TMI Blog1994 (1) TMI 174X X X X Extracts X X X X X X X X Extracts X X X X ..... y the respective users to the other. In this connection he drew our attention to paras 12 and 13 of the earlier order of the Collector bearing No. Collr/93/87, dated 19-11-1987 which are reproduced below for convenience of reference : 12. In fact the only evidence which is of material interest is in the nature of the following facts : (i) that M/s Kamal Industries and M/s SPL Machinery have a common power/service connection. (ii) that no documentary evidence has shown that one lathe belonging to M/s SPL Syndicate and one lathe belonging to M/s SPL Machinery were installed in the premises of M/s Kamal Industries; (iii) that some processes of manufacture of one unit were being undertaken in another unit. 13. It is of course perfectly legal to share a power connection and also to share machinery or to lend machinery by one to another. In such cases, what is required to be shown in defence is that there was adequate compensation for such purchase of power or for such, borrowing of machinery. Admittedly in this case no such evidence has been led by the respondent. Admittedly this is a slender evidence. The cases of bifurcation are difficult to establish. As long as the paper ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant. He further pleaded so far as the electricity charge is concerned, here again the fact of payment for the use of power by the appellant was there by evidence on record. He pleaded that once the points which weighed with the learned adjudicating authority in the earlier order had been met, the learned lower authority had no option but to rule in favour of the assessee, since on all other points, the original authority had already entered a finding that those points could not be factors from which any inference could be drawn whether there are two units and whether the two were functioning as one. 2. The learned DR adopted the reasoning of the original authority in the impugned order and pleaded that the lower authority has rightly held that clearances of both the units should be clubbed and the appellant should be called upon to pay duty. 3. We observe that in the show cause notice issued the charges have been framed on the facts set out in para 9 of the show cause notice which is reproduced below : 9. From the four mahazars drawn for these three units the following facts have been noticed : (i) That Kamal Industries and SPL Machinery are having common power/servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... machine, it is evident that manufacture of electric motors was undertaken at M/s. Kamal Industries and M/s. SPL Machinery only. These two units undertake part of the process for the motor production and finally painted at Kamal Industry and tested at M/s. SPL Machinery. Electric Motors thus manufactured were sold by raising invoices at three different units. 12. From the statement referred to above, the fact reflected in the mahazar for testing, painting electric motors, the premises of Kamal Industries and SPL Machinery was utilised with the Air Compressor and Testing Equipment installed at the respective premises for the sale invoices for electric motors claimed by all these three units. Further Kirloskar Machine of M/s. SPL Machinery was found installed at Kamal Industry. This fact is further corroborated by the statement of Shri S. Karudhia given on 21-12-1985 that the boxes manufactured on job work by his wife s firm were handed over to SPl Machinery only though indents were raised for all three units. The learned Collector, who adjudicated the case earlier, after taking into consideration the evidence and pleas made, while analysing the position as to whether the unit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to the operations of the two units and in a circumstance like this he held that this slender evidence was enough to interpret the position to the advantage of the Department. One more factor which weighed with the Collector was that one manufacturer was manufacturing boxes for all the three units and that these boxes were being handed over to M/s. SPL Machinery. This order of the Collector dated 19-11-1987 bearing No. 93/87 on appeal was remanded by the Tribunal vide order No. SRSB/43/1988 dated 1-9-1988 with the following observations : However, the appellant has now submitted before us that they do possess such evidence in relation to purchase of power in the form of the ledger entries and receipts from the Tamilnaidu Electricity Board and also that they have with them labour bills and vouchers evidencing payment for job charges done in the units. There is also an apparent ambiguity in the finding relating to the machinery as the Collector s order indicates the existence of two lathes, whereas the show cause notice refers to only one. In the circumstances we hold that it will be appropriate for the Collector to evaluate the evidence that the appellants claimed to be in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para 10.5 of the impugned order is reproduced below : 10.5. Shri P.L. Meenakshi Sundaram happens to be the owner of the premises in which both these units were functioning at the material time. He is the brother of Shri P.L. Sivasamy (one of the partners of M/s. SPL Syndicate). In view of the fact that Shri Meenakshi Sundaram is the owner of the building, necessarily the electricity connection has to be in his name. In fact, it was so. There were three connections, namely, Sl. No. 134 (domestic connection), Sl. No. 135 (power connection, and Sl. No. 136 (for welding set). It has been mentioned that Shri Meenakshi Sundaram paid the electricity dues of all the three connections. M/s. Kamal Industries paid Rs. 50/- per month for using the electricity to Shri Meenakshi Sundaram. There is no such contract between M/s. SPL Syndicate and Shri Meenakshi Sundaram. This is rather mysterious. What has weighed with the learned Collector in the impugned order is the two partnership concerns running the two units viz. M/s. Kamal Industries and M/s. SPL Machinery have close relations as partners and the learned Collector has observed that the two firms have been created for the purpos ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was done with the customers or with the workers of the two units to establish whether the two units were functioning as one financial entity. No evidence has been brought on record to show that the orders for the motors were being organised by one of the units and the procurement and disposal of raw materials was also by one of the two units and the two units were functioning as part of the one financial operation. In the earlier order one of the factors which weighed with the Collector, as mentioned earlier, was non-payment of electricity dues. It is seen that so far as Kamal Industries are concerned, evidence has been produced that they were paying monthly charge of electricity to Shri Meenakshi Sundaram, who is the owner of the building in which the two units were located. No evidence, however, has been produced before the learned Collector in regard to the payment of rent by M/s. SPL Machinery. It has to be noted that any payment for electricity which was to be made had to be to Shri Meenakshi Sundaram and it is not if one unit was dependent on the other for electricity. Non-payment of electricity dues by M/s. SPL Machinery or SPL Syndicate cannot be a factor which can be cons ..... X X X X Extracts X X X X X X X X Extracts X X X X
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