AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2017 (5) TMI 1081
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.... 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 Waste Winding machine (Kalimata) water pump Waste winding Machine (new) owned by M/s VA -- P.789....
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.... 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 installed in the said unit were not functioning since one and half year. He further informed that since clearances of final products of M/s MRPI did not exceed Rs. 10 lakhs th....
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.... 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 cutting machine is used to cut paper core used for winding of PVC film and HDPE film manufactured by said units; 5. weighment and packing of final products are carried out in one factory at Plot No.....
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....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 entities came into existence prior to the Central Excise Notification No.175/86-Central Excise dated 1.3.86 and therefore, it cannot be stated that separate firms were formed to avail benefit of Notification No.175/86-Central E....
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....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 all the four units; 6. They have common facility where waste arising out of manufacturing activity are grinded in one waste grinding machine owned by VA and the same is installed in backside room of factories of Plot No.788 (MP) and Plot No.789 (MRPI....
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....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 case of Prabhat Dyes & Chemicals 1992 (62) E.L.T. 469 (Tribunal) wherein it has been argued that on identical circumstances, the Tribunal held as under: 6. We have examined the records of the case and considered the submissions made on behalf of both sides. The only question ....
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....ng 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 (169) ELT 215 (Tri-Del.) In the case of Muthusavaari Pillai Paper Products (Supra), A.C. Pharmaceuticals Pvt. Limited (Supra), Superior Products (supra), KAA Arunachalam and Shakti Engg. works (Supra) there was separate machinery, labor and electricity connection. In the instant case there despite existence o....
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....lity 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 condition for this exemption notification is that where a manufacturer clears specified goods from one or more factories, the Exemption in his case shall apply for the total value of clearances mentioned against each of the serial numbers in the said table and not separately for each factory. Another condition of the Notifica....
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....ise 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 clearances in their name. 7.1 However in most of the cases, the fact of common ownership of different units by a person is not so obvious and may be carefully camouflaged. For example - if there is a manufacturing unit of a proprietorship concern of a person 'X', there is a second manufacturing unit owned by a partnership concern '....
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....CE, 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 management control. In the present case facts clearly show financial control. Undisputedly, the share capital of each of the three companies was Rs. 200/-. Though it was claimed that financial assistance was availed from the financial companies, it is on record that the unsecured loans advanced by MACL to the three companies were substan....
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....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 Printers (MP) (established on 1.6.1979) i) Labhubhai Bhimjibhai Patel (Self); ii) Maniben Raghavjibhhai Patel (Brother's wife); and iii) Bhimjibhai Laxmanbhai Patel (HUF) B. M/s Stylopack established in or around 1st June 1979 consisting of the following three partners: i) Labhubhai Bhimjibhai Patel (Self); ii) Madhubhai Bhimjibhai Patel (B....
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....f 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 permission for free movement of raw materials and finished goods was sought from Revenue, the Revenue would have given about use of common facility and free flow of material from one unit to another. Failure to disclose these facts and the illegal movement of raw materials and finished goods from one unit to another amounts to suppression and misdeclaration of facts. What was in the knowledge of the revenue was that there are some common partners a....