TaxTMI 
TaxTMI 
2020 (7) TMI 291
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....limited company and taken a portion of the factory on lease from M/s.NAPL. Initially, the appellant was engaged in the manufacture of Aluminum Chloride and thereafter from 2001 started manufacturing Potassium Titanate. M/s. NCPL was registered with the State VAT Authorities, Income Tax Authorities, State Industry Department as SSI unit, DGFT Authorities and availing the exemption Notification No.8/03-CE dated 1.3.2003 as amended from time to time. After crossing the exemption limit of Rs. 1.5 crore, the appellant applied for registration on 29.10.2011 and thereafter the Range Officers visited the factory premises of the appellant on 8.11.2011 and formed opinion that the appellant had wrongly availed the benefit of SSI exemption during 2006-2012 and turnover of the appellant should be clubbed with turnover of M/s. NAPL. The show cause notices were issued to the appellants to deny the benefit of SSI exemption on the following grounds:- (i) The factory premises of appellant is part of factory premises of M/s.NAPL so there is no independent factory of the appellant, (ii) Shareholders of both the companies are common, (iii) The directors of both the companies ....
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....in 2006 whereas it was availed during a last more than one decade. He also submits that M/s. NAPL was registered since 1987 and from time to time excise officials visited factory premises. The appellant got itself registered in 1993 and the unit of the appellant was visited by the range officials who found that the unit is independent working separately. The audit team was also visited the factory premises of M/s. NAPL from time to time and as per report for the period 1999 to 2003-04, October, 2005 to February, 2007, March, 2007 to March, 2008, 2008-09 and 2010-11 to 2011-12 and the audit team physically verified each and every aspect of M/s. NAPL. The question of sister concern was also under consideration of audit team. Therefore, at this stage, it cannot be said that the appellant wrongly or mis-chiefly claimed benefit of SSI exemption. 6. He further submits that the appellant and M/s.NAPL are private limited companies and except one director, other directors are different. Both the companies are having separate bank accounts and selling products independently. NAPL is not manufacturing Potassium Titanate still its website is showing availability of said product which does n....
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....enefit of SSI exemption limit. 10. On the other hand, learned AR opposed the contention of the learned Counsel and heavily relied on the decision of Hon‟ble Supreme Court in the case of Supreme Washers Pvt.Ltd.-2003 (151) ELT 14 (SC) to say that Common management of three companies under one person, common procurement of raw material, common stock accounting and planning, common stock of raw material and semi-finished goods, common use of machinery between and common marketing arrangement with free flow of finance between three units. Inter-relationship and inter-dependence of three units established. Therefore, the value of clearances of three units to be clubbed. 11. Heard the parties and considered the submissions. 12. On careful consideration of the submissions made by both sides, we find that in the show cause notices, the benefit of SSI exemption denied by invoking clauses 2 (vi) and 2(vii) of Notification No.08/2003-CE dt.1.3.2003. Therefore, it will be better to incorporate the said paras of the notification which is extracted below:- SSI Exemption to manufacturers not availing Cenvat - Notification No. 8/2002-C.E. dated 1.3.2003 2. The exem....
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....ion 'from one or more factories' is added, the effect would be the same if the manufacturer is also the same. The expression, 'one or more factories' only further clarifies that whether the factory is one or more, it is the clearances by or on behalf of the same manufacturer which is to be taken into consideration for purpose of interpreting the exemption notification." 14. As the Board has already clarified that private limited companies are treated as separate, therefore, we have no hesitation to hold that both the units are separate units. 15. Further, we find that the similar issue has been examined by this Tribunal in the case of M/s.S.K.Sacks Pvt.Ltd. and others (supra), wherein this Tribunal has observed as under:- "11. The facts are not in dispute: (a) Both units having separate registration under the Companies Act as well as with Central Excise department during the relevant period. (b) Both the companies are having same director and one director namely Shri Arvinder Pal Singh is managing and looking after both the companies. (c) companies manufacturing different products (d) in some occasions, the payment ....
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.... and clearances of both the units cannot be clubbed together. 16. The allegation against the respondents is that both units have been managed by Shri Arvinder Pal Singh, the same cannot be a ground for clubbing clearance of both the units in view of the decision of the Tribunal in the case of Superior Products which has been affirmed by the Hon'ble Apex Court. 17. We further find that next allegation is that in some cases M/s. A.S.Processors Pvt.Ltd. made payment directly to the suppliers of M/s.S.K.Sacks Pvt.Ltd. We find that as M/s.S.k.Sacks Pvt.Ltd. is supplying the goods to M/s. A.S.Processors Pvt.Ltd. as if A.S.Processors Pvt.Ltd. making payment directly to M/s.S.k.Sacks Pvt.Ltd., therefore, it cannot be termed as there was financial flow back. All these issues considered by the Commissioner (Appeals) in the impugned order which are reproduced as under:- It has been alleged by the department that both the units i.e. M/s S.K. Sacks Pvt. Ltd., (appellants No. 1) and M/s. A.S. Processors, Amritsar, are being controlled by Sh. Arvinder Pal Singh, Director and his wife Smt. Sarabjit Kaur ; that both the companies are working under the same management ; wo....
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....ritsar have been clubbed and as after clubbing their clearances exceeding the prescribed limit the benefit of SSI exemption has been denied to the appellants No. 1. Besides, another allegation is that the appellants No. 1 has sold his goods at a lower rate to M/s A.S. Processors, Amritsar as both the units are under the same management and one manufacturer, the sale price of M/s. A.S. Processors, Amritsar should be the assessable value on which the appellants No. 1 was required to discharge the duty. Accordingly the duty has been sought to be recovered on the additional value charge by M/s. A.S. Processors, Amritsar from its customers. In their defence, the appellants No. 1 have inter alia, submitted as under:- (i) That there did not exist any reason for alleging that both the units belongs to same manufacturer simply on the grounds that there were to common directions and their dependence on certain financial transaction between the units. (ii) That when all the financial transactions between the two units were duly accounted for in books of record then mere making of payment to the supplier of appellants No. 1 by M/s. A.S. processors, Amritsar who owned....
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.... filed by both units and assessed - Permission to job work on behalf of other undertaking for certain processes granted under Rule 57F(3) of erstwhile Central Excise Rules, 1944 - Factors of one supervisor working for both units and one unit doing certain finishing processes for another unit, not a basis for clubbing the clearances of the two units - Notifications No. 1/93-C.E. Further in case of M/s. L.D. Industries Vs. CCE Pune, reported as - 2003 (157)ELT459 - (Tri. Del.), the Hon'ble Tribunal has held that the limited companies whether public or private are to be considered as separate distinct from share holders and each such limited company which is a manufacturer will be entitled to separate exemption limit. This case was decided by the Hon'ble Tribunal after being remanded by the Hon'ble Supreme Court on the issue of interrelationship between there with reference to the applicability of Circular dated 1.3.56. In this context, Board's Circular No. 6/92 dated 29.5.92 was also referred wherein contents of Circular dated 1.3.56 have been reiterated. The relevant para of the judgment is reproduced below, "3. Before us the learned Counsel for M/s. Supreme Washer....
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....a manufacturer by itself and will be entitled separate exemption, separate exemption shall be available as the department cannot argue against Board's Circular. On the issue of clubbing of clearance of two factories, I find that in case of M/s Rollataners Ltd., Vs. CCE - Del. - 2004 (170) ELT 257 (SC), THE Hon'ble Supreme Court has held that simply because of the fact that both the factories are in the same premises that does not lead to inference that both the factories are same. The relevant para 7 of the judgment is reproduced below:- "7. There is no two opinion that both the factories are near to each other and it is owned by the same owner and the common balance sheet is maintained. But, by this can it be said that both the factories are one and the same ? The definition of the "factory‟ as defined in Section 2(e) of the Central Excise Act, 1944, reads as under:- "(e) "factory‟ means any premises, including the precincts thereof, wherein or in any part of which excisable goods other than salt are manufactured, or wherein or in any part of which any manufacturing process connected with the production of these goods is being carried on or i....
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....ax, State and Central Excise and Sales Tax, Department cannot plea that only one company is main while the other is a dummy unit - Section 2(f) of Central Excise Act, 1944. The ratio of this case law squarely covers the instant case as M/s. S.K. Sacks Pvt. Ltd. (the appellants No. 1) and M/s A.S. Processors are two Private Limited companies separately registered with Excise Authorities, Income Tax, State Sales Tax Department and even under Factories Act. Further it is not a case where the allegation of the revenue was that M/s. A.s. Processors is a dummy unit. In view of above discussions and ratio of the referred case laws, it emerges that the department has not brought on record sufficient evidence to sustain the charge of financial flow back from one unit to other and whatever the facts the department has brought on record are normal commercial transactions and cannot be termed as a case of financial flow back in any case. Therefore, it has to be held that clubbing of clearances of two private limited companies i.e. M/s S.K. Sacks Pvt. Ltd., (appellants No. 1) and M/s. A.S. Processors (P) Ltd., Amritsar is not sustainable." 16. We further take note of the fact that a....