TaxTMI 
TaxTMI 
2017 (5) TMI 1081
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....f the Factory M/s Plot No. Description of final product 1. Mayur Printers P-788 PVC Film 2. Vikas Agencies P-790-791 -do- 3. Mayank Rotoplast Inds P-789 & 792 -do- 4. Stylopack P-791-792 1st Floor HDPE Film While units at Serial No.1, 2 & 4 were registered with Central Excise Department and paying duty after availing SSI exemption under Notification No.1/93-Central Excise dated 28.2.93, the unit at Serial No.3 was neither registered with Central Excise Department nor any declaration for manufacturing activity had been filed with Central Excise Department for the year 1992-93 and 1993-94. During search Panchnamas were made and it was found that stock of raw materials and finished goods of these units were lying in the premises of other units. It was also found that the following machines were available in various plots : Plot No.& Name of Unit Machinery found working Machinery found not working Other details P - 788 M/s MP 65 mm Extruder Machine Duplex 45 mm Extruder machine in dismantled condition 40 kgs. High Speed Mixture PVC file packed in corrugated boxes were lying Backside of Plot No.788/789 ....
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....lled at Plot No.790 of M/s Vikas Agency. He also confirmed that packing weigment etc. of finished goods was also being done in the premises of Vikas Agency at plot no 790. He also confirmed that though they have separate high speed mixture machines installed in the premises of M/s Mayur Printers but only machines installed in the premises of MRPI was being used by all of these firms located at Plot No.789. Similarly, he confirmed that they have one cutter machine used for winding PVC and HDPE film and the same machines were installed at Plot No.788 & 789 and the said machines cater of all these firms. He also confirmed that water is needed for cooling down PVC film during manufacturing process and the same is supplied to all these units from chilling plant located at Plot No.792 and pumped through common water pump installed at Plot No.788. He also informed that it is practically impossible to install separate chilling plant for small units as it requires huge investment, therefore, they have got only one chilling plant and one water pump for all units. He further informed that the clearances shown in respect of MRPI were from old stock of manufactured goods as the machineries inst....
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....uated. He produced copies of relevant transfer order of said plots issued by GIDC, Surat in support of his above statements. He also deposed that the amount shown as credit was the amount of loan taken from the said unit without any interest and debit amount was the amount of loan given to the said unit as outstanding in the respective accounting years i.e. M/s MP have taken loan without interest amounting to Rs. 2,52,403.71 (outstanding as on 31/03/1990) from M/s SP and VA amounting to Rs. 6,16,132.42 (as on 31-3-91), but given loan without interest amounting to Rs. 46,500/- (as on 31/03/90) to MRPI and likewise in respect of other units except amount of rent shown against each. He also informed that even partner of one unit has given interest free loan to other unit also. From the above it was alleged in the notice that all the four units are enjoying common facilities which are as under:- 1. One common administrative office and common staff; 2. One common electric generating diesel engine for electricity supply incase of power failure; 3. One common water supply and water chilling plant to make hot water coming from manufacturing activity to cool; 4. One paper core c....
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....he appellants and other two units are dummy does not hold good as he has imposed penalties on these so-called dummy units. He argued that M/s Stylopack is manufacturing HDPE bags and other noticees namely Mayank Rotoplast Industries, Mayur Printers and Vikas Agencies are manufacturing PVC films. He argued that the four noticees have the following facilities namely i) Separate premises ii) Separate machinery to carry out manufacturing activity iii) Labour iv) Separate electricity connection. He argued that each one had separate and independent facility to manufacture goods. In the circumstances, he argued that the same cannot be treated as dummy unit. 5.1 He argued further that the case of Stylopack cannot be clubbed with other units as Stylopack is engaged in the manufacture of HDPE bags, a product different from the product manufactured by other units which is based on PVC. He further argued that the four entities have existence as legal entities. He pointed out M/s Mayank Rotoplast Industries (MRPI) was established on 27.12.76, M/s Vikas Agencies (VA) on 1.6.79, M/s Mayur Printers (MP) on 17.3.80 and M/s Stylopack (SP) on 9.4.87. He argued that all the legal ent....
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....us occasions. He further pointed out that the entire activity was known to the Revenue and therefore, the extended period of limitation cannot be invoked. He argued that allegation of suppression of financial flow-back cannot be relied to invoke the extended period as there was no obligation on the part of the appellants to disclose the financial activity to Revenue. For this assertion, he relied upon 6. Ld. A.R. for Revenue took us through the facts and arguments made in the impugned order. 7. We have gone through the rival submissions. We find that the following facts are not disputed 1. They have common administrative office and common staff; 2. They have common electric generating diesel engine for electricity supply in case of power failure; 3. They have common water supply and water chilling plant to make hot water coming from manufacturing activity to cool; 4. They have common paper core cutting machine is used to cut paper core used for winding of PVC film and HDPE film manufactured by said units; 5. They have common weighment and packing of final products are carried out in one factory at Plot No.790 under supervision of supervisor of one factory for a....
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....nt & packing of final product PVC film as well as HDPE film & its clearance were carried out at plot No.790 of M/s VA. Thus, a final product PVC film & HDPE film shown manufactured and cleared by all three units had not been manufactured by said three units independently but jointly for all three units. This is clear from the Panchnama dated 6.1.94 drawn at the factory premises of all above units. These facts have not been disputed by the noticees but instead they have confirmed the same in their defence reply. It therefore, goes to show that there is common operational integrity and mutuality among all the units and all the partners." The Commissioner also alleged that the various noticees are providing financial assets during material period by giving loan without charging any interest. He also observed that on the basis of this observation, he has come to the conclusion that all these four units are one and the same and therefore has held that clearances of all these units are to be clubbed for the purpose of determination or total value of clearances for exemption under Notification No.175/86-C.E. dated 1.3.86, as the case may be. 7.3 The appellants have relied upon the c....
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....ssible in law. Similarly in case of finished goods and intermediates manufactured by them such movement was not permissible without payment of duty and without proper documentation. If any finished or intermediate goods manufactured out of duty paid goods are to be removed outside manufacturing premises the duty is required to be paid. In case the credit is taken, the same is required to be reversed. No such activity was being done and the manufactured goods being moved from premises to another is illegal unless the factory is one registrant. Simply, it is seen in the said case that there was no allegation of free usage of machine of other units. 7.4 Learned counsel has also cited the following case law: i) Muthusavaari Pillai Paper Products vs. C.C.E. - 2004 (171) ELT 219 (Tri-Chennai) ii) A.C. Pharmaceuticals Pvt. Limited vs. C.C.E. 2003 (159) ELT 1149 (Tri-Kol) iii) Superior Products vs. C.C.E. - 2002 (144) ELT 187 (Tri-Del.) iv) Poly Printers v. C.C.E. - 2002 (139) ELT (Tri-Del.) v) KAA Arunachalam Printing Div. v. C.C.E.- 2001 (133) ELT 423 (Tri-Chennai) vi) Shakti Engg.works vs. C.C.E.- 1989 (40) ELT 95 (CEGAT) vii) Special Machines v. C.C.E. - 2004 (1....
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....t of the case and applicability of the Circulars referred herein above was not brought to the notice of the Tribunal we are in agreement with the suggestion made by the learned Attorney General that it will be just and proper to remand this matter, for this limited purpose, to the Tribunal for examining the applicability of the Circular relied upon by the Appellants, M/s. Supreme Washers (P) Ltd. 7. For the reasons stated above, we confirm the? finding as to the inter-relationship between the three units, as found by the Tribunal, and remand the appeals back to the Tribunal for the limited purpose of deciding the applicability of the Circular referred herein above. It is seen that in this case, interdependence in manufacturing operations, having common stock of raw materials and semi-finished goods, having common use of machinery between the three units, having common marketing arrangements and free flow of finance between three units was considered sufficient for clubbing the total production. 7.7 Similarly, in the case of British Scaffolding 2014 (313) E.L.T. 87 (Tri. - Del.), the Tribunal held as under: 7. SSI Exemption is subject to conditions specified in it. One c....
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....es not arise, as in the scheme of collection of Central Excise duty, as laid down in the Central Excise Act, 1944 and the rules made thereunder, the collection of duty is manufacturing unit wise and if a manufacturer has two or more factories located at separate locations, each unit is required to obtain separate Central Excise registration and is assessed to duty separately by the jurisdictional central excise officers. If there is short payment of duty by different units of a manufacturer on account of wrong availment of SSI Exemption, separate duty demands would have to be confirmed by the respective central excise officers having jurisdiction over the unit. If, however, the C.B.E. & C. appoints a common adjudicating authority, that common adjudicating authority can pass an adjudication order demanding duty from the units located in different Commissionerates. The question of identifying the main unit and the dummy unit and demanding duty only from the main unit arises only in that situation when on investigation, only one unit is found to be actually functioning and other units are found to be just non-functional fake units established just to show bogus production and clearanc....
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....ty is a well settled legal principle. It is this principle which has to be applied for determining as to whether two or more manufacturing units owned by separate partnership firms, private limited companies and/or public limited companies are to be treated as the units of the same manufacture. On this point, the Apex Court in case of CCE, Delhi v. Modi Alkalies & Chemicals Ltd., reported in 2004 (171) E.L.T. 155 (S.C.), has held that when on lifting the corporate veil it is found that only one person/company has extraordinary interest and pervasive control over the financial matters and management of other companies, irrespective of the latter having separate sales tax, income tax and central excise registration, their clearances have to be clubbed for determining their eligibility for the SSI Exemption Notification No.1/93-C.E. In this regard, Para 87 of the judgment is reproduced below :- "Whether there is inter-dependence and whether another unit is, in fact, a dummy has to be adjudicated on the facts of each case. There cannot be any generalization or rule of universal application. Two basic features which prima facie show interdependence are pervasive financial control and....
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....es into focus is only the shadow and not any substance about the existence of the three companies independently. The Circular No. 6/92, dated 29-5-1992 has no relevance because it related to Notification No.175/86-C.E., dated 1-3-1986 and did not relate to Notification No. 1/93. The extended period of limitation was clearly applicable on the facts of the case, as suppression of material features and factors has been clearly established. If in reality the three companies are front companies then the price per unit to be assessed in the hands of MACL is Rs. 5 and not Rs. 0.50 as disclosed. The question whether there was manufacture or not was not in issue before the Commissioner. The plea that there was no manufacture has also to be rejected in view of the fact that exemption was claimed by the three companies as manufacturers to avail the benefit of Central Excise Notification No.1/93. Same view has been expressed by the Apex Court in its judgment in case of Supreme Washers Pvt. Ltd. (Supra). This decision was upheld by the Hon Apex Court as reported in 2015 (323) ELT a 124 (SC) 7.8 In the instant case, the legal entities involved are as follows: A. M/s Mayur Print....
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....ion. It is seen that the ld. Counsel has argued that their unit was registered with the Central Excise Department and the officers had visited their unit for the purpose audit of stock taking at various times. It is also argued that the appellants filed C/List at various time and the same were approved by the Department. Moreover, it was also argued that Revenue was aware about the constitution of the partnership firm and interrelationship of all the partners and the details were submitted at the material time. It is seen that Revenue was aware of these facts. However, the material facts in the instant case are that there was free flow of raw material/ intermediates / finished goods without documentation and without duty discharge from one premises to another. The machines of different units were being used without any compensation paid. The raw material and finished goods were being processed together and there was free movement of goods among the units. Under the Central Excise law if any raw material on which credit has been taken or finished goods are to be moved out of the factory premises, the same cannot be done without the authority of law and without permission. If permiss....