TaxTMI 
TaxTMI 
TaxTMI 
2017 (7) TMI 336
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.... by them or obtained from other manufacturers. In October 1996, the Revenue conducted investigations with Kores and various small scale units who were supplying the stationery items, manufactured by them to Kores. After completion of investigation, the Revenue entertained a view that Kores had floated many units in order to improperly avail small scale exemption. Proceedings were initiated against Kores by show cause notice dated 25/03/1997 proposing the clubbing of all clearances from 4 different SSI units and to demand Central Excise duty. The proceedings concluded by an order dated 30/03/1998. On appeal, the said order was upheld by the Tribunal vide final order dated 27/06/2000. The matter was taken up to Hon'ble Madhya Pradesh High Court by Kores. The Hon'ble High Court vide their order dated 17/11/2005 remanded the case back to the Original Authority for fresh adjudication. 2. On denovo adjudication, the Original Authority confirmed the demand vide his order dated 30/03/2010. Appeals were filed against the said order by Kores and SSI units. The case was decided by the Tribunal vide final order 52954 - 52961 of 2015 - EX dated 10/09/2015. The order of the Commissioner was set....
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....October 1996. Based on the said investigation multiple proceedings were initiated by the Revenue against Kores and others. The main thrust of all the proceedings is to hold that Kores is the only legitimate unit and all other SSIs were only dummies created by Kores in order to avoid Central Excise duty by availing SSI exemption. 8. The impugned order examined the background facts and after considering the proposals in the show cause notice and the submissions of the noticees, concluded that the rural units had in fact were involved in packing and labeling activities and were not dummies of Kores. It was further recorded that there was no financial flow back or over-reaching managerial control by Kores. The transactions were held to be on principal to principal basis. The Original Authority dropped the proceedings against Kores and other SSI units. 9. The Revenue is aggrieved by the above said order of the Commissioner. In the grounds of appeal, the Revenue contended mainly on the following points:- (a) The Commissioner has erred in holding that in the instant case all the SSI units are independent Private Ltd. Companies registered with the Registrar of Companies under Companies ....
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.... further observed that presumption by the Revenue that any relationship or commonality of interest in connection with business dealing will make the two legal entities "as related persons" and such relationship will make the small scale unit as a dummy unit, is not legally sustainable. It was concluded that the turnover of related persons cannot be per se clubbed together for arriving at the threshold limit of SSI exemption. 12. The learned Counsel submitted the Original Authority examined elaborately the various allegations made in the show cause notice with specific emphasis on financial controls and administrative/managerial controls of Kores on these SSI units. He drew our attention specifically to the findings recorded in paras 25.13, 25.20, 25.21 and 25.26 of the impugned order. 13. Considering that the very same set of evidences collected in the investigation of 1996, is contended to the supporting the case of the Revenue, the learned Counsel for the respondent submitted that the final orders of the Tribunal covering the very same set of facts are correctly applicable to the present appeals also. The Original Authority, in fact followed similar reasoning, though the order ....
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....nits. Thus, in absence of such evidence and financial or managerial control, no adverse inference of the SSI units being dummy of Noticee No. 1 can be drawn. There is no evidence on record which can further show that the Directors, by virtue of being past employees of KIL, were working under the control of KIL. I, therefore, observe that this allegation cannot be made a basis to hold the SSI units as being under control of KIL or its dummy. As regards allegation of the show cause notice that some of the directors/ share holders of the noticee No. 2 to 12 units were relatives of serving Directors of KIL, even if it is assumed that directors of SSI units were relatives of existing directors of KIL, even if it is assumed that directors of SSI units were relatives of existing directors of KIL, such relationship can be viewed on personal basis and not on organizational basis unless there is financial or managerial control over SSI units by Noticee No. 1. In the instant case, all SSI units are independent Private Limited companies registered with Registrar of Companies under Companies Act, 1956. Each company is an artificial person and it has independent legal entity irrespective of fact....
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....h it is permissible to lift the corporate veil while dealing with the companies, yet it can be done only if credible and cogent evidence is brought on record by the investigation to prove that companies are sham creation of a particular person/company. The burden of proving the companies as dummy of another company/ person is entirely upon the investigation. In this case, the evidences on record do not go beyond creating suspicion. The evidences are sketchy and nebulous. It is settled law that suspicious howsoever grave cannot take place of proof. The allegations made in the show cause notice do not even by applying the test of preponderance of probability establishes that SSI units were dummies of Noticee No. 1". 17. The Original Authority relying on the assertions made in the show cause notice held that the rural SSI units were engaged in packing of staple pins with Kores brand. This was evidenced even during the searches conducted by the officers, in two of the such units. The Original Authority also found that while the demand was raised against the rural units, no such demand was made from urban units in the proceedings. 18. We note that the status of various urban units as....
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....notification no.1/93-CE are to be examined in order to decide whether or not such clubbing is covered by any of such provisions. Para 3 of the said notifications states that nothing contained in this notification shall apply if the aggregate value of the clearances of all excisable goods for home consumption: a) by a manufacturer from one or more factories, or b) from any factory, by one or more manufacturers had exceeded Rs. 200 Lakhs in the preceding financial year. 8. Now applying the provisions of the said para it is apparent that the original authority ordered for combining the turnover of all SSI units with the main appellant considering them as "a manufacturer". 9. We consider that such conclusion is not supported by any tenable evidence. We find that the Ld. Commissioner confirmed the demand and ordered recovery of duty from the 4 SSI units along with their principal M/s. Kores (India) Ltd. When the demand of recovery was confirmed against these SSI units their identity and separate existence has been recognized. Further, confirming the demand of recovery from the SSI units along with the principal (M/s. Kores (India) Ltd.) indicates ambiguity in the demand to the ....