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TaxTMI 
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TaxTMI 
2020 (7) TMI 291
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....e 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 are common, (iv) Although, there is separate gate of Appella....
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.... 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 not mean that NAPL has claimed that both the companies are one and same. He also submitted that the appellant M/s. ....
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....t.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 exemption contained in this notification shall apply subject to the following conditions, namely: - "(i) ----------------------- (ii) ----------------------- (iii) ----------------------- (iv) ----------------------- (v) ---....
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.... 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 made to creditors of M/s.S.K.Sacks directly made by M/s.A.S.Processors for the goods supplied by M/s.S.k.Sacks Pvt.Ltd. 12. The case of the Revenue is that both units of M/s.S.k.Sacks and M/s.A.S.Processors having common director. As some financial transactions have been undertaken where M/s.A.S.Processors directly made payment on beha....
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....r 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 ; working under common cause ; that as explicit from the facts like distribution of production and clearance financial dealing, common administrative and financial control and husband and wife being common directors in both the companies so both the units has been created by Sh. Arvinder Pal Singh and his spouse so as to evade revenue liability and therefore clearance of both have sought to have been ....
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.... 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 money from appellants No. 1 in respect of purchase of goods does not involve financial interdependence. (iii) That the allegation of low back of goods have been alleged but there is no evidence to show that any money has been transferred other than that which have been shown in the books of accounts. Thus, in the absence of any flow back there is no reason to hold that both the units belongs to the same manufacturer. (iv) That mere operation of acco....
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....al 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 Washers (P) Ltd. has produced copies of the circular No. 6/92, dated 29-5-92 and Circular No. 5 issued vide F. No. 21/31/56-CX.MI, dated 10-8-56. Notification No. CER(5)CE, dated 1-3-56 referred in the circular dated 29-5- 92 taken note of by the Hon‟ble Supreme Court as such is not produced before us. But on going through the circular dated 10.5.56, It is seen that paragraphs (i) to (III) contained therein are quoted verbatim in circular dated 29.5.92 as if those provisions stood contained in Notification da....
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....duced 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 is ordinarily carried on,". By applying the ratio of above case law in the instant case it has to be held that as M/s. S.K. Sacks Pvt. Ltd., and M/s A.S. Processors were separately registered under the Factories Act, these cannot be treated as one factory and as such both have to be considered as tow factories separately eligible for exemption. Regarding some entries mentioned in the show cause notice in respect of making of payments by M/s. A.s. Processor,s Amritsar to the suppliers of raw materials of the appellants No. 1, it is observed ....