TaxTMI 
TaxTMI 
2024 (4) TMI 370
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....ive of Education Cess & SHE Cess under Section 11A(4) read with Section 11A(10) of the Central Excise Act, 1944 for the period from April 2013 to November 2014. I order that the amount of Rs 5,00,000/- (Rupees Five Lakh only) deposited by the party during investigation shall stand appropriated against this duty liability. (ii) I also order that the party shall pay Interest at the appropriate rate on the duty of Rs 6,17,610 (Rupees Six Lacs Seventeen Thousand Six Hundred Ten only) determined above under Section 11AA of Central Excise Act, 1944. (iii) I impose a Penalty of Rs 6,17,610/- (Rupees Six Lakh Seventeen Thousand Six Hundred Ten only) on M/s TSM Plastics under Rule 25(1) of the Central Excise Rules, 2002 read with Section 11AC (c) of the Central Excise act, 1944 for contravention of the provisions of the Central Excise Act and the Rules made there-under as pointed out herein above. (iv) I impose a Personal Penalty of Rs. 1,00,000 (One Lakh only) on Shri SK Sharma. Partner of M/s TSM Plastics, D-20 Sector-7, Noida under Rule 26 of the Central Excise. Rules, 2002 for contravention of the provisions of the Rules as pointed out herein above. (....
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....2003-CE dated 01.03.2003. 2.3 Searches were also conducted in the premises of M/s L.S. Plastics in presence of two independent witnesses and Appellant-III on the same date. During the search it was found that M/s L.S. Plastics started the production in August, 2014 and were manufacturing plastic bottles and clearing the same to their customer M/s G.D. Foods manufacturing India Pvt. Ltd., Delhi and Neemrana. 2.4 As per the information available in the computer system loaded with Tally (software) year wise sales turnover in respect of these two units is as under:- YEAR M/s TSM (Rs. In Crores) M/s L.S. Plastics 2010-11 0.62 0 2011-12 0.86 0 2012-13 4.54 0 2013-14 6.54 0 2014-15 (upto November 14) 3.43 0.90 2.5 From the above, it was observed that appellant-I has claimed the benefit of exemption under Notification No. 08/2003-CE dated 01.03.2003 even after crossing the exemption limit as provided by the said notification. Accordingly, the goods found in the premises of the appellant-I and M/s L.S. Plastics were detained/ seized by the officers vide seizer memo dated 19.05.2015. A Show cause notice dated 25.05.2015 was issue....
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....tlement of exemption under Notification No. 08/2003-CE dated 01.03.2003 cannot be denied by clubbing the clearances of two units. The documents clearly established that these two are separate independent entities as a partnership firm and proprietary firm respectively having their own land duly allotted by Noida Authority, having their own plant and machinery through which regular production was being made independently and the units were duly recognized by different departments like Noida Authority, Factory Act, Commercial Tax Department, Banks and Income Tax Department where the two units were recorgnised and assessed. The bank account of the firms are also enclosed which clearly show that there are no transaction or financial interactions or facilitation between the units. • There is no dispute that anyone of the above two unit is dummy or non-existent. Therefore, exemption of manufacturing unit cannot be denied and clubbed together on the ground that one of the partners being common. • Reliance is placed on the decision in the case of Thermotech [2013 (293) ELT 712 (T)]. • It is alleged that appellant-II was caring out entire purchase of r....
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....bbing pertains to the year 2014-15 only and the demand pertaining to 2013-14 was confirmed on account of wrong computation of value of clearance relating to export of goods with value of domestic clearance. The impugned order has not taken into account the submission of Appellants and confirmed the demand without recording any findings thereon. • M/s L.S. Plastics production commenced production in the financial year 2014-15 therefore there cannot be clubbing of clearance in financial year 2013-14. • As the demands cannot be sustained, there cannot be any penalty imposed on the appellant-II and appellant-III. Appeals be allowed. 3.3 Arguing for revenue learned Authorized Representative reiterates the findings recorded in the impugned order and in order of the Original Adjudicated Authority. He submits that both the authorities have taken into consideration all the submissions made. 4.1 We have considered the impugned orders along with the submissions made in appeal and during the course of argument. 4.2 We find that the impugned order records the following findings for upholding the Order-in-Original:- 5. I have considered the material av....
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.... the present case are different hence jurisprudence emanating from ratio of these cases cannot be applied in the present case. I place reliance on the Hon'ble Supreme Court in the matter of ALNOORI TOBACCO PRODUCTS [2004 (170) E.L.T. 135 (S.C.)], where in para 11 to 14 it was held that Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observations of Courts are neither to be read as Euclid's theorems nor as provisions of the statute and that too taker out of their context. These observations must be read in the context in which they appear to have been stated. Judgments of Courts are not to be construed as statutes. 10. In the result, as discussed, as there exist liability on them in terms of the Impugned Orders, its attendant consequences follow as a matter of course. Interest under Section 11AA of the Central Excise Act, 1944 would be payable by them as ordered therein. I further observe that in the present system of self-assessment documents like invoices and other transaction details are not supplied to the Department, the intention will h....
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.... and the work related to administration etc was looked after by Shri Sanjeev Sharma Further it also came to light that the entire purchase of raw materials was done by Shri S K Sharma as partner of M/s TSM and the same was delivered to both the manufacturing premises of M/s TSM and M/s LS Plastics. The details of raw materials available at any particular premises at any given time was maintained only at the factory premises of M/s TSM and even at the time of visit of the Central Excise Noida Anti Evasion officers, each and every detail and records pertaining to both the units were available at the office of M/s TSM only. The finished goods of both the units were similar and for the same class of customers which also indicated that they were not independent entities, but a well thought out creation for bifurcation and suppression of clearance value in order to avail duty exemption through SSI benefit as per notification. The authorized person of both the related units for maintaining accounts was on the payroll of M/s TSM, but was functioning as the key person in both the units and signing all the documents as, authorized signatory of both the said units on closer scrutiny of record....
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.... factories could be supplied to their common buyers Factory in a different name of M/s L.S. Plastics was opened merely to bifurcate the value of clearances of excisable goods manufactured in the concerns so as to avail the benefit of Notification No. 8/2002 CE dated 01.03.2003 for SSI duty exemption. TSM, after availing the benefit of exemption Notification No. 8/2003-CE dated 01.03.2003 as amended, cleared the excisable goods without payment of Central Excise duty On the basis of the above facts and computation of value of clearances for the period 2012-13, 2013-14 & 2014-15(upto Nov, 2014), a quantification Chart (Consolidated duty calculation worksheet) enclosed as Annexure B to the Show Cause Notice was prepared and was also shown to Shri S K Sharma, Partner of M/s TSM, on 31.12.2015. Admittedly, M/s TSM have cleared finished goods without payment of duty during the aforesaid period, therefore M/s TSM appeared to be liable to pay duty amounting to Rs. 6,17,610/- on the goods valued at Rs 49,66,618/-. 37. I find that though both the units were registered separately with Central Excise Income Tax. Sales Tax, Industries Deptt and are located in separate premises and both ....
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.... 39. I observe that the case laws cited by the party in their written reply dated 18.1.2017 are having different circumstances as compared to the present case and are therefore not relevant in this matter In the present case it has been established beyond doubt that that M/s L S Plastics and M/s T.S. M plastics have members of the same family as owners/directors and all the records and operations of both the units are maintained and controlled at the single premises of M/s TSM plastics. Both have a common accountant and the accounts of both units are being maintained through a tally Software installed at the premises of M/s TSM Plastics There is no operational office at the premises of M/s LS Plastics and no records regarding inputs/services received and stock keeping of finished goods is being maintained at their factory Purchase of raw materials is also centralized at the premises of M/s TSM Plastics and done by Sh Sanjeev Sharma Therefore it is very much clear that M/s L.S Plastics was created solely for the purpose of diversifying into the manufacture of plastic bottles for supply to a common buyer with the sole intention of circumventing the provisions of Notfn No 8/2003 so....
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....thin state 12445 0 0 0 0 0 6 Sales A/c 4% or 5% 2716 0 612 0 194 160 7 Sale of finished goods CST 17547 0 48901 0 20759 4866 Total 45426 0 65429 0 34340 9002 After noting the value of clearances and the explanations given by the Shri Bharti the Accountant of the Appellant, analysis of the trading of the goods received and sold was undertaken in show cause notice. Thereafter in para 14.4 records the value of clearances from the two units, on the basis of sales invoices issued by the appellant and after excluding the value export clearances and Plastic bottles (traded) as follows: Sl No Financial Year Value of Clearances Value for Demand 1 2012-13 1,41,53,579/- 0 2 2013-14 1,72,98,582/- 22,98,582/- 3 2014-15 (upto Nov 14) 1,76,68,036/- 26,68,036/- As the value of clearances for the year 2012-13 was less than Rs 1.5 crores well within the exemption limit as per notification No 8/2003-CE dated 01.03.2003, no demand has been made for the said year. In respect of the year 2013-14 taking the value of clearances of the Appellant-....
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....15 upto Nov., 2014) had crossed the SSI exemption limit of Rs. 1.5 crore as specified under Notification No 08/2003-CE dated 01.03.2003." Appellant has at no point of time disputed the computation of the value of clearances as per para 14.4 which is the basis of demand. 4.7 No contention with regards to the error in computation of duty has been raised before the adjudicating authority or Appellate Authority. On the contrary appellants have admitted that duty was not paid on the excess value due to clerical mistake of the Order-in-Original, which is reproduced bellow:- "30. As regards payment of interest amount has not been calculated in the SC Noticee. The Noticee has already paid Rs. Five Lacs and amount can be adjusted/ deducted from that value of clearances due to calculation mistake and ignorance of legal provisionally the dealing hand. There was no mala fide intention to evade payment of duty. As soon as the mistake was detected, Noticee paid the amount of Rs. Five lacs at the investigation stage. In view of the fact imposition of penalty under rule 25 of C.E. Rules 02 is not justified and legal." Appellants have before Commissioner (Appeals), not challenged ....
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....rawing remuneration of Rs 2,00,000/- and partnership interest to the extent of 10% in the partnership firm. It is also well established and not disputed appellant-II who enjoys partnership interest of 70% in the partnership firm and remuneration of Rs 4,00,000/- actually controls all the operation of M/s L S Plastic. 4.10 Appellant have heavily relied upon the decision in case of Thermotech, to argue that in absence of mutuality of interest the clearance of both the units though owned by the members of same family cannot be clubbed. The relevant excerpts from the said decision are reproduced below: "15. We find no merits in the above reasoning of the adjudicating authority. Admittedly he has nowhere referred to any mutuality of interest between the units of husband and units owned by wife. He has observed that lack of mutuality of interest or financial flow back can be only one of the important consideration but cannot be made sole basis for arriving at the decision. Merely because the two owners of the units were husband and wife and the profits earned by them came into same household, does not mean that clearances of all the units is required to be clubbed. We really ....
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....he appellants stands not accepted by the Commissioner by observing that as all the units are owned either by wife of Shri Pradeep Khanna or by Ms. Neera Khanna, issuance of separate notice to the other units was not required. We find no merits in the above arguments. Admittedly all the units were working separately and the Revenue is proposing the clubbing of clearances with the clearances of M/s. Thermotech. The minimum legal requirement is to put the other units on notice. Mere fact that the said other units were under the proprietorship of Ms. Neera Khanna or under the ownership of husband of Ms. Neera Khanna cannot absolve the Revenue from putting the other units to notice. It is well settled law that in case of clubbing of clearances of various units, the notices are required to be issued to all, inasmuch as the clearances of other units is sought to be clubbed with clearances of a particular unit. To club the clearances of other units with M/s. Thermotech without even putting the other units on notice and without even letting them know about the same is against the settled principle of law." From the perusal of the above it is quite evident that the matter has bee....
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...., Mumbai, 2004 (167) ELT 209(Tri.) it was held evidence of common office premises, common staff and common maintenance of records etc. cannot be held to be sufficient to club the clearances of the units, who have different registration in all the department and in the absence of any financial flow back." From the perusal of the above, it is quite evident that clearance cannot be clubbed in situation where the units are functioning as independent units with different sets of machinery and infrastructure to manufacture goods. However in the case in hand both the authorities have concluded with regards to commonality of infrastructure facilities and management and control, hence this decision is distinguishable. o Plasto Containers (India) P. Ltd. [2011 (268) ELT 0509 (Tri.-Mumbai)]; Tribunal has concluded sating as follows: "35. From the above discussion, we hold that both the units are having separate directors, separately registered with the registrar of companies, separate sales tax registration, income tax, bank account and separate lease deed with MIDC and are having separate premises also. In that event the clearance of both the units cannot ....
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....esh Kr. Jindal is a proprietor of M/s. Jindal Steel Fabricator and also a partner of the partnership firm, namely, M/s. Jindal Steel Products. As per the Company's Law/Partnership Act, there is a distinct identity of a proprietory firm and a partnership firm. the clearance made by a partner in his individual capacity from he proprietory unit cannot be clubbed with the clearance of a firm to which he is a partner. In the present case, Mr. Mahesh Kr. Jindal is a proprietor of M/s. Jindal Steel Fabricator and also a partner in another firm, namely, M/s. Jindal Steel Products. Both the firms, namely M/s. Jindal Steel Fabricators proprietory concern and M/s. Jindal Steel Products, Partnership concern, having separate identity are two separate manufactures. The two firms have Income Tax Files, Sales Tax Registration, separate Bank Accounts etc... Accordingly, they cannot be treated to be one manufacturers and consequently, the value of the clearances of the two firms cannot be clubbed together. 5. In order to club the turnover of two concerns, it has to be provided by adducing evidences that on firm is dummy or camouflaging the others. In the present case, there is no such a....
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....y of Rs. 1,45,29,754/- from M/s Sotex, the proprietary firm of Shri M M Majithia. The demand cannot be upheld, since the demand in the show Cause Notice proposed to be recovered from M/s Sotex was not a figure of Rs. 1,45,29,754/- but much less, the present proposal to confirm the duty demand beyond which was proposed in the Show Cause Notice at Rs. 35,806/- & Rs. 2884/- cannot be upheld. (b) The finding that the three units are just dummy units cannot be upheld when the department is recognizing separate clearances and duty demands on these other units. (c) Except for M/s Sotex, the independent existence of the other partnership concerns and proprietary concern cannot be doubted. It is another matter that they may be under the total control of Shri M M Majithia, that ipso facto cannot label them as dummy non existent units. They have independent SSI registration and Central Excise registration and declaration filed and have separate audited Balance Sheets & located geographically apart. (d) The duty demands, as per annexure C are found to be based on: i. value of clearances as declared by the units; ii. value of clandestine clearances a....
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....ants is well founded. The reliance on the case of Nizam sugar Mills case by the Ld. Commissioner will not help the revenue in the facts herein. The entire proceedings of demands are therefore required to be quashed on ground of time bar." From the perusal of the above it is evident that the department itself was recognizing the units whose clearance was sought to be clubbed as separate units and the demand was set aside on the grounds of limitation and not merits. We do not find this decision to be applicable in the facts of this case. o Superior Products & Ors. [2008 (230) ELT 0003 (SC)]; Hon'ble Supreme Court has refused to interfere with the finding of fact recorded by the tribunal. The finding of the fact in the case of Superior Products, is limited to the said decision and cannot be considered as binding precedent. Relevant para of the Hon'ble Apex Court decision is reproduced below: "5. Tribunal in its order has recorded a finding that accounts of both the units are managed separately. That they have separate capital, premises, machinery and labour and carrying out separate operations. That they are separate units. These findings are findings of fac....
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....son was a related person of the other within the meaning of the Section. Appellate Tribunal noted that Collector (Appeals) had held that the appellant as well as M/s. Ganga Saran & Sons Pvt. Ltd. were started and established by G.S. Sharma and his family members and further that Assistant Collector had found that the shares of the appellant and the shares of the buyer company were held by the members of the same Sharma family and, thus, by the persons that who were related to each other. The Appellate Tribunal referred to the decision of this Court in Mohanlal Magan Lal Bhavsar (Deceased) through LRs. and Ors. v. Union of India and Ors. [1986 (23) E.L.T. 3] and also to its own decision in Diamond Clock Manufacturing Co. Ltd. v. C.C.E., Pune [1988 (34) E.L.T. 662] where it interpreted the definition of related person. Relying on these two decisions as applicable to the facts of this case, the Appellate Tribunal was of the view that there was identity of Interest and M/s. Ganga Saran & Sons Pvt. Ltd. was related person within the meaning of Section 4(4)(c) of the Act. The Appellate Tribunal disposed of the appeal with the directions aforesaid. 6. Mr. Dave, learned Counsel fo....
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.... bit after decision of the House of Lords in the case of Salomon v. Salomon [1897 AC 22]. This is how this Court noticed in Tata Engineering and Locomotive Company Ltd. v. State of Bihar & Ors. [(1964) 6 SCR 885] : "The true legal position in regard to the character of a corporation or a company which owes its incorporation to a statutory authority, is not in doubt or dispute. The corporation in law is equal to a natural person and has a legal entity of its own. The entity of the corporation is entirely separate from that of its shareholders; it bears its own name and has a seal of its own; its assets are separate and distinct from those of its members; it can sue and be sued exclusively for its own purposes; its creditors cannot obtain satisfaction from the assets of its members; the liability of the members or shareholders is limited to the capital invested by them; similarly, the creditors of the members have no right to the assets of the corporation. This position has been well-established ever since the decision in the of Salomon v. Salomon & Co. [(1897) A.C. 22 H.L.] was pronounced in 1897; and indeed, it has always been the well recognised principle of common law. H....
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....corporate personality have been made by two sections of the Companies Act, 1948, by judicial disregard of the principle where the protection of public interests is of paramount importance, or where the company has been formed to evade obligations imposed by the law, and by the Courts implying in certain cases that a company is an agent or trustee for its members. In Palmer's Company Law (23rd Ed.), the present position in England is stated and the occasions when the corporate veil may be lifted have been enumerated and classified into fourteen categories. Similarly in Gower's Company Law (4th Ed.), a chapter is devoted to `lifting the veil' and the various occasions when that may be done are discussed. In Tata Engineering and Locomotive Co. Ltd. [(1964) 6 SCR 885], the company wanted the corporate veil to be lifted so as to sustain the maintainability of the petition, filed by the company under Article 32 of the Constitution, by treating it as one filed by the shareholders of the company. The request of the company was turned down on the ground that it was not possible to treat the company as a citizen for the purposes of Article 19. In CIT v. Sri Meenakshi Mills Ltd. [AIR....
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....ds shall not be deemed to be normal price thereof, i.e., the price at which such goods are ordinarily sold by the assessee to a buyer in the course of wholesale trade for delivery at the time and place of removal, if the buyer is a related person and price is not the sole consideration for sale. As to who is a related person, we have to see its definition of Section 4(4)(c) of the Act. It is not only that both, the manufacturer and the buyer, are associated with each other for which corporate veil may be lifted to see who is behind it but also that they should have interest, directly or indirectly, in the business of each other. But once it is found that persons behind the manufacturer and the buyer are same, it is apparent that buyer is associated with the manufacturer, i.e., the assessee and then regard being had to the common course of natural events, human conduct and public and private business it can be presumed that they have interest, directly or indirectly, in the business of each other (refer Section 114 of the Evidence Act). It is, however, difficult to lay down any broad principle to hold as to when corporate veil should be lifted or if on doing that, could it be said t....
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....ind Rubber Mills was being carried on from the said premises; that the rent of the said office and electricity bills were paid by Amar Enterprises; that payment of bills 2 & telephone installed in the said office was made by Atlantic Chemicals and sometimes by Arvind Rubber Mils. The correspondence in File No. 4 of Foamsil Chemicals pertaining to sundry debtors for the year 1992-93 recovered from their Pahwa Mansion Office, contained several letters addressed by different customers to Foamsil Chemicals in which the address of Foamsil Chemicals is of their Pahwa Mansion office. SCN fists out names of a few of the firms who had mailed their letters on the said address for Foamsil Chemicals, also recovered file containing vouchers in course of the search of the office premises on 20-4-93 which pertained to Arun Chemicals and which showed the Pahwa Mansion office as the address of Regd. Office of the firm. Further, in course of search of the residential premises of Shri J.S. Jain, situated at E-10, Preet Vihar, Delhi on 20-4-93, the records of Atlantic Chemicals and Foamsil Chemical and Arvind Rubber Mills Pvt. Ltd. were also recovered from the ground floor of the said house. The Centr....
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....e by Foamsil Chemicals to Atlantic Chemicals; payment made to UPSEB on behalf of one another, etc. However, no records was found indicating payment of interest by Atlantic Chemicals to Foamsil Chemicals or Arun Chemicals for keeping and utilizing their amounts in their business. Similar instances of fund transfers from Arun Chemicals to Atlantic Chemicals, Arvind Rubber Mills (P) Ltd. to Atlantic Chemicals and by Amar Enterprises to Foamsil Chemicals have been pointed out in the SCN. These monetary transactions from one firm to another and outstanding huge sums as credit balance with no interest liability indicate amply that the firms were freely utilizing the money or other firms in their business and without payment of any interest. The above facts including use of funds of one unit by other without payment of interest is not denied by the noticees. 124. In this case, there are certain outstanding facts. The 3 units, all proprietary concerns, are owned by three members of one family i.e. Sh. Parveen Kumar Jain (brother), Sh. Naveen Kumar Jain (brother) and Ms. Babita Jain (wife of Shri Naveen Kumar Jain). The goods manufactured are the same, that is RBA. There is use of ....
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....t done. It is therefore, held that Atlantic Chemicals and Foamsil Chemicals have contravened the provisions of Rules 9(1), 173B, 173F, 173G of CER and cleared RBA manufactured in their factories without payment of appropriate duty amounting to Rs. 38,45,363.59 and Rs. 31,39,143.16 respectively during the period from 1989-90 to 1993-94. Simiarly, Arun Chemicals are also held to have manufactured and cleared RBA without payment of duty amounting to Rs. 1,21,360/- in violation of Rule 9(1), 173B, 173G of the CER. As this short/non-payment of duty was done by suppression of facts, such as, not disclosing true nature of the ownership, control and management of firms and their activities, misdeclaration of lads, such as, the brand names not owned by them in the classification lists and availment of exemption on the branded goods, etc. the same is held recoverable from them under proviso to Section 11A(1) of the Act read with Rules 9(2) of the CER. For the aforesaid violation, they are also held liable to penalty under Rule 9(2) and 173Q of the CER. 11.1.3 After having gone through the facts on record and the submissions of both sides, we are of the considered view that manufactu....
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.... it may be mentioned that both M/s. Foamsil Chemicals and M/s. Arun Chemicals have been actively involved in the operations of wrongly availing exemption under Notification No. 175/86-C.E. by 'artificial fragmentation when there was no distinction in management of the firms'. Therefore, M/s. Arun Chemicals (who is one of the appellants) deserves to be penalized under Rules 9(2) and 173Q of Central Excise Rules. We are giving no specific findings on M/s. Foamsil Chemicals as they are not the appellant here. 11.1.7 From the facts (impugned order Para 99), it is clear that noticee appellants M/s. Atlantic Chemicals played a major role in the manufacturing of the item RBA. Many of the machinery items and facilities for manufacturing are available only with M/s. Atlantic Chemicals. Therefore, after clubbing of clearances of the subject three units, liabilities for payment of duty of Central Excise is hereby fixed on M/s. Atlantic Chemicals. Consequently, the appellant M/s. Atlantic Chemicals is to pay total duty of Central Excise of Rs. 71,06,066/- (i.e. Rs. 38,45,363/- + Rs. 31,39,343/- + Rs. 1,21,360/-) for the RBA manufactured and cleared during 1989-90 to 1993-94. In this r....
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.... really lies behind. The legislature has shown the way with group accounts and the rest. And the Courts should follow suit....." 17. Since then, the doctrine of lifting of the corporate veil has been firmly established in a series of cases. The corporate veil could be lifted when it is found that the corporate personality was used as a mask for evasion of tax where transactions were found to be a sham or collusive or where the corporate personality was employed to circumvent statutory liability or to evade the tax liability. In such a situation, the veil could be lifted to find out the real culprits hiding behind it. It was held that even though there are no statutory provisions, the circumstances so existing in the particular case warrants the lifting of the corporate veil to realize the tax from the Directors or partners as the case may be as has been held in Telco & Ors. v. State of Bihar - AIR 1965 SC 40 (paras 24 & 27); CIT v. Shree Minakshi Mills Ltd., Madurai - AIR 1967 SC 819 (para 8); New Horizon Ltd. & Another v. Union of India and Others (1995) 1 SCC 478; Delhi Development Authority v. Skipper Construction Co. P. Ltd. (1996) 4 SCC 622 (paras 24 to 28); Calcutta ....
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....AIR 1965 SC 40; Juggilal Kamlapat v. CIT, AIR 1969 SC 932." 4.15 In case of British Scaffolding India Pvt. Ltd. [2014 (313) ELT 87 (Tri.-Del.)] Delhi Bench has held as follows:- 7. SSI Exemption is subject to conditions specified in it. One condition for this exemption notification is that where a manufacturer clears specified goods from one or more factories, the Exemption in his case shall apply for the total value of clearances mentioned against each of the serial numbers in the said table and not separately for each factory. Another condition of the Notification is that the aggregate value of clearances of all excisable goods for home consumption by a manufacturer from one or more factories during the preceding financial year does not exceed a particular threshold limit, as mentioned in the Notification. Thus, when a manufacturer has four factories located at different locations, and the SSI Exemption Notification prescribes nil rate of duty for first clearances of specified goods worth Rs. 50 lakhs in a financial year, each of these factories would not be separately eligible for full duty exemption in respect of its first clearances worth Rs. 50 lakhs in a financia....
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....ding duty only from the main unit arises only in that situation when on investigation, only one unit is found to be actually functioning and other units are found to be just non-functional fake units established just to show bogus production and clearances in their name. 7.1 However in most of the cases, the fact of common ownership of different units by a person is not so obvious and may be carefully camouflaged. For example - if there is a manufacturing unit of a proprietorship concern of a person 'X', there is a second manufacturing unit owned by a partnership concern 'A' with 'X' and his wife 'Y' as partners, there is a third manufacturing unit owned by a private limited company 'B' with shareholding by 'X', his son 'Z' and the partnership concern 'A' and there is a fourth manufacturing unit owned by another private limited company 'C' with shareholding by 'A', 'B' and another son Z2 of 'X' and if these four units owned by 'X', 'A', 'B' and 'C' are each availing of SSI Exemption, a question arises as to whether they are to be treated as separate entities or units owned by the same person, for the purpose of SSI Exemption. 7.1.1 While a company is a legal perso....
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.... "Whether there is inter-dependence and whether another unit is, in fact, a dummy has to be adjudicated on the facts of each case. There cannot be any generalization or rule of universal application. Two basic features which prima facie show interdependence are pervasive financial control and management control. In the present case facts clearly show financial control. Undisputedly, the share capital of each of the three companies was Rs. 200/-. Though it was claimed that financial assistance was availed from the financial companies, it is on record that the unsecured loans advanced by MACL to the three companies were substantially heavy amounts as on 1-4-1998. NGCPL received an amount of Rs. 1.55 crores. About 14 lakhs appeared to have been paid after the issue of show cause notice. Loans advanced to NGCPL was about Rs. 52 lakhs while to SCGCPL it was about Rs. 65 lakhs. The finding of the Commissioner that the financial assistance from the financial institutions were availed with the aid and assistance of MACL has not been seriously disputed. Apart from that, the cylinders were brought on lease by MACL from another concern and were sub-leased to the three companies. The cylin....
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.... Same view has been expressed by the Apex Court in its judgment in case of Supreme Washers Pvt. Ltd. (Supra). 7.1.2 The Board's Circular No. 6/92, dated 29-5-1992 clarifying that limited companies, whether public limited or private limited are separate entities and each such limited company is a manufacturer by itself and would be entitled for SSI Exemption separately, has not considered the principle of lifting of corporate veil in the cases where different corporate entities appear to be just colorable devices for tax evasion, and hence this circular is not in accordance with the provisions of law. In accordance with Apex Court's Judgment in case of CCE v. Ratan Melting & Wire Industries, reported in 2008 (231) E.L.T. 22 (S.C.) = 2008 (12) S.T.R. 416 (S.C.), a circular which is contrary to the statutory provisions, has no existence in law. Though in case of Supreme Washers Pvt. Ltd. (supra), after upholding the principle of lifting of corporate veil the Apex Court taking note of the Board's Circular No. 6/92, dated 29-5-1992, had remanded the matter to the Tribunal for examining the applicability of this circular, since this circular being contrary to the law laid d....
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....nd therefore the latter was not to be held to be 'related' to the former in terms of Section 4(4)(c)/Section 4(3)(b). Learned SDR countered by reiterating the relevant findings of the Commissioner (Appeals). She also referred to the relevant provisions of Companies Act to show that M/s. RRT were related to M/s. Goodwill in terms of Section 4(3)(b)(ii) of the Central Excise Act. She argued that, on the facts of the case, the corporate veil required to be lifted to expose the relation between the two companies. In this connection, reliance was placed on the Supreme Court's judgment in Calcutta Chromotype Ltd. v. Collector - 1998 (99) E.L.T. 202 (S.C.) and Commissioner v. ITEC (P) Ltd. - 2002 (145) E.L.T. 280 (S.C.). After considering the rival arguments, we agree with learned SDR that the constitution of M/s. Goodwill and that of M/s. RRT indicated that S/Shri R. Rajendran, R. Balakrishnan, R. Thiruvasagam (all sons of the Chairman of M/s. Goodwill) and Smt. Leelavathi (wife of the Managing Director of M/s. Goodwill) together held all the shares in M/s. RRT and about 45% of the shares in M/s. Goodwill. They were Directors of both the companies. The Managing Director of M/s. Goodwill ....
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....% is as determined by the Central Government by notification in the official gazette from time to time. There would be discretion, if at all the same is incorporated in such notification in the gazette by which rates of interest chargeable Under Section 11AB are declared. The second aspect would be whether there is any discretion not to charge the interest Under Section 11AB at all and we are afraid, language of Section 11AB is unambiguous. The person, who is liable to pay duty short levied / short paid / non levied / unpaid etc., is liable to pay interest at the rate as may be determined by the Central Government from time to time. This is evident from the opening part of Sub-section (1) of Section 11, which runs thus: Where any duty of excise has not been levied or paid or has been short levied or short paid or erroneously refunded, the person, who is liable to pay duty as determined under Sub-section (2) or has paid the duty Excise under Sub-section (2B) of Section 11A, shall in addition to the duty be liable to pay interest at such rate.... The terminal part in the quotation above, which is couched with the words "shall" and "be liable" clearly indicates that ....