TaxTMI 
TaxTMI 
2026 (4) TMI 1269
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....3.2003 and not liable to pay Central excise duty c. whether penalties can be imposed on the proprietress / proprietor of the appellant units. 3. The details of the Appeals are tabulated as under; Sl. No Appeal No. Name OIA No. & Date SCN & Date Period Demand U/S 11A(4)/ 11A(1) CEA,1944 Penalty U/S 11AC 1 E/21749/17 K.K. Manoj 221-16-17 30.11.2017 53/2013- CE 23.12.2013 01.11.2008 to 31.12.2012 39,17,004 39,22,004 2 E/20036/18 K.K. Manoj 222-16-17 30.11.2017 11/2016- CE 15.03.2016 01.01.2015 to 31.12.2015 5,44,129 59,000 3 E/20038/18 K.K. Manoj 221-16-17 30.11.2017 02/2015 26.02.2015 01.01.2014 to 31.12.2014 3,12,956 3,17,956 4 E/20039/18 K.K. Manoj 221-16-17 30.11.2017 9/2014 CE 31.03.2014 01.01.2013 to 31.12.2013 17,46,728 17,51,728 5 E/21748/17 Sheeba N K 221-16-17 30.11.2017 53/2013 CE 23.12.2013 01.11.2008 to 31.12.2012 39,17,004 39,22,004 6 E/20078/18 Shee....
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....e Tribunal. 5. The learned Counsel for the appellant during the hearing submits that; as the issues covered are similar in all the above appeals, Appeal No. E/21749/2017 of Sri. K. K. Manoj Proprietor, M/s. Shree Sheeba Polysacks is referred to in their submissions and they may be considered for all appeals unless any specific reference is made to other appeals. 6. The learned Counsel submits that the following are the summary of start date of various units referred to in the SCN No. 53/2013-CE dated 23.12.2013 Details M/s. Sri Aidihya Enterprises Prop K.K. Manoj M/s. Sree Sheeba Polysacks Prop K.K. Manoj M/s.Sree Aishwarya Packagings Prop Sheeba N.K Business Start date 20.02.2007 (VAT Regn from 29.12.2007)-Closed on 31.10.2009 09.12.2009 14.03.2005 7. The learned Counsel submits that; on the date of visit of the Central Excise Officials on 30.01.2013 the 2(two) units which were functioning are M/s. Sree Sheeba Polysacks and M/s. Sree Aishwarya Packaging. The brief about these units is provided herewith; Details M/s. Shree Sheeba Polysacks &....
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....warya Packaging. e. M/s. Shree Sheeba Polysacks (Mr. K.K. Manoj) obtained industrial connection on 24.02.2010 with consumer no 14215. f. Mr. Manoj had obtained connection with consumer no. 10806 on 29.02.2003 and dismantled on 17.11.2011. g. Ms. Sheeba N. K (M/s. Shree Aishwarya Packagings) obtained connection with consumer no. 12218 on 20.01.2006 and dismantled 07.12.2011. 11. The learned Counsel submits that on a perusal of the aforesaid summary of events, the following factual position emanates; A. M/s. Shree Aishwarya Packagings was started during 2005 by Ms. Sheeba N. K in a small shed. Following documents are enclosed in support of this. a. Shop Inspection report from Agricultural Income Tax and Sales Tax Department. b. Panchayath permission for manufacture in Order No. A5.115/05 dated 16.02.2005. c. Rental Agreement dated 21.02.2005 d. A separate electricity connection was also obtained by Ms. Sheeba N. K for her unit bearing consumer no. 12218 from 20.01.2006. A copy of electricity bill dated 09.06.2010 enclosed as Annexure-4. e. This entity later closed its operation in the abov....
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....for various periods commencing from April 2008 until 31st March 2014 and later period through a separate order in 1/2017-CE which has been upheld by the First Appellate authority can be clubbed. The reasons for clubbing of the turnover of these units as given from Paras 60 to 65 of the Order-in-Original are as follows: i. Drawing of electricity from the same connection ii. Disproportionate turnover on a comparison of staff strength of each of the units. iii. No separate store room, office room for both the units. iv. Raw materials are lying together and no wall between stocks for clear demarcation. v. Electricity and Rent given free hence there is common interest amongst three units. 14. Learned Counsel for each of the above findings submits that: a. Drawing of electricity from the same connection: As could be seen from Para 55 and 56 of Order-in-Original there was separate connection for each of the units. Hence, the finding that electricity is drawn from same connection is incorrect. Once M/s. Shree Aishwarya Packaging moved to the new location during December 2011, though separate electricity connection was ....
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....quired, more so when the products are easily identifiable. d. Raw materials are lying together and no wall between stocks for clear demarcation: Submission to "c" above may be considered. e. Electricity and Rent given free hence there is common interest amongst three units: Electricity and Rent are not given free, audited financials clearly show cases the payment of rent and electricity charges by M/s. Shree Aishwarya Packagings. Hence the finding is not correct. 15. Learned Counsel further submits that there is no mutuality of interest as the units functioned separately and had statutory registrations to carry out the business and are filing statutory returns. The tests of clubbing laid down by various decisions are as follows: a. Common funding and financial flowback between units; There are no common funding or financial flow back between the units. b. Common management and control of operations; Units are managed individually in their own capacity. c. Functional interdependence (one unit manufacturing exclusively for another); Each of the units have their own set up of people, ....
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....(SCN) is issued jointly and severally. The burden to prove, if any unit is dummy is on the Revenue to clearly state which unit is dummy and which is the bonafide unit. In the given facts, since both the units were bonafide, with an intent to somehow fasten the liability, show cause notices (SCNs) were issued 'jointly and severally' on all units which is not permissible. 18. Learned Counsel further submits that by issuing show cause notices (SCNs) on all parties, there is a recognition by the Revenue that they are independent units hence clubbing is not permissible. The Appellant places reliance on the decisions, wherein it is held that such show cause notices (SCNs) are not allowed and were held in favour of the Assessee, a. Talwar Versus Commissioner Of Central Excise 2018 (362) E.L.T. 324 (Tri. Del.) both units have statutory registrations like VAT and Income Tax, hence clearances cannot be clubbed. Demand not sustainable, if made jointly and severally, SSI exemption to be applied separately for each units. b. Deepak Hinges Pvt. Ltd. Vs. Commissioner-2019 (21) G.S.T. Allahabad. Clubbing of clearance not permissible when c....
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....there is no requirement of registration, no penalty is leviable under Rule 27 of the Central Excise Rules, 2002. 23. The learned Authorized Representative (AR) for the Revenue reiterated the findings in the impugned orders. The learned AR further submits that M/s. Sree Sheeba Polysacks and M/s. Shree Aishwarya Packaging belong to wife and husband, the employees are interchangeably used, there is a common room for the raw material, there is no payment of rent by M/s. Shree Aishwarya Packaging, the electricity connection is common for both the units, and certain other aspects of functioning of the units which are common are construed as there is mutuality of interest between both the units and therefore the clearances of both the units should be clubbed for the computation of the exemption limit under the SSI Notification No. 08/2003-CE dated 01.03.2003. Learned AR submits that these units of the appellants are one and the same and one is the dummy of the other unit and that they artificially bifurcated the turnovers to keep the turnovers within the SSI exemption limit. 24. Heard both sides and perused the records. 25. The issue involved in these appeals is with ....
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....d the required approvals/ licenses / permissions/ utility connections (electricity, water) etc. Further, they are filing VAT Returns and Income Tax Returns, separately. Further they are paying the utility bills, separately. We find that there are catena of decisions, inter alia where even in a case where units of the wife and husband are operating from the same premises they cannot be considered as a single unit in the absence of any evidence to show that there is a financial flow back. In the facts and circumstances of the case we find that both the units existed independently till 2011 and thereafter they were operating from the same premises located in different floors. However, the demands are from the years 2008 to 2014. The appellant contended that till 2011 when the units were separately operated, therefore the demand for the period 2008 to 2011 is not sustainable as they were independent units. With regard to the combining of the clearances there are catena of case laws wherein clubbing is not permitted in the situations/ facts in those cases, which we find are applicable to the facts of this case, hence the clubbing of the clearances is untenable. Further, we find th....