TaxTMI 
TaxTMI 
1992 (1) TMI 358
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.... ET Coolers of Sai Brand. The factory premises of Noticee No. 1 and 2 are housed in one building shed on a land allotted by DIC, Hoshangabad as in part of that building Noticee No. 2 are said to be engaged in the manufacture of Coolers. 1.4 On physical verification of factory premises of Noticees No. 1 and 2 the Officers observed that some machinery essential for manufacture of coolers was found in one portion of the building and the remaining were found in next portion of the same building said to be in possession of the Noticee No. 2. It was also observed that both the factories were working in one building segregated by a wall in same compound having common exit. Further no machines required for the manufacture of Coolers were found installed in the premises of Noticee No. 1. 1.5 From the scrutiny of records, it was revealed that Shri Ashok Agrawal (hereinafter referred to as Noticee No. 4) was instrumental in establishment of M/s. Sai Coolers in the year 1982. After a couple of years when Trade Mark of 'SAI' was established in the market and on reaching nearer to the limit of 5 years exemption of sales tax available to new units in the backward areas of Madhya Pra....
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.... said machines were found in the premises of Noticee No. 2 together with fully manufactured coolers of 'Sai' brand and cuttings of the Tin/G.L. Sheets which proves coolers were being manufactured in the premises said to have been owned by Noticee No. 2 only and not in the premises of Noticee No. 1 i.e. M/s. Sai Coolers, Itarsi. From the Panchnama drawn on spot 26.6.1989 it is observed that cooler manufacturing activities were centralised at only one place i.e. Noticee No. 2 but the production, clearance/sales were being declared separately in the name of three units to the department in order to avail separate exemption available under Central Excise Law. 1.6 On 26.6.1989 a search was also conducted in the premises of M/s. Shivdayal Rameshwar Dayal Trading Company owned by Shri Gopichand Agrawal and it was noticed that the premises consisting of residential premises owned by one Shri Jagdish Agrawal. In course of search from one of the rooms, whose keys were handed over by Shri Gopichand Agrawal, the records pertaining to the manufacture and sale of coolers as detailed in Panchnama dated 26.6.1989, were recovered and withdrawn. 1.7 From the scrutiny of various documen....
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....otherwise in view of the above facts were not entitled for the same. 1.14 On enquiry from the Executive Engineer, MPEB, Itarsi he intimated that no electricity connection has been provided to M/s. Krishna Industries, Itarsi (Noticee No. 3) whereas they have commenced their production since 27.3.1985. 1.15A On enquiry Mr. Bhave, Representative of M/s. Krishna Industries (Noticee No. 3) in his statement dated 28.7.1989 deposed that their factory has taken premises of M/s. Santulal Agrawal on fixed monthly rent inclusive of the electricity charges @ Rs. 200/- per month. 1.16 Though two separate electricity connections have been taken by both Noticee No. 1 and Noticee No. 2 but plain reading of electricity bill shows that there is no satisfactory consumption of electricity units in comparison to production of coolers inasmuch as sometime in a month consumption of electricity units are higher in one whereas in another month it is higher in another unit. 1.17 Besides, the factories and office premises of Noticee No. 1, 2 and 3, a simultaneous search was organised throughout MP on all the dealers and also enquiries were made from suppliers for ascertaining the nature of transa....
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.... D.I.C., Hoshangabad. 2. The M.P. Government Industries Deptt. Officers had visited their factory and found independent existence, separate premises and actual manufacture of goods. They are owners of raw material and the same were used by them. The Motors for manufacture of coolers were directly supplied to them and payment thereof was made by them by cheque. 3. Central Sales Tax and M.P. Sales Tax Officers had also visited their factory and verified the premises and manufacture of goods and thereafter finalised assessments of concessional rates. 4. Income Tax authorities also checked their accounts and finalised their assessments. 5. The Central Excise Officers visited their factory and found independent premises and full machinery essential for manufacture of coolers. 6. Panchanama drawn by Central Excise Officers at 18.00 hrs. on 26.6.1989 has not been relied upon in the show cause notice. This panchnama shows existence of all machinery essential for manufacture of coolers by Noticee No. 1 and therefore proceedings get totally vitiated. 7. The labour is engaged by them separately and the sales of coolers have been conducted ....
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....oolers. This clearly shows that the Sai Coolers were having all necessary equipments in their premises at the time of visit of the officers for manufacture of the Coolers. Had this fact been taken into consideration or brought to the notice of the adjudicating officer, there could not have been any need for initiating these proceedings. 3. All the 3 units are registered as independent units with the Directorate of Small Scale Industries and are being assessed separately in Income-Tax, Sales Tax, Central Sales Tax etc. and also are being allotted quota of raw material by the MP. Laghu Udyog Nigam regularly on yearly basis. All the 3 units have also been filing declarations and other returns separately to the Central Excise department. All the 3 units have been inspected by the A.G.M.P. unit of Gwalior. Superintendent, Central Excise has also checked their R.G. 1 register which has been duly authenticated by him. 4. The dealers to whom the goods have been supplied have also made payment to the respective units by cheques separately. These cheques have been deposited in respective accounts. There is independent source of finance in respect of all the 3 units. ....
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....nder Notification No. 175/86-CE dated 1.3.1986, as amended, from time to time by Noticee No. 1, 2 and 3 on the ground that the said three units are one and the same and the total value of their products when clubbed together does not entitle them to the aforesaid exemption. It is alleged that Shri Ashok Agrawal (Noticee No. 4) and Proprietor of Noticee No. 1 has created Noticee No. 2 and 3 as dummies of Noticee No. 1 and these do not have existence of their own. The Noticee No. 2 and 3 are not at all capable of independently manufacturing complete Coolers. 3.2.1 From the evidence produced, I find that the Noticee No. 1, 2 and 3 are independent entities. Each unit is registered with District Industries Centre, Hoshangabad as Small Scale Industry. Each one is registered with the Sales Tax and Income Tax Departments. They are being assessed separately in Income Tax, Sales Tax, Central Sales Tax, etc. They are also allotted quota of raw material by the M.P. Laghu Udyog Nigam on yearly basis. All the three units have been filing declarations and other returns separately in the Central Excise Department. There is no documentary evidence, unimpeachable continuous conduct or irrefutable....
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....vidence for financial flow back from Noticee No. 2 & 3 to the Noticee No. 1. The Appellate Tribunal, New Delhi in case of Shree Packaging Corporation, Hyderabad (1987 (32) ELT 94 : 1988 (16) ECR 227 (Cegat SB-D)) held that common person employed in both firms functioning in adjacent premises and some of the owners in both firms closely related and there being no common funding or financial flow back and both firms having separate Income Tax assessments, the two firms are separate and distinct. 3.2.5 The allegation regarding common brand of 'SAI' is not tenable. There is no evidence that the brand name is registered. The common brand name used by Noticee No. 1, 2 & 3 does not lead to the conclusion that they are connected with one another and therefore their clearances cannot be clubbed unless there is evidence to the effect that there is a common financial flow back from one firm to another. There is no evidence that the Noticee No. 2 & 3 are dummy units of Noticee No. 1. The Appellate Tribunal, New Delhi in case of Bhagwandas Kanodia (1987 (32) ELT 204) held that manufacturers selling their products under a common name with a common marking are not to be deemed as funct....