TMI Blog2001 (8) TMI 244X X X X Extracts X X X X X X X X Extracts X X X X ..... 1996-97 in terms of proviso to Section 11A(1) of Central Excise Act, 1944. (iii) An amount of penalty of Rs. 6,56,250/- shall be paid by M/s. Agarwal Rubber Pvt. Ltd. under Section 11AC of Central Excise Act, 1944 read with Rule 173Q of Central Excise Rules, 1944 as discussed in Para (22) supra. (iv) Interest @ 24% per annum on the duty determined as above at (ii) shall be paid by M/s. Agarwal Rubber (P) Ltd. under Section 11AB vide Notification No. 8/2000-C.E, (N.T.), dt. 1-3-2000 . (v) An amount of duty of Rs. 54,38,792/- shall be paid by M/s. TM Tyres and Tubes Pvt. Ltd., Kallakal Village being the Central Excise Duly short paid by them during the period from 1997-98 to 1999-2000 (upto 11/99) in terms of proviso to Section 11A(1) of Central Excise Act, 1944. (vi) An amount of penalty of Rs. 57,10,732/- shall be paid by M/s. TM Tyres and Tubes Pvt. Ltd. under Section 11AC of Central Excise Act, 1944 read with Rule 173Q of Central Excise Rules, 1944 as discussed in Para (22) supra. (vii) Interest @ 24% per annum on the duty determined as above at (v) shall be paid by M/s. TM Tyres and Tubes Pvt. Ltd. under Section 11AB vide Notification No. 8/2000-C.E. (N ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e clubbed as there was mutuality of interest and its main unit who is alleged to be the king pin in floating other four units, then demands ought to have been raised against the principal unit i.e. Agarwal Rubber Pvt. Ltd., as has been held by the Apex Court in the case of Gajanan Fabrics Distributors v. CCE, Pune reported in [1997 (92) E.L.T. 451 (S.C.)]. On this prima facie consideration, and on the plea that the Commissioner in Para 10 has stated that large number of judgments are not applicable itself shows total non-application of mind as the law on the aspect of clubbing of various units have been explicitly expounded by the Tribunal and the Apex Court and High Courts in large number of judgments. The Commissioner ought to have applied his mind further in the matter. The order is totally a non-speaking order and in view of fundamental error in the show cause notice itself appeals are required to be allowed at this prima facie stage by grant of waiver of duty and stay of its recovery. 3. Ld. DR, Shri V. Ramakrishnan points out that the demands have been independently made against each of the unit as they were not entitled to the benefit of the notification. The Revenue is no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a specific query from the Bench and to the arguments on the fundamental error in the show cause notice, in the light of the Apex Court judgment of Gajanan Fabrics Distributors v. CCE, Pune reported in [1997 (92) E.L.T. 451 (S.C.)] pointed out by ld. Counsel and various judgments, ld. DR submits that all these matters are required to be seen only at the final stage, when he will be in a position to get the report from the Commissioner and at this stage, he reiterates the findings recorded by the ld. Commissioner in his order. 5. On a careful consideration of the submissions, we notice from the following allegations are made in the show cause notice in Paras 3 to 7, which are extracted below :- 3. Whereas it appears that though all the four units are run by the same management and under the overall control directions of Shri Deendayal Agarwal and Shri Ashok Kumar Agarwal, they have availed the benefits of concessional rate of duties under Notifications 1/93, 16/97, 8/98 and 8/99 individually for each unit by camouflaging the actual identity under the corporate facade, which resulted in short payment of duty and thereby contravened the Rules 9(1), 52A, 173F, 173G and 226 of Cen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of Grounds; (ii) an amount of Rs. 6,25,000/- being the Central Excise duty short paid by ARPL during the year 1996-97 (as detailed in Annexure A 1), should not be paid by ARPL in terms of Rule 9(2) of Central Excise Rules, 1944 read with proviso to sub-section 1 of Section 11A of Central Excise Act, 1944; (iii) a penalty should not be imposed on them in terms of Rules 9(2), 52A(8), 173Q and 226 of Central Excise Rules, 1944 for contravening the provisions of Rules 9(1), 52A, 173F, 173G and 226 of ibid; (iv) penalty equivalent to duty demanded in Para (ii) above should not be imposed on them under Section 11AC of Central Excise Act, 1944; (v) interest as applicable on the duty demanded at Para (ii) above should not be levied in terms of Section 11AB of Central Excise Act, 1944. 6. Therefore, M/s. TM Tyres and Tubes Pvt. Ltd., Kallakal Village, are hereby called upon to show cause to the Commissioner of Central Excise, Hyderabad I Commissionerate, L.B. Stadium Road, Basheerbagh, Hyderabad - 500004 (hereinafter referred to as Adjudicating Authority) within thirty days from the day of receipt of this notice as to why : (i) all the four units namely, ARPL, TMTTPL, MR and R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 173G, 174 and 226 of ibid; (iv) penalty equivalent to duty demanded in Para (ii) above should not be imposed under Section 11AC of Central Excise Act, 1944; (v) interest as applicable on the duty demanded at Para (ii) above should not be levied in terms of Section 11AB of Central Excise Act, 1944. We notice from the above paragraphs that it clearly indicates that Agarwal Rubber Pvt. Ltd. were required to show cause as to why all the four units should not be clubbed and treated as one entity and the value of clearances of all the units should not be clubbed for arriving at the aggregate value of clearances for the purpose of determining eligibility and for denying the benefit. In such circumstances, the Apex Court in the case of Gajanan Fabrics Distributors v. CCE, Pune (supra) have clearly laid down that demands cannot be independently raised but it has to be made only on the principal unit who has set up other unit when Revenue is proceeding to lift the corporate veil, to find out the real person who is operating all the units. The findings recorded by the Apex Court prima facie applies to this case, which is at Pages 91 and 92 of the paper book are reproduced herein below : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t even the said section was not in existence as it had been omitted from the statute book and therefore relying on that section is bad in law, and the order is unsustainable. 9. We notice that there is lot of substance and force in the Counsel's submission. Therefore, we grant waiver of pre-deposit and stay the recoveries. 10. As we find that there is non-applicability of mind in the matter, and the order is not in the light of various judgments recorded by the Apex Court and the Tribunal and the Commissioner in Para 10 having held them to be not applicable which, in our opinion, is not a correct finding, we have to proceed with the hearing of the appeals by taking up the same for final decision. We are not agreeable with the suggestion of ld. DR to call for a report from the Commissioner, as we see apparent and clear contradiction in the order itself. The order being against the principles of natural justice, and not a speaking order and not in terms of the principles laid down with regard to clubbing of clearances, therefore we accept the plea of the Counsel for remanding the matter. We, therefore, take up the appeals and set aside the impugned order and remand the case to th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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