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2018 (2) TMI 1014 - CESTAT MUMBAISSI Exemption - clubbing of clearances of four entities i.e., Silicone Carbide Grinding Mills Pvt. Ltd (i.e. SCGM), Lignin Research Center (i.e. LRC), Sweta Electric (P) Ltd (i.e. Sweta) and Indostaits (Pvt.) Ltd. (i.e. Indostraits) - dummy units - it has been held in the impugned order that the four companies are dummy company. They are a facade created for circumventing the small scale notifications and therefore the aggregate value of clearance of all four companies were clubbed. Held that: - while there were noteworthy transaction between SCGM and LRC, no significant transaction in respect of Sweta and Indostraits has been pointed out in the show-cause notice or in the impugned order. The only evidence in respect of Sweta and Indostraits relates to common office premises, common control of Shri S.V. Jayshankar. In absence of any evidence of common pool of funds, free movement of material, common manufacturing operations etc, merely on the basis of some common shareholding and management clubbing of clearance by holding them as dummy units cannot be upheld. In these circumstances, the charge for clubbing the clearances of Sweta and Indostraits with SCGM and LRC cannot be sustained. The two units were commercially interacting with each other as in they were buying and selling material to each other. Therefore a few transactions do not by any manner indicate that there was a common pool of funds. It can be seen that the SCGM and LRC came into existence as totally different units. SCGM came into existence in1982 while LRC was formed in 1966. The original shareholding pattern was very different at the time of formation. Later by resignation and induction of partners the shareholding pattern evolved to present state - It is apparent that the SCGM and LRC have separate identities right from the inception. Various licences have been procured at different times. Thus independent development of the two cannot be doubted. Tribunal in the case of Electro Mechanical Engg Corpn [2002 (5) TMI 186 - CEGAT, NEW DELHI] has in almost identical circumstances held that clearances cannot be clubbed. No evidence of any significant transaction between Sweta and Indostraits among themselves or with SCGM and LRC. Some instances of transactions have been pointed out between SCGM and LRC, but they are neither significant nor substantial to prove that there was common pool of funding or common identity of the two or any flowback. Thus the clearances of the four appellants cannot be clubbed for the purpose of small scale exemption. Extended period of limitation - Held that: - at the material time there was a view of revenue that each limited company is a manufacturer by itself and will be entitled to a separate exemption limit. In such circumstances the bonafides of the appellants cannot be doubted - invocation of larger period of limitation is not justified. Confiscation of goods cleared during the previous five years - redemption fine - Held that: - Since on merits the case is not established there can be no confiscation. Moreover in absence of goods and in absence of any seizure no confiscation can be ordered and no redemption fine can be imposed - confiscation and redemption fine set aside. Appeal allowed - decided in favor of appellant.
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