TaxTMI 
TaxTMI 
2025 (5) TMI 59
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....pellant company with the value of clearance of M/s. MCG Electrocontrols Pvt . As the total value of clearance of both the units exceeded the value of clearances fixed for availing SSI exemption, the said benefit of SSI exemption was denied to the appellant. 1.1. Accordingly, a SCN was issued to the appellant demanding central excise duty of Rs.52,27,694/- along with interest and penalty. On adjudication, the Ld. adjudicating authority has confirmed the demand of central excise duty along with interest and imposed equal amount of duty as penalty. 1.2. Aggrieved against the confirmation of the demands of duty, interest and penalty, the appellant has filed this appeal. 2. The appellant submits that their value of clearance of the excisable goods for the Financial Year 2009-10 was less than Rs. 4 crores, but the Ld. adjudicating authority has added freight amount of Rs. 6,68,870/ - and arrived at their value of clearance for the Finanacial Year 2009-10 as Rs. 4,04,98,846/-. Accordingly, the benefit of exemption on the first clearance value of rupees one hundred and fifty lakhs available to the appellant for the next financial year 2010-11 was denied and duty has been demanded withou....
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....ure and sales of goods by MCG Electrocontrols Pvt. Ltd. on their own for all the years except the sales made to the appellant; in the Profit and Loss Account of MCG Electrocontrols Pvt. Ltd. the value of sale of their manufactured goods has been shown as under: (i) Rs.44,69,739/ - for the Financial Year 2009- 10 (ii) Rs. 52,15,832/ for the Financial Year 2010-11 (iii) Rs. 59,28,620/ - for the Financial Year 2011-12 and (iv) Rs.1,04,30,233/ for the Financial Year 2012-13. 2.3. Hence, it is their submission that it is evident that entire value of clearance of M/s MCG Electrocontrols Pvt. Ltd.has not been added to the assessable value of the appellant. Only the sale value of clearance made to the appellant company has been added to the assessable value of the appellant company. Thus, the appellant submits that the department has considered M/s MCG Electrocontrols Pvt. Ltd as a separate unit manufacturing control panels and recognised the value of clearances made by them to all their customers except the appellant company, as genuine and only the value of clearances made to the appellant has been segregated and added to the assessable value of the appellant company for denying....
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....pees one hundred and fifty lakhs available to the appellant for the next financial year 2010-11 is not sustainable. Accordingly, we hold that the demand confirmed in the impugned order on account of denial of the exemption up to the value of clearances of 1.50 crores for the Financial Year 2010-11 is not sustainable and accordingly we set aside the same. 5.2. Regarding clubbing of the value of purchases made by the appellant from M/s MCG Electrocontrols Pvt. Ltd. It has been alleged that M/s MCG Electrocontrols Pvt. Ltd has no separate machinery available in their unit for manufacture of control panels. They were having one common Director and financial interests. Accordingly, the Ld. adjudicating authority has justified the clubbing of the value of clearances of both the units to deny the benefit of exemption to the appellant company. However, we observe that the Department has not brought in any evidence to substantiate the allegation that M/s. MCG Electrocontrols Pvt Ltd is a dummy unit of the appellant except claiming that they are functioning in the same premises and one of the Directors is common in both the companies. 5.3. It is observed that M/s. MCG Electrocontrols Pvt. ....
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....oth the units in the present matters cannot be clubbed together as both of them are private limited companies. Further, the financial flow back has not been brought on record. It has been held by the Rajasthan High Court in Renu Tandon that value of clearances of three units cannot be clubbed together and two units cannot be treated as one unit merely because of proximity of relationship or the situation of two factories or because there are some common employees, unless there is clear and specific finding that there is mutuality of business interest between two units and both have interest in business of each other and they have common funding and financial flow back. We therefore, set aside the impugned order and allow both the appeals." 5.5. From the decision cited above, we observe that unless there is mutual financial interest, the value of clearances of two units cannot be clubbed. In the present case, we observe that the investigation has not brought in any evidence to show that both units have mutual financial interest. 5.6. From the Profit and Loss Account of the appellant company, we observe that the appellant has been involved in trading of the control panel purchased ....