TaxTMI 
TaxTMI 
2025 (10) TMI 176
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....25<br>Central Excise<br>MR. P. DINESHA, MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellants : Mr. S. Jaikumar, Advocate (Sl.Nos. 1-6 and 26-30, Mr. Hari Radhakrishnan, Advocate (Sl. Nos. 7-25) For the Respondent : Ms. Anandalakshmi Ganeshram, Authorised Representative ORDER Per Mr. VASA SESHAGIRI RAO Sri Poovathal Polymers (SPP for short), and various other appellants listed above, are in appeal before us, against the Order-In-Original No.MDU-CEX-COM-09-2023 dated 05-04-2023 (Originally numbered as MDU-CEX-COM03-2023 dated 05-03-2023 and amended vide Corrigendum dated 31-03-2023), challenging the confirmation of the demand of differential duty, under Section 11A of the Central Excise Act (CEA for short), interest under Section 11AB of CEA and penalty under 11AC of CEA, and with respect to all other appellants listed above, against the imposition of penalties under Rule 26 of Central Excise Rules (CER for short). 1.1 The issue involved in this case is the clubbing of value of clearances among SPP and 11 other units, who were engaged in the manufacture and clearance of excisable goods, namely, polybags falling under ....
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....espect to the quantification of demand based on electricity consumption for the period from April 2015 to June 2017, the counsel would submit that, it is a well settled legal position that, clandestine production cannot be alleged or confirmed merely based on the electricity consumption, as the Central Excise duty is on the manufacture of excisable goods and not based on any mathematical calculations. It was also argued that, whereas the electricity consumption could be one metric in the manufacturing process, there are many more crucial and critical factors to establish the manufacturing trial namely, purchase of raw material, manpower, production records, packing and transport, sale of finished goods and realisation of sale proceeds. In the instant case, the adjudicating authority has not attempted to establish any of the essential elements of manufacture to conclude clandestine production and clearance thereof, but has resorted only to power consumption to confirm differential duty. 3.5 It was further argued that, the adjudicating authority has solely based on the power consumption by SPP during the post-GST era and adopted the same for pre-GST era. While doing so, he has ign....
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....ng authority had proceeded to club the value of clearances and confirm the differential duty denying SSI Exemption on the following grounds, namely, i. Commonality of Infrastructure ii. Common workforce iii. Mutuality of interest + iv. Interdependence between units and, v. Financial flowback 4.1.0 With respect to commonality of infrastructure, it was submitted that, it remains undisputed that both SPP as well as DUs existed and operated in separate and independent premises. That being so, it is only the allegation of the department that, rent has not been properly paid by the DUs to the respective premises owners in respect of the infrastructure leased out. 4.1.1 In this connection, various submissions made by SPP and DUs, are as follows that: - a) Each unit is having separate land and building either in their own name or operated under a valid lease deed b )Each unit is geographically located in different places or having separate boundary c) Each unit is having separate machineries on their own d) Each unit is having separate Electricity connection in their own name e) Each....
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....construed and implicated as a reason for denial of independent existence. Further, neither any law nor the provisions of SSI Notification prohibit sharing of expert manpower as a reason to deny SSI Exemption. It is also an undisputed fact that, wherever the common resources were utilized, they were compensated from respective entities, which goes to prove the arm's length transactions. 4.2.1 The allegation that some of the units owned or partnered by the relatives of Shri. M. Bommanasamy, by no stretch of imagination can be construed to be a reason for clubbing of value of clearances. At the most, Shri. M. Bommanasamy can only be alleged for communal development. 4.2.2 In this regard, reliance is placed on the following decisions: - a) Renu Tandon reported in 1993 (66) E.L.T. 375 (Rajasthan High Court) b) Sushil Chemicals - 2008 (230) E.L.T. 117 (CESTAT, Bangalore) 4.3.0 With respect to the allegation regarding mutuality of interest, the counsels would submit that, by the very words of this expression, to allege mutuality of interest, there shall be 'mutuality'. 'Mutuality' by letter and spirit, is a two-way lane, where both the ends of the transaction sh....
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....records and documents during the cross-examination before the adjudicating authority which has been given a go-by. 4.5.1 In this connection, the appellants submitted the following table to substantiate the source of funds / purchase of machinery either through bank loan or through their other legitimate income sources which have been reflected in their profit & loss account and balance sheets as evident from the Income Tax returns filed. DETAILS OF ALL THE UNITS Company Address Type Of Firm/Constitution Establishment Year Land Building Rental / Lease Details Machinery Electricity Source Of Investment Sri Poovathal Polymers R.S.1196/2C, 1197/2C, 2B Palani Road, Vedasandur. TIN:33275261223 Partnership: M. Bommanasa my B. Poovathal B. Karthik 01.04. 1994 Own Own NA Own 05-274001-233 Statement of A/cs Flint Paper & Plastic Industry No.1/155, Flint Nagar, Ottanchathiram Road, Vedasandur, Dindigul- 624 710 TIN:33775260754 Partnership: M. Bommanasamy B. Poovathal 01.04.1992 Own O....
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....- 001-885 Statement of A/cs Sri Durgaa Plastics S.No.1243/1B2, Ayyanar Nagar, Palani Road, Vedasandur Dindigul - 624 710 TIN:33096256833 Partnership: P. Sridhar, S. Lingamuthu, B. Karthik, K. Saravanakumar G. Amsavalli 15.09. 2014 Rent Rent Rs.14,000/- p.m Own 05-274- 003-895 Statement of A/c & Bank loan Sri Vinayaga Polymers (lease of Flint) 4/196D, Palani Road, Vedasandur, Dindigul - 624710 TIN:33356385961 Partnership: A. Senthilkumar B. Vinodkumar 21.04. 2016 Lease Lease 15,000 /- p.m Leas e 05-274- 001-217 Statement of A/c Sri Bommiyan Polymers (previously Shanmuga) lease of SPP R.S.1196/2C, 1197/ 2C,2B Palani Road, Vedasandur. Dindigul - 624 710 TIN:33306252401 Proprietorship: Kalaikumar 21.04. 2016 Lease Lease Rs.15,000/- p.m Leas e 05-274- 001-233 Statement of A/c 4.6.0 With the respect to another major allegation of the Department to conclude that all the units are DUs of SPP is based ....
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....ders 25.03.2019 850,000 30.07.2020 986,000 136,000 R. Karthick SPP 26.03.2019 850,000 09.06.2019 to 07.07.2020 30.07.2020 (Bank) 3,46,500 6,18,216 (Bank) 114,716 3 Sri Poovathal Poly Bags B. Balasubramani Karthik Traders 29.03.2019 500,000 30.07.2020 to 14.08.2020 51,200 91,200 Karthik Traders 03.04.2019 260,000 M. Kalaikumar M. Kalaikumar 745,000 M. Ramaraj Karthik Traders 28.03.2019 500,000 Karthik Traders 04.04.2019 245,000 05.10.2022 to 28.10.2022 05.11.2022 2,00,000 5,45,000 745,000 R. Kohila Karthik Traders 28.03.2019 500,000 04.10.2022 to 22.10.2022 2,00,000 ....
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....e for confiscation at the first place. In the instant case, there is neither a proposal for confiscation in the Show Cause Notice nor is there any confiscation of any goods in the Order-In-Original. In the absence of same, it was argued that, imposition of penalty under Rule 26 on the co-noticee is fundamentally flawed and merits to be set aside. 6.0 The Ld. Authorized Representative Ms. Anandalakshmi Ganeshram has supported the findings of the adjudicating authority in the Order-In-Original. 7.0 We have heard both sides and perused the appeal records. The two main issues that arise for determination in these appeals are: - i. Whether the clandestine removal alleged to have been effected by SPP based on the electronic evidences, namely, pen drive and consumption of electricity, is sustainable or not. ii. Whether the clearances effected by the alleged principal unit, namely, SPP along with various other units, and consequential denying of SSI Exemption is legally tenable or not and, iii. Whether penalty imposed on SPP and the disputed units and various partners is legally justified or not? 7.1 With respect to the allegation of clandestine clearanc....
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....n 79A of Information Technology Act has not been rebutted by the department. Further, the appellants have also challenged that the electronic evidence namely pen drive has not met the mandatory protocols set out under Section 36B of CEA, including the requirement of a certificate under Section 36B (4) of CEA, has also not been rebutted by the adjudicating authority. Instead, the adjudicating authority has observed in para 21.7.5 of impugned order that the appellants had not objected to the method of taking printouts and the legality and authenticity of the retrieval during the time of the investigation but only took such a stand in their reply to Show Cause Notice. He further observed that the certificate which was not prepared and signed while retrieving the data would not alone vitiate the entire proceedings as the same was taken in the presence of independent witnesses and the partners of SPP. 7.4 The above findings of the Adjudicating Authority which are against the legal provisions and discarding the judicial pronouncements is fundamentally also against the settled principles of adjudication and thus not tenable. 7.5 In this connection, we draw strength....
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....he conditions mentioned in this section are satisfied in relation to the information and computer in question and shall be admissible in any proceedings, without further proof or production of the original, as evidence or any contents of the original or of any fact stated therein of which direct evidence would be admissible. (2) The conditions referred to in sub-section (1) in respect of a computer output shall be the following, namely:-- (a) the computer output containing the information was produced by the computer during the period over which the computer was used regularly to store or process information for the purposes of any activities regularly carried on over that period by the person having lawful control over the use of the computer; (b) during the said period, information of the kind contained in the electronic record or of the kind from which the information so contained is derived was regularly fed into the computer in the ordinary course of the said activities; (c) throughout the material part of the said period, the computer was operating properly or, if not, then in respect of any period in which it was not operating properly or was out o....
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....r it is so supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried on by any official, information is supplied with a view to its being stored or processed for the purposes of those activities by a computer operated otherwise than in the course of those activities, that information, if duly supplied to that computer, shall be taken to be supplied to it in the course of those activities; (c) a computer output shall be taken to have been produced by a computer whether it was produced by it directly or (with or without human intervention) by means of any appropriate equipment. Explanation. -- For the purposes of this section any reference to information being derived from other information shall be a reference to its being derived there from by calculation, comparison or any other process." 36. Mr. Shri Singh learned counsel for the appellant fairly submits that when the CCTV footage was introduced as evidence through PW-1 on 28.08.2014, the judgment of this Court in State (N.C.T. of Delhi) v. Navjot Sandhu @ Afsan Guru, (2005) 11 SCC 600 was holding the field. ....
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....ondary evidence pertaining to electronic record, as stated by this Court in Navjot Sandhu case [State (NCT of Delhi) v. Navjot Sandhu, (2005) 11 SCC 600 : 2005 SCC (Cri) 1715], does not lay down the correct legal position. It requires to be overruled and we do so. An electronic record by way of secondary evidence shall not be admitted in evidence unless the requirements under Section 65-B are satisfied. Thus, in the case of CD, VCD, chip, etc., the same shall be accompanied by the certificate in terms of Section 65-B obtained at the time of taking the document, without which, the secondary evidence pertaining to that electronic record, is inadmissible." 38. According to the learned counsel, since the exhibits were marked before 18.09.2014, the appellant did not have the benefit of the decision of the Anvar P.V. (supra) when the footages were marked. 39. In Shafi Mohammad v. The State of Himachal Pradesh (2018) 2 SCC 801 (delivered on 30.01.2018), a two Judge Bench of this Court after noticing Anvar P.V. (supra) held that a party who is not in possession of device from which the document is produced cannot be required to produce the certificate under Section 65-B(4....
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....y its mind and pronounce its decision on the question of admissibility then and there; and secondly, in the event of finding of the court on the mode of proof sought to be adopted going against the party tendering the evidence, the opportunity of seeking indulgence of the court for permitting a regular mode or method of proof and thereby removing the objection raised by the opposite party, is available to the party leading the evidence.* [ The matter between two asterisks has been emphasised in original] Such practice and procedure is fair to both the parties. Out of the two types of objections, referred to hereinabove, in the latter case, failure to raise a prompt and timely objection amounts to waiver of the necessity for insisting on formal proof of a document, the document itself which is sought to be proved being admissible in evidence. In the first case, acquiescence would be no bar to raising the objection in superior court." 31. It would be relevant to refer to another case decided by this Court in P.C. Purushothama Reddiar v. S. Perumal [P.C. Purushothama Reddiar v. S. Perumal, (1972) 1 SCC 9] . The earlier cases referred to are civil cases while this case pertain....
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....on 65-B(4) cannot be permitted to be raised at this stage as the objection relates to the mode or method of proof." As rightly pointed out by Mr. Raja Thakare, learned Additional Solicitor General, it was held in Sonu (supra) that objection about Section 65B(4) of the Indian Evidence Act, not being complied, cannot be taken at the appellate stage since that will deny an opportunity for the prosecution or the opposite party to rectify the defect. It was also held that the documents were not inherently inadmissible in evidence. Thereafter, the Honourable Supreme Court, went on to hold as below: 47. A two-Judge Bench in a referral order reported in Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Ors., (2020) 3 SCC 216 referred the following question to a larger bench: "3. We are of the considered opinion that in view of Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108], the pronouncement of this Court in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC (Civ) 346 : (2018) 1 SCC (Cri) 860] needs reconsideration. With t....
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....or directs that the requisite certificate be produced by a person to whom it sends a summons to produce such certificate, the party asking for the certificate has done all that he can possibly do to obtain the requisite certificate..... 52. We may hasten to add that Section 65-B does not speak of the stage at which such certificate must be furnished to the Court. In Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108], this Court did observe that such certificate must accompany the electronic record when the same is produced in evidence. We may only add that this is so in cases where such certificate could be procured by the person seeking to rely upon an electronic record. However, in cases where either a defective certificate is given, or in cases where such certificate has been demanded and is not given by the person concerned, the Judge conducting the trial must summon the person/persons referred to in Section 65-B(4) of the Evidence Act, and require that such certificate be given by such person/persons. This, the trial Judge ought to do when the electronic record is produced in evidence bef....
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...., can also be applied. Section 65-B(4) of the Evidence Act clearly states that secondary evidence is admissible only if led in the manner stated and not otherwise. To hold otherwise would render Section 65-B(4) otiose. 73. The reference is thus answered by stating that: 73. 1. Anvar P.V. [Anvar P.V. v. P.K. Basheer, (2014) 10 SCC 473 : (2015) 1 SCC (Civ) 27 : (2015) 1 SCC (Cri) 24 : (2015) 1 SCC (L&S) 108], as clarified by us hereinabove, is the law declared by this Court on Section 65-B of the Evidence Act. The judgment in Tomaso Bruno [Tomaso Bruno v. State of U.P., (2015) 7 SCC 178 : (2015) 3 SCC (Cri) 54], being per incuriam, does not lay down the law correctly. Also, the judgment in Shafhi Mohammad [Shafhi Mohammad v. State of H.P., (2018) 2 SCC 801 : (2018) 2 SCC 807 : (2018) 2 SCC (Civ) 346 : (2018) 2 SCC (Civ) 351 : (2018) 1 SCC (Cri) 860 : (2018) 1 SCC (Cri) 865] and the judgment dated 3-4-2018 reported as Shafhi Mohd. v. State of H.P. [Shafhi Mohd. v. State of H.P., (2018) 5 SCC 311 : (2018) 2 SCC (Cri) 704], do not lay down the law correctly and are therefore overruled. 73.2. The clarification referred to above is that the required certificate ....
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....teel Casting Ltd v. Additional Director General (Adjn.), Directorate General of GST Intelligence (Adjudication Cell), reported in 2024 (10) TMI 672-CESTAT NEW DELHI. In this decision, the Tribunal has, after noticing the statutory provisions of Section 36B (4) held that as the required certificate under Section 36B (4) of the Central Excise Act was not produced, no reliance can be placed on the printouts, in view of the judgements of the Supreme Court in Anvar P.V. and Arjun Panditrao Khotkar. The relevant paragraphs of the aforementioned Tribunal decision is as under: 15. To examine the issues that have been raised, it would be necessary to first examine section 36B of the Central Excise Act. It is reproduced: "Section 36B- Admissibility of micro films, facsimile copies of documents and computer print outs as documents and as evidence. (1) Notwithstanding anything contained in any other law for the time being in force,- (a) a microfilm of a document or the reproduction of the image or images embodied in such microfilm (whether enlarged or not); or (b) a facsimile copy of a documents; or (c) a statement contained in a document a....
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....o say, - (a) identifying the document containing the statement and describing the manner in which it was produced; (b) giving such particulars of any device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer, (c) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate, and purporting to be signed by a person occupying a responsible official position in relation to the operation of the relevant device or the management of the relevant activities (whichever is appropriate) shall be evidence of any matter stated in the certificate; and for the purposes of this sub-section it shall be sufficient for a matter to be stated to be to the best of the knowledge and belief of the person stating it. (5) For the purposes of this section, - (a) Information shall be taken to be supplied to a computer if it is supplied thereto in any appropriate form and whether it is so supplied directly or (with or without human intervention) by means of any appropriate equipment; (b) whether in the course of activities carried o....
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....ny device involved in the production of that document as may be appropriate for the purpose of showing that the document was produced by a computer, (iii) dealing with any of the matters to which the conditions mentioned in sub-section (2) relate. 19. The Central Excise Act contains a specific provision that describes the manner in which the admissibility of computer print outs will be accepted as evidence in proceedings initiated under the Central Excise Act. 20. In respect of section 65B of the Evidence Act, which is pari materia to the provisions of section 36B of the Central Excise Act, it would be relevant to refer to the observations made by the Supreme Court in Anvar P. V. The Supreme Court, held that evidence relating to electronic record shall not be admitted in evidence unless the requirement of section 65B of the Evidence Act is fulfilled." The Tribunal thereafter goes on to reproduce relevant paragraphs of Anvar P.V and Arjun Panditrao Khotkar vs. Kailash Kushanrao Gorantyal & Others, noticing that the latter judgement was with a mild modification that if the original device is not produced, then electronic record can be produced in a....
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.... the Central Excise Act, hold that a printout generated from the personal computer that has been seized cannot be admitted in evidence unless the statutory conditions laid down in section 36B of the Central Excise Act are complied with. The decisions also hold that if the data is not stored in the computer but officers take out a printout from the hard disk drive by connecting it to the computer, then a certificate under section 36B of the Central Excise Act is mandatory. 75. We are consciously avoiding prolixity by refraining from citing multiple judgements on similar lines relied upon by the appellants. Therefore, by following the aforementioned binding judgements of the Honourable Apex Court as well as in conformity with the views expressed by coordinate benches of this Tribunal earlier, we hold that the Adjudicating Authority has grossly erred in placing reliance on the printouts obtained from the pen drives, computer and hard disks as has been done in this matter to confirm the demands. The impugned order of the Adjudicating Authority cannot be sustained and is liable to be set aside on this count also. 76. We further notice that in this case the appellants h....
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....along with their other submissions with respect to substantial consumption of electricity during preheats between batches. It is the case of the appellants, SPP would be running single shifts during the disputed period, which required switching off and switching on frequently, whereas, they started continuous production during 2018-19 as only virgin materials are used which is probable due to banning of certain categories of plastics. 7.6.2 We have perused the decision rendered in the case of RA Castings (P) Ltd. [2008 (6) TMI 197] which has been relied upon by the Appellant. For ready reference, the relevant portion of the said decision is reproduced here under: - 19. "The main question to be decided in the instant appeals here is whether the appellants during the period December 2001 to March, 2005 have actually manufactured M.S. Ingots in excess of what has been recorded in their statutory records and removed the said quantity clandestinely from their factory without payment of duty. The excess production has been worked out on the basis of electricity consumption for which the standard norms are imported from the report of late Mr. N.K. Batra, Professor of Mat....
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.... in suppression of production of steel ingots. The reasons for high consumption of electricity in the case of the appellants' factories have not at all been studied and analysed by the Revenue independently. Instead, the norm of 1046 units fixed as per Dr. Batra's report has been blindly applied to the appellants' cases to work out the excess production. This approach is flawed and does not have sanctity. 21. The law is well settled that the electricity consumption cannot be the only factor or basis for determining the duty liability that too on imaginary basis especially when Rule 173E mandatorily requires the Commissioner to prescribe/fix norm for electricity consumption first and notify the same to the manufacturers and thereafter ascertain the reasons for deviations, if any, taking also into account the consumption of various inputs, requirements of labour, material, power supply and the conditions for running the plant together with the attendant facts and circumstances. Therefore, there can be no generalization nor any uniform norm of 1046 units as sought to be adopted by the Revenue especially when there is no norm fixed under Rule 173E till date by the ....
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....ignees, receipts of sale proceeds by the consignor and its disposal. In the instant case, no such evidences to the above effect have been brought on record. 22.1 For want of evidence relating to the above points, clandestine removal cannot be sustained merely on the basis of the technical opinion report of Mr. Batra. In this connection, the following case laws are relied: (i) Emmtex Synthetics Ltd. v. Commissioner of Central Excise, New Delhi reported in 2003 (151) E.L.T. 170 (Tri.- Del.); (ii) Commr. of Central Excise, Chennai v. Dhanavilas (Madras) Snuff Co. reported in 2003 (153) E.L.T. 437 (Tri.- Chennai); (iii) Commissioner of Central Excise, Madurai v. Madras Suspensions Ltd. reported in 2003 (156) E.L.T. 807 (Tri.-Chennai); (iv) Commissioner of Central Excise, Coimbatore v. Sangamitra Cotton Mills (P) Ltd. reported in 2004 (163) E.L.T. 472 (Tri.-Chennai); (v) Commissioner of Central Excise Coimbatore v. Velavan Spinning Mills reported in 2004 (167) E.L.T. 91 (Tri.- Chennai); (vi) M. Veerabadhran & others v. Commissioner of Central Excise, Chennai-II reported in 2005 (182) E.L.T. 389 (T) = 2005 (98)....
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....m to conclude clandestine production and clearance. On the other hand, in the instant case, it is seen that no effective attempt has been made by the department to substantiate their allegation in respect of any of the above pointers, but they have chosen only difference in power consumption to be the basis of excess production. As noted above, the submissions of the appellants with respect to variety of factors which influence the power consumption has been given a go-by. Thus, we hold that, the revenue has not discharged their onus to establish any excess production by the appellant nor clandestine removal thereof, and accordingly we set aside the demand of differential duty for the period from April 2015 to June 2017 as confirmed in the impugned Order-in-Original. 9.0 Coming to the second issue with respect to the clubbing of value of clearances and denial of SSI Exemption between SPP and other units, it is vehemently argued by the Ld. Counsel that all the allegations of the department to conclude that the value of clearness effected by SSP and others are to be clubbed are thoroughly prejudiced and the arm's length transaction between them have been comfortably ignored.....
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....impugned Orderin-Original as under: - "The Supreme Court in the case of Modi Alkalies & Chemicals Ltd 2004 (171) ELT 155 (S.C) had held that pervasive financial and management control are prima facie indicators of interdependence but adjudication that a unit is dummy has to be on the facts of each case and there could not be any generalization or rule of universal application and the decision as to whether they were front companies for manufacturing company is irrespective of latter having separate sales tax, income tax and central excise registration for manufacturing company." 9.4 In the above case, the Hon'ble Supreme Court has mandated the authority to decide as to whether any unit is a dummy has to be examined on the facts of each case, whereas, in the instant case the adjudicating authority has, without determining the existence or otherwise of the units, misplaced reliance on the above ratio. It is absolutely essential to examine whether there is manufacture or not and whether the transactions among these are on principal to principal basis or at arm's length basis. 9.5 The other defense of the appellants with respect to the allegation in respect payment....
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....actor for clubbing of units. In the case of CCE Kanpur Vs. Sharad Industries [2013 (294) ELT 561(TRI-TEL)], it was observed that the evidence of common office premises, common staff, common maintenance of records cannot be a sufficient ground to club the clearances of the units and prime requirement for clubbing of clearance of two units is that, both the units do not have any independent existence or independent machinery and infrastructure to manufacture the goods. In the instant case, the appellants have successfully demonstrated the independent existence and also independent machinery and infrastructure to manufacture the goods. Hence, the ground of the investigation that, sharing of few common resources would not be a ground to club the value of clearances between the units. While holding so, we also note the trade practice that, resources with expertise are often engaged by multiple units as consultants / part-timers, for which they get extra compensation. In the instant case also, it is on record that the alleged common work force were independently compensated from the respective units, where they had provided their services. 10.1 We f....
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....the disputed units post 2017. In this connection, the appellant has contended that mutuality of interest is an interest which should flow from both the ends, whereas, the department has not alleged any beneficial interest at the hands of the disputed units, to constitute a mutuality. Further, the investigation has also questioned the financial wherewithal of the disputed units for their capital investments. In this context, the appellants have placed on record that all the disputed units had source of capital investments either by way of their savings or through loans from banking channels, which remains undisputed, as evidenced by their financial records. 11.1 The Adjudicating Authority has proceeded to negate these submissions of the appellant by observing in para 20.13 of the impugned order by observing that no profit, interest and share amount was found to have been paid to any of the partners during the functioning of these firms. To our mind, by no stretch of imaginations the nonpayment of profits or interest would constitute any negative inference with respect to the mutuality of interest. While observing so, the adjudicating authority has lost sight of the su....
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.... principal basis and cannot be a ground to allege or conclude a financial flowback between the units and consequent ground to club the value of clearances. 14.0 We find that the above averments of the appellants remain undisputed that all the loans were repaid through banking channels with appropriate interest and hence, as rightly contended by the appellants, would, at the most be viewed as a financial transaction and not a ground to club the value of clearances. In other words, these financial transactions of taking loans and repayment thereof, that too with the appropriate interest, cannot constitute a flowback to club the value of clearances. 15.0 The counsel have also placed a valid argument that the alleged principal unit namely SPP was formed in the year 1994 whereas, the one of the alleged dummy units, namely Flint paper and Plastic Industry (FPP) was in existence since 1992, the adjudicating authority has given a finding in para 20.10 of the impugned Order-in-Original that after starting SPP and the disputed units at close proximity in Vedasandur, the independent activity of Flint Paper and Plastic Industry came to a halt and was controlled by the SPP, it....