TaxTMI 
TaxTMI 
2024 (1) TMI 934
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....o investigation against M/s Varun on the ground that they have created dummy units in order to keep the total value of clearances below the SSI exemption and not paying duty on their clearances, the officers visited and carried out search operations at the following premises: i. Factory premises of M/s Varun situated at Plot No. 24, Sai Leela Industrial Estate, Udhna, Surat ii. Factory premises of M/s Nishoo Arts iii. Factory premises of M/s Global Integrated Technology 1.1 During search at factory premises, it was revealed that records/documents pertaining to aforesaid all the three firms were found lying in a common room in the premises of M/s Varun B Corporation. There was no marker or any other distinct identification for demarcating the premises of M/s. Nishco Arts & M/s Global Integrated Technology and all the three entities had common entry & exit gate & common boundary. Thus, Warrant issued against M/s. Varun B Corporation only executed & two other Warrants in name of M/s. Nishoo Arts & M/s Global Integrated Technology could not be executed as explained above. Shri Varun Rakesh Aggarwal Proprietor of M/s. Varun B Corporation informed that the p....
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....M/s. Global Integrated lacked independent manufacturing capability, sharing machinery without payment. Interdependence was evident, and no payment was made for shared facilities. h. All four firms were proprietorships, related as per Income Tax Act. Owners were family members, indicating close ties. i. M/s. Varun B Corporation made no payment to related firms during 2009-10 and 2010-11, based on Section 40A(2)(b) declarations in the audit report. j. M/s. Nishoo Arts also made no payment to related firms during 2009- 10 & 2010-11, as per Section 40A(2)(b) declarations. k. M/s. Global Integrated Technology made payments for rent and electricity to M/s. Varun B Corporation but none to M/s. Nishoo Arts and M/s. Bela Textiles, indicating selective transactions. l. M/s. Global Integrated Technology did not compensate M/s. Nishoo Arts for premises and electricity, suggesting indirect enrichment. m. M/s. Bela Textiles made payments to M/s. Nishoo Arts and M/s. Varun B Corporation for job charges, but none to M/s. Global Integrated Technology, indicating biased transactions. Expenses manipulation was observed in salary & wages, misleadin....
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....g locations. 1.4 In the show cause notice it is evident that three factories, including M/s. Varun B Corporation, showed the manufacturing of Duplex Boxes, but they utilized each other's facilities. Considering M/s. Varun B Corporation as the manufacturer, the clearance value of the other two factories needs to be added for calculating the total aggregate clearance value. None of the factories fulfilled the conditions to avail SSI benefit under Notification No. 8/2003-CE, requiring them to pay Central Excise duty from the first clearance during 2009-10 and 2010-11. The aggregate value of clearance by M/s. Varun B Corporation during 2009-10 exceeded Rs. 400 Lakhs, crossing the threshold limit for exemption during 2010-11. SSI benefit won't be available separately to each factory, and none fulfilled the conditions for exemption, necessitating the payment of Central Excise duty. M/s. Varun B Corporation manufactured excisable goods during 2009-10 and 2010-11 but failed to obtain Central Excise registration, maintain production records, prepare Central Excise invoices, and pay Central Excise duty, totaling Rs. 1,00,06,208/- on Duplex Box clearances valued at Rs. 10,59,02,636....
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....dent for manufacturing duplex boxes. d. That it is the well settled law that non-payment of Interest on borrowing fund cannot be made basis for Clubbing. Further, Loan taken or given through Account payee cheque only. In this regard he relied upon the judgements of:- • CCE Ahmedabad Vs S.C Patel -2011 (264) E.L.T 414 (Tri. Ahmd.) • M/s COIMBATORE ENGINEERING WORKS Versus COMMISSIONER OF C. EX., COIMBATORE - 2009 (239) ELT 366 (Tri. Chennai) e. That four Colour printing Machine can do the work of two-colour printing machine also. Thus, the Allegation is baseless f. That Global Integrated Technology has got printing done from M/s Varun B Corporation and M/s Nishoo Arts on job-work basis. Punching Machine installed at Global Integrated Technology premises is paper cutting machine. g. That M/s Varun had not installed any of its machines in Nishoo Arts or Global Integrated Technology premises h. That M/s Global Integrated technology had taken on rent premises. The copy of the rent agreement is submitted. Earlier 1st Floor of Plot No. 24 was rented to M/s Global Integrated Technology with proper demarcation. Rent paid....
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....exemption cannot be denied whether or not such declaration is given. In this regard he relied upon the following judgements:- • Lokhandwala Construction Ind. V/s CCE- 1997(92) ELT 703 (CEGAT) • K.S Mills V/s CCE - 1998 (98) ELT 619 (CEGAT) q. That Three Search warrants were issued but only one Panchnama was done. Thus, from day one, the intention of the investigating officers was very clear to club the clearance of all the three units. It is not understood, if it was so to make out case of clubbing then why there should be a marathon of 3 years. r. That nowhere it can be established that there was mutual flow back of funds amongst the units, control of both financial & management aspect by the same set of persons. There is no point to conclusion that these firms interlinked in their operation and management. In fact, all the three factories are totally independent with no interdependence, no financial flow back, no mutuality of interest between firm, nor any flow back of profit. There is no supporting evidence for common finance and common management and there is no finding that the Varun corporation has floated, financed and incorporated....
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....ependent for production of finished goods i.e. Duplex Box [Top, Bottom & Tray]. We find on perusal of the documents submitted and plan layout of the factories, the firms are situated at adjacent plots and not in one common premises. On the basis of layout, it is noted that units have separate entry and separate demarcation. In fact, in Sr. No. 136/2 of Sai Leela Industrial Estate, there are in all 40 plots, 22 plots are on other side of the road. Further, On perusal of Panchnama dated 13.04.2011 we find that M/s Varun had three punching machines installed, M/s Nishu Arts had Six punching machine installed and M/s Global Integrated Technology had one punching machine installed. We find that merely because rent was not given, it is not sufficient to disprove that the units were not independent. It is not the fact that the punching machines installed at the premises of M/s Varun B Corporation was also used by M/s Gobal Intergated Technology. Therefore, there was no interdependence between firms. 4.1 It has been alleged that M/s Global Integrated Technology, M/s Nishoo Arts, M/s Varun B Corporation & M/s Bela Textiles have provided fund on daily basis to each other for making paymen....
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....logy has got printing done on job-work basis. M/s Global Integrated Technology that have submitted that they have got the job-work done from M/s Varun and M/s Nishoo Arts. We further find on perusal of the Balance Sheet of M/s Global Integrated Technology that they have installed paper-cutting machine which undertakes the work of punching machine. Further, we find that there is no evidence to the fact that M/s Varun has installed any of its machines in Nishoo Arts or Global Integrated Technology premises. 4.4 In the Order in Original it is stated that on paper, the factory premises of M/s Global Integrated Technology was situated at Survey No 136/2, Plot No-24, Sai Leela Industrial Estate, Old Petrol Pump, Udhna, Surat and was physically situated at additional margin of Plot No 23, Sai Leela Industrial Estate, B/h Old Petrol Pump, Udhna, Surat which is owned by Shri Prashant Aggrawal Prop. of M/s Nishoo Arts and identified as Plot No 23/A. However, no rent has been paid by M/s Global Integrated Technology to M/s Nishoo Arts for utilizing premises owned by M/s Nishoo Arts. On perusal of Rent agreement we find that Global Integrated technology had taken on rent premises from M/s N....
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....e set of persons. We find that all the units are totally independent with no interdependence, no financial flow back, no mutuality of interest between firm, flow back of profit. There is no supporting evidence for common finance and common management and there is no finding that M/s Varun has floated, financed and incorporated the SSI units. Also, there is no evidence that Varun Corporation is investing money in SSI unit. We place reliance on the following judgements: i. In the case of Balsara Hygiene Products Ltd. V/s Commissioner of C. Ex., Vapi - 2012 (10) TMI 454 - CESTAT, Ahmedabad, wherein it is held that:- "11. We find that the adjudicating authority has held against the assessee that there is a management control or there being grant of interest free loan of the three units are to be considered as one unit and duty demand can be raised against them. These findings of the adjudicating authority are incorrect as in the following case laws, the Tribunal has categorically held that mere fact of management, control or grant of interest free loan is not sufficient to hold the units as a dummy unit in the absence of any money flow back and/or profit sharing and t....