and also later on there was some financial flow back, therefore, it was alleged that the respondents are related persons and therefore their turnover was clubbed together. Consequently the benefit of SSI exemption was denied to them. The said order was challenged by the respondents before the Commissioner (Appeals) who held that two units are different units and also gave the benefit of extended period of limitation and set aside the adjudication order quo denying the benefit of SSI exemption. Aggrieved with the said order, the Revenue is before us. 3. Learned AR appeared on behalf of the Revenue submitted that the Commissioner (Appeals) has failed to appreciate that since the both units of the respondents and M/s.A.S.Processors were owned by same persons and they had mutuality of interest direct and indirect, therefore, clearances of the respondents are required to be clubbed together. 4. It is the conte....
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....w material suppliers) of M/s.S.K.Sacks Pvt.Ltd. because M/s.A.S.Processors made direct payment to raw material suppliers of M/s.S.K.Sacks Pvt.Ltd. M/s.A.S.Processors owes money to M/s.S.K.Sacks Pvt.Ltd. on account of purchase of sacks. M/s.A.S.Processors Ltd. was creditor of M/s.S.K.Sacks Pvt.Ltd. and instead of making payment to M/s.S.K.Sacks, they made payments to creditor of M/s.S.K.Sacks (raw material suppliers. It was commercial transactions and every transaction was recorded in books of accounts. Apart from these both companies were separately registered under Central Excise department, Sales Tax, ESIC, Factory Act, Income Tax Act and separate bank limits. Therefore, clearances cannot be clubbed. To support his contention, he learned Counsel for the respondents relied on the following decisions: (1) Superior Products-2002 (144) ELT 187 (Tri.-Del.) which has been affirmed by the apex court reported in 2008 (230) ELT 3 (SC) (2) Plasto Containers India Ltd. vs. CCE, Nagpur-2011 (268) ELT 509 (Tri.-Mum) (3) Ennar Cements Pvt.Ltd. vs. CCe, Bangalore-2013 (292) ELT 245 (Tri.-Bang.) (4) Padmini Products vs. CCE-1989 (43) ELT 195 (SC) (5) ....
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....en undertaken where M/s.A.S.Processors directly made payment on behalf of M/s.S.k.Sacks Pvt.Ltd. to their suppliers. 13. As both the units are private limited company and registration with the Central Excise and under the Companies Act, therefore, relying on the CBEC circular No.6/92 dated 29.5.1992 wherein the Board has clarified as under: (i) The question whether different partnerships having common partners are treatable as separate manufacturers or the same manufacturer, would be a question of fact in each case to be determined on the basis of such factors among other, like composition of the partnership, existence of the factory, licence, nature of goods manufactured, etc. (ii) Different firms will be treated as different manufacturers for the purpose of exemption limit. But if a firm consisting of certain partners say, A, B & C, has got more than one factory, all these factories should of course be combined. Limited companies whether public or private are separate entities distinct from the shareholders composing it. Hence each limited company is a manufacturer by itself and will be entitled to a separate exemption limit. (iii) If there are two f....
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.... spouse so as to evade revenue liability and therefore clearance of both have sought to have been clubbed for the purpose of charging of Central Excise liability. For arriving at this view, the revenue has, based its findings on the under mentioned factors:- (i) That both the units have promoted and got incorporated by Sh. Arvinder Pal Singh and his wife Smt. Sarabjit kaur. (ii) That the appellants No. 1 manufacturing the plastic sacks and plastic fabrics. For sacks, they did not have the facility to manufacture of plastic sacks or plastic fabrics till 31.03.2002. To manufacture these items they had to send their basic raw material to the other company i.e. M/s A.S. Processors, Amritsar. Thus, both the units are completely dependent on each other. (iii) That the appellant No. 1 has two bank accounts and these to bank accounts can be operated by any of the Directors. Similarly, M/s A.S. Processors, Amritsar has two bank accounts and both these accounts can be operated by either of the two directors. Since, both the directors of these two units are the same so any one can operate the account of company. (iv) That there are several instances in the ....
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....us, in the absence of any flow back there is no reason to hold that both the units belongs to the same manufacturer. (iv) That mere operation of accounts by any directors cannot be any reason to allege that there is financial flow back of funds. (v) That mere operation of accounts by any directors cannot be any reason to allege that there is financial flow back of funds. (vi) That the adjudicating authority has not taken into account the appellants plea that the factory of the M/s. A.S. Processors, Amritsar was a separate factory duly registered under Factory Act and eligible for exemption as a separate factory. (vii) That even if argument sake the M/s A.S. processors, Amritsar is considered to be an unit of appellants No. 1 (which in fact was not) even then no duty was demandable as goods manufactured in that unit upto on 28.02.2001 remained exempted under Notifications providing exemption based on value of clearances in the financial year. Lay flat tubing was exempt unconditionally under Notification No. 5/98, 5/99, 6/2000 & 3/2001 and similarly plastic bags of heading 39.23 were exempt as credit was not taken on inputs in the factory of M/s. A....
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.... It is seen that paragraphs (i) to (III) contained therein are quoted verbatim in circular dated 29.5.92 as if those provisions stood contained in Notification dated 1-3-56. Both sides submit before us that what is referred in circular dated 29-5-92 and as contained in Notification dated 1-3-56 are the same as is found in the circular dated 10.8.56. We proceed to consider the matter on the above basis. Paragraph (i) of the Circular dated 10-8-56 reads as follows:- "(I) Different firms will be treated as different manufactures for the purpose of the exemption limit. But if a firm consisting of certain partners say, a, b & C has got more than one factory, all these factories should of course be combined. Limited companies whether public or private are separate entities distinct from shareholders composing it. Hence each limited company is a manufacturer by itself and will be entitled to a separate exemption limit." The above portion would show that the limited companies whether public or private are to be treated as separate entities distinct from shareholders and that each such limited company which is a manufacturer will be entitled to separate exemption limit. By....
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.... the show cause notice in respect of making of payments by M/s. A.s. Processor,s Amritsar to the suppliers of raw materials of the appellants No. 1, it is observed that what the department has brought on record is the fact of payment by M/s. A.S. Processors to the suppliers of raw material of appellants No. 1 which are dully reflected in the books of accounts of both the units. These transactions between the two units are just commercial transactions and cannot be termed as other than normal commercial transactions. There is no evidence on record regarding any sharing of profit of one unit by the other. Nor there is any case of special financial relationship. In other words, to uphold the charge of financial flow back, the evidence w.r.t. manipulation of accounts or sharing of one profit by the other etc. should have been on record. In the instant case, both the units were manufacturing different items for which the jurisdictional excise authorities were duly informed. Both the units were granted the registration by the department. Not only that the appellants No. 1 had been obtaining the permission under rule 57F of the Rules for sending granules to M/s. A.S. processors, Amritsar ....